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purchase incentives and opportunities to connect
with online friends.

VALUES CENTERS
Values centers are smaller centers drawing their
identity-and the majority of their tenants-from the
surrounding community. They are anchored by an
idea, not a retail nameplate, and can be organized
around a values statement, such as animal rights,
an idea, such as peace or serenity, or even an ethnic
or community identity.
In the case of animal rights, for example, all
restaurants might be vegan or vegetarian, leather
goods and furs might not be sold, activists might be
given free meeting or speaking space, and a bookstore might offer an appropriate selection of titles.
These CESs could be specialty outlets featuring unique local products and ethnic or artisanal
brands across a broad variety of categories-
grocery, ready-to-eat food, convenience and
personal care items, and health services. They
might even offer a curated selection of satellite "merchandise-free" or "merchandise-light"
items from national retailers, or destination CESs
presented in virtual shops, showrooms or limited
assortment stores.
Values centers could reflect one or more of the
ethnic identities of the local community through
food halls, with ethnic artisans offering familiar
ethnic or imported brands, entertainment and services particularly relevant to a community.
Given the growing popularity of local or specialty food, one can easily imagine the successful
launch of a concept, such as the "Our Town Food
Mall," featuring a farmers' market selling locally
grown or manufactured items, pop-up restaurants, ethnic food halls, kitchen appliance stores
and cooking schools.

Values centers also might be smaller CESs specializing in related retail businesses and services,
such as a high-end luxury center, a fashion plaza
and maybe even a men's mall. This hyper-focus on
a subsegment of consumers will allow new brands
to test-market and introduce products to a relevant,
targeted consumer base.

INNOVATION CENTERS
Innovation centers are "smart" CESs where
participating tenants pool data and ethnographic
observation, social psychological analysis and other
tools to satisfy shoppers and evolve along with them.
These CESs will employ staff, including center anthropologists, retail cultural psychologists and mall
ethnographers to constantly observe, record and
analyze shoppers as they move from space to space,
providing real-time feedback to all tenants and CES
staff. Their services will either be incorporated into
the lease agreement and available to all tenants or become the proprietary intellectual property of the CES
operator and made available for sale to tenants and
consumer goods manufacturers on a selective basis.
They will also turn beta testing into a business. It
is easy to imagine a subset of these CESs-call them
beta centers-that will be pure tech plays where
every store in a smart, active retail environment
features the latest in technology, some available for
sale and some being tested.
Everyone associated with an innovation center
will share an opportunity to create a separate revenue stream by leasing access to their individual
stores, shelves and customers. For their part, consumers will get the opportunity to test the impact
of new technologies, access experts to help them
through their own technologies, and maybe even
trade personal shopping and product evaluation
data for discounts on new items or new products.

Figure 4

Most successful future CESs will fall into four basic categories

Large regional centers,
anchored by popular
attractions, which draw from
broad local, national and some
international audiences

Hyper-curated centers specializing in related retail businesses
and services, reflecting the
values and preferences of the
surrounding community

Mixed-use, multiformat
centers located where
consumers live, work
and travel

Every "store" (and the center of
itself) is a smart, active retail
environment featuring the
latest in high technology

DESTINATION CENTERS

VALUE CENTERS

RETAILDENTIAL SPACE

INNOVATION SPACE

Source: A.T. Kearney analysis

"RETAILDENTIAL" SPACE
"Retaildential" spaces are mixed-use CESs targeting a specific consumer segment, such as young
urban professionals, single 40-somethings or senior
living environments. These highly curated "lifestage
centers" will offer a demographic-specific and a
propriate set of retail, restaurants, entertainment
and services.
Senior-focused malls will be built adjacent to, or
in conjunction with, senior housing and will
feature medical services, pharmacies, exercise
facilities, lawyers specializing in age-specific law,
accountants specializing in estate planning and
community rooms.
Retaildential CESs for young, hipster professionals will contain high-end electronics stores, upscale
furniture shops, micro-breweries, bars, gourmet
food stores, meet-and-greet social space, gyms and
other fitness facilities, spas and live entertainment.
Another variation on this theme might be
mixed-use, multiformat centers strategically
located where consumers live, work and travel,
offering integrated shopping and entertainment
experiences, as well as access to necessities ranging
from food to dry cleaning services.
As Americans move to more densely populated
urban areas, there will be growing demand for local, walkable downtown centers. And, as the gig
economy expands and shared workspaces take
new forms, there will be an increasing need for colocated centers that provide physical locations for
sharing and re-commerce platforms.

A NEW WORLD
Innovative retailers, center operators and technologists are already redefining the "art of the
possible" on a daily basis across the world.
That said, future success depends on being able
to "unlearn" the lessons of the past. This is a new
era for retailing, and the conventional wisdom of
20th-century retailing has about as much place in
the 21st-century CES as a buggy whip has on an interplanetary spacecraft.
Tomorrow's success will belong to those
operators and tenants willing to break from yesterday's patterns and practices and fully embrace a
consumer-driven future. The future is as robust as
the industry's imagination.
AUTHORS: MICHAEL BROWN, PARTNER, A.T. KEARNEY | MICHAEL.
BROWN@ATKEARNEY.COM; MATT LUBELCZYK, BUSINESS
DEVELOPMENT MANAGER, A.T. KEARNEY | MATT.LUBELCZYK@
ATKEARNEY.COM. FOR THE FULL REPORT, VISIT
HTTPS://BIT.LY/2HFH6EP.

HTTPS://BIT.LY/2hfh6ep

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