In the last edition of IGD News&Views we presented the launch of the project Next Steps, focused on finding new solutions for shopping centers during the phase after the lifting of the pandemic restrictions.
Our conversation with Daniele Cabuli, Chief Operating Officer, and Laura Poggi, Head of Leasing, therefore, continues. They will update us on the work they have done to manage the relationships with the retailers during this delicate exit phase and change the merchandise offered at IGD’s centers.
What is IGD doing during this anti-Covid restrictions exit phase?
As always, in IGD we strive to understand current needs and to be proactive with timely responses. In 2020, during the first lockdown we worked to continue to provide services – deemed essential at a number of our centers – making the safety of the people inside the centers a priority. In a subsequent phase we then worked on rental agreements with the single retailers with results at the beginning of fall 2020 we viewed as very satisfying. As a result of the new wave of the pandemic, which caused a lot of businesses to close in the first two months of the year – typically the most important months for sales – we had to begin the whole process again. After the re-openings allowed on 17 May 2021, we are working on the third round of lease negotiations with retailers in the hope that this will also be the last …
How are these negotiations going?
Our approach remains focused on maintaining the structure of the leases, without giving into any requests to switch to variable rents linked to revenues. We are, therefore, trying to accommodate the tenants hit the hardest by the closures by granting temporary rent abatements. Once it is approved, the Sostegni-bis Decree should provide some relief for tenants experiencing difficulties who would receive the equivalent of around one month’s rent. We will see what kind of and how much aid IGD will have to provide in order to guarantee the sustainability of the businesses most impacted by the closures.
In May you told us about the creation of a work group, Next Steps, which would develop a series of initiatives in response to the needs of shoppers that emerged in surveys and research which were broken down by age and geographic area. How is the work going?
The work is moving forward thanks to everyone’s hard work. A few of the initiatives, at zero cost, have already been implemented: when it became possible to reopen restaurants, but only for outdoor dining, in just a few days we created outdoor areas and patios in the open areas of the shopping center so that restaurants with only indoor dining spaces could reopen as quickly as possible. Other projects that the Next Steps group has developed call for initial investments which must be approved by IGD’s Board of Directors.
When will you tell us about these innovative projects?
These projects will be a key part of the next Business Plan. We will certainly share the costs and positive impact that we expect to see once IGD’s investment pipeline has been determined.
In the meantime, what signals are tenants giving you?
Even though the few anti-Covid restrictions that are still in place prevent us from organizing major events in our shopping centers, we are seeing some positive signals. On the one hand, rent collection is going well. This tells us that the retailers’ sales are encouraging: even though during the months in which stores were closed online sales increased in Italy by a couple of percentage points, penetration continues to be low. Above all, the purchases made online failed to fully absorb people’s disposable income. We are, therefore, seeing an increase in demand for goods and services which, compressed for a long time, drove excess savings. Another important phenomenon that characterizes the most recent period, is the opening of new stores of all sizes. The tenants believe there will be a decided recovery, above all those with an international presence who can look at the results reported in the countries that have been reopened longer than Italy.
Is the same conviction true for restaurants?
Restaurants and leisure activities benefit from the desire to socialize after a period during which the use of services was basically non-existent. So, yes, we have seen that these types of tenants are also ready for new openings in 2021.
What are the most prominent brands that have opened in IGD’s centers in the last few months?
The new entries include well-known brands like Pepco or Pandora, but also new successful restaurant formats like Pokè, which offers Hawaiian cuisine that is very popular also because you can create your own personalized dishes. The most recent openings include the electronics shop Mi Store at Centro Tiburtino in Rome.
How do you interpret the fact that the openings continued even when significant restrictions were still in place like, for example, the weekend closure of shopping centers?
We interpret it as a clear sign of the strong attachment that retail businesses have to their physical presence.
How are you getting ready to capture future consumer trends?
By fostering increasingly closer partnership with the retailers, in order to better understand the specific needs of each customer and give her what she needs. Toward this end, the projects that the Next Steps team are undertaking have a strong focus on the integration of the physical store with the brands’ online presence: with structural approaches that are combined with increasingly refined online profiling, achieved through a number of touchpoints. Our goal, in fact, is to define new layout and merchandise mixes leveraging on digitalized CRM opportunities.
What is IGD actually doing to gather this information?
We have created a reserved area for customers on the websites of each shopping center. The shopper may enter to accumulate points, participate in games or have access to special events, like meeting celebrities which provides us with a way to better understand preferences and needs.
What do you expect to see at the next MAPIC, your sector’s most important trade fair?
There will be a certain emphasis on leisure at this edition: we will also present solutions which respond to the needs that emerged in the various surveys taken like the desire to go out again, to have fun and take care of yourself. Above all our participation at the next event will be shaped by the idea of a renaissance. After the many negotiations carried out over the past few months during the period of closures, we hope to finally begin talking with tenants exclusively about development, innovation and the next consumer trends.
Thank you and buon lavoro.