design:retail - June 2018 - 41

041

CONNECTIVITY: THE HUMAN FACE OF
TECHNOLOGY

Autonomous mobility technologies will be another important connectivity tool. Autonomous
transport services in the form of cars, buses and
trains will deliver customers to and from the CES,
while other autonomous agents (such as robots)
will help operate stores and interact with shoppers
or their networks. Still other related technologies-
from delivery robots and drones to autonomous
trucks-will get products from the CES to wherever
shoppers want them to go.
As on-demand mobility replaces car ownership,
our notion of how large a footprint we need may
change. Excess parking space can be converted to
drive-thru pick-up centers for customers, delivery
services for vendors, or even space for non-tenant
retailers. Green spaces may replace the seas of
cement currently surrounding today's centers,
encouraging consumers to interact with nature
or just enjoy the scenery. On-demand vehicles
could be housed in transportation hubs for fleets
of drones and other real-time delivery options at,
or near, the CES.
CES tenants and owners will use specific
technologies of their own-big data collection,
algorithms, AI programs and perhaps even quantum computing-to track and meet individual and
collective consumer demand in real time.
As machine learning evolves from pattern recognition to cognitive intelligence, consumers will
expect and demand highly curated, frictionless
shopping experiences. These may look like product recommendations and selections queued up
for them by their AI assistants as they enter a store
or the debut of automated, unmanned "just walk
out" stores for relevant categories. Whatever form

In 20th-century malls, technology's primary
role was to power systems. In the 21st century, its
role will be to connect buyers' individual and collective dreams, values and aspirations and sellers'
collective engagement space offerings.
While it is dangerous to underestimate the power
of technology as a driver of future retail, it's also easy
to overestimate its role. Successful CESs will see
and embrace technology for what it is-a diverse set
of tools, each created to perform specific functions,
no different (in this respect at least) than electricity.

PLUG IN, TURN ON, SHOP OUT
Retailers and CES operators will need to master
two sets of technologies: the ones consumers use to
order their lives, communicate and transact commerce; and those that businesses will use to identify
individual shoppers, track purchases, calculate dwell
times, analyze behavior, communicate with customers and create real-time merchandising, marketing,
advertising and promotional opportunities.
Consumers' technology choices will create
personalized "digital ecologies"-combinations of
connected tools, from bots such as Kik Bot Shop
and WeChat to voice-activated AI agents such
as Google Now and Amazon's Alexa, and smart
appliances and cars that manage a staggering
array of functions from sorting and storing media
and managing homes to overseeing subscription
service purchases and planning vacations. CES
operators and tenants need to be able to tap into
and leverage those personalized digital ecologies
while shoppers are in or away from their centers.

Figure 3

U.S. shopping center growth has outpaced population growth
1.2%

1.1%

1.3%
0.9%

4% CAGR

37k

42k

48k

56k

1970

1973

1977

1981

1.2%

0.9%

1.1%

0.9%

2% CAGR

65k

76k

81k

87k

1985

1989

1993

1997

Sources: ICSC country reports; A.T. Kearney analysis

94k

2001

0.9%

0.8% 0.9%

113k

115k

2005 2009

2013

116k
Total Shopping
Centers
(Thousands)

2017

the specific experience takes, AI-enabled shoppers will expect a seamless integration of their
digital and physical experience. At a minimum,
retailers must prepare for a near future in which
customers have the ability to select-and block-
any input they choose. Any notion suggesting a
separation of, or difference between, digital and
physical life and retail will be met by widespread
consumer resistance.
The most successful retail technologies are those
that remain a half step ahead of the consumer.
Leveraging technology to unite tenants and better
serve customers will be a crucial part of the equation as CESs evolve. But there are others.

COMMERCIAL CONSIDERATIONS AND THE
ROAD TO THE FUTURE
RETAIL APOCALYPSE OR RENAISSANCE?
Today, many business journals are obsessed with
the so-called "retail apocalypse," "the death of the
mall" or "the death of retail." Ironically, retailing is
standing on the edge of a renaissance, substantially
different from the era that preceded it, but with an
even greater possibility for success.
In America, this "retail renaissance" is based on
reconfiguring existing square footage. This is much
less of an issue internationally, as in Asia, for example, where retailers are still building new CESs
to meet growing consumer demand.

THE TRANSFORMATION OF RETAIL
U.S. Population
(CAGR)

1% CAGR

103k

Any notion suggesting
a separation of, or
difference between,
digital and physical
life and retail will be
met by widespread
consumer resistance.

Variety will define the future of CESs as emerging technologies, creative retail models, innovative
foodservice offerings, entertainment programming and community events; nontraditional
components, such as healthcare facilities; service
seamlessly integrating online and digital commerce; and even residential elements redefine the
nature of customer-brand interaction.
Some physical retail spaces will take the form of
smaller, "smart," dynamic formats serving as hubs
for interactive brand experiences. Others may
be "inventory-light" retail environments for

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