CBRE leads the tech transformation in the Iberian retail sector

CBRE leads the tech transformation in the Iberian retail sector
Adolfo Ramirez-Escudero

The sector’s strong performance in recent years has made 2017 the consolidation point for the real estate sector and thanks to the upturn in the market this has made it the perfect time to invest. In recent months, investment in Spain and Portugal has grown 58% and 31% respectively y-o-y.

Within the current socioeconomic context, the Iberian retail sector is faced with two major trends in parallel. Firstly, the sustained economic growth cycle is boosting sales and attracting new overseas investors. Secondly, there is a paradigm shift that is being driven by technological advances and the unstoppable digitalisation of the sector, which in turn is revolutionising traditional business concepts and forcing retailers to adjust their strategies if they are to remain competitive.

 

Innovation in Shopping Centre management

The digital transformation of the real estate sector is now a reality. Technological innovation has presented investors and clients with an infinite number of possibilities in terms of how to improve their productivity, achieve greater quality and add value to services. Market players are currently trying to come to terms with this new context and identify the best ways of adapting their business models to the industry’s current situation and its needs.

The retail sector is one of the main segments in which new innovative solutions are being developed, both in High Street and Shopping Centres and Retail Parks. In this regard, CBRE continues to revolutionise the sector thanks to the implementation of the first independent management tool in the Iberian Peninsula, which is able to integrate almost forty shopping centres across Spain and Portugal.

This encourages the creation of business synergies that help to create larger more uniform teams and make CBRE leaders in implementing its own management strategies specifically designed for the retail sector.

 

Shopping Centres and High Street: the drivers of the retail sector.

One of the main reasons for developing new digital tools are the positive results registered by shopping centre investment, which accounted for 37% in Portugal and 5% in Spain. In the portfolio of shopping centres that form CBRE’s index, footfall in Spain climbed by 2.5% and sales increased by 1.5% y-o-y.

In Spain, sales rose by 2.8% between January and April 2017, sharply contrasting with the -2.2% drop in turnover registered in 2016. However, in Portugal sales climbed by 8.4%, recording significant growth since 2013, when the APCC (Portuguese Shopping Centre Association) started to record data.

As in recent years, High Street investment remains upbeat, with the total investment volume in Spain and Portugal reaching €800 million and €37 million respectively in 2016. In both countries, an underlying trend has started to take hold; namely institutional overseas investors entering the Iberian market and positioning themselves as the major flagship store players.

 

 

Transformation of the sector fuelled by e-commerce

Consumers are finding the distinction between online and offline channels increasingly blurred, and their new habits are driving retailers to focus on both segments at once, thereby creating a new ‘phygital’ order. Despite the fact that bricks and mortar stores remain the preferred choice for consumers, it is increasingly difficult to draw people away from the comfort of their own homes and into stores. Retailers are therefore opening large flagship stores to entice people in, stores that are focused on the shopping experience, and on increasing the range of services on offer, installing new technology such as OSS, Locatus and Geoblink. This also allows them to personalise their marketing strategies.

Thus, e-commerce is becoming an increasingly popular sales channel, currently registering an annual turnover of €24,000 million and more than 20% growth in Spain, and €4,200 million and 10% growth in Portugal in 2016.

From looking at this trend, it is plain to see that the omni-channel approach is fundamental for online retailers; with many now opening flagship stores that offer extensive supply, together with digital and technology services in one unique physical space.

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