2022: a year of true recovery
In this interview of Laura Poggi, IGD’s Director of the Commercial Department, Marketing and CSR, we’ll take a closer look at IGD’s Italian portfolio and the leasing activities carried out in 2022.
How would you characterize the year that just closed?
2022 was a year that began in the wake of the difficulties we encountered in the two previous years caused by the pandemic. In the first few months of 2022 traffic was, in fact, lower than in 2019 due to the high number of infections caused by the Omicron variant. In the remaining months, tenant sales and footfalls in the shopping centers improved as the pandemic waned. It was, therefore, a complex year, characterized, on the one hand, by a return to socializing and spending, after a period of savings imposed by the lockdowns, and, on the other hand, the concerns caused by seeing the real value of your income eroded by inflation and higher energy costs.
And what was the net effect of these different factors?
The evidence provided by the operating metrics of our shopping centers shows that retailers’ sales posted double-digit growth against 2021, coming in with a convincing increase of 13.4%. The comparison with the pre-pandemic performance shows a slight increase (+0.7%) across all the categories of merchandise. These include, which we are pleased to point out, the improved sales of restaurants (a particularly vital sector which is bouncing back after the difficulties encountered during the pandemic), as well as personal and home care. Clothing, widespread in our malls, is holding its own.
Why is the growth seen in these sectors good news?
Because we are being rewarded for the adjustments we made to our merchandising mix: we were rewarded by shoppers when we introduced new brands (35 were introduced in 2022, the highest number in the last 5 years), worked on adding new brands or introduced new product categories consistent with shoppers needs.
Can you give us a few examples…
In clothing, for example, we correctly interpreted the preference to trade up to high-end brands or, conversely, to choose very current, trendy and competitively priced brands in order to optimize spending. The decision to reduce our exposure to mid-range price points proved to be a wise one. Restaurants provide another eloquent example as sales for the Italian portfolio were 53.5% higher than in 2021 and the gap with respect to 2019 narrowed. This sector proved to the most dynamic of all. We are satisfied with the good performance of the new formats we introduced which reflect the current food trends and require minimal fit-outs. In 2022 we added an impressive 9 new food brands to our malls, providing individuals who have begun to visit our centers every day at lunchtime, as smart working becomes less pervasive, with a vast range of choices.
What did you actually do to reposition the merchandising mix?
We took advantage of the remodeling and restyling underway in a few shopping centers. Two important examples toward this end are the Puntadiferro center in Forlì and the Tiburtino center in Rome. In the first instance, we added 15 new brands which increased the appeal of the shopping center; in the second instance we worked to introduce new medium-size stores which are recording great sales performances. A similar approach was taken during the restyling of PortoGrande, in the Marche region, where, as the size of the hypermarket was reduced, we introduced brands like Portobello, Unieuro and Calliope which provided us with a well-balanced offer including with respect to the relative catchment area.
Was it easy to introduce new brands and sign new leases at a time of galloping inflation?
It wasn’t simple, but our method based on involving all the interlocutors provided us with good results. During the year we, in fact, further increased the number of meetings with tenants (in the end, we organized 1,360 meetings with them). Thanks to this commitment, together we found the best solutions during a particularly complex period. More in detail, we used the tools available to find a way to introduce new retailers without compromising the structure of our leases which must remain indexed.
Is there other good news that emerges from taking a closer look at the growth in retailers’ sales?
Yes, in 2022 the number of stores reporting increased sales was higher than in 2019. This means that the recovery in sales is increasingly more common for both small and large stores. This is a trend that is important to the economy of our portfolio as a significant part of the rents comes from the so-called “neighborhood” stores.
The Porta a Mare project is nearing completion. Can you give us an update on Officine Storiche?
Pre-letting is moving forward at a brisk pace with the addition of domestic and international tenants, including with a view to widening the catchment area. At this point, almost 90% of the total GLA has been pre-let. We worked to create a tenant mix capable of expanding the appeal of the entire area. The goal is to also create a veritable osmosis between the restaurant and entertainment brands that will be present. In the meantime, the Open Day we organized at the construction site gave impetus to the gym membership campaign. The gym is expected to open at the same time as the inauguration of the entire Officine Storiche retail project, which should take place by the end of June.Share