By Silvio Kirchmair
The placemaking industry is experiencing profound change. Retail space in developed markets has been declining for more than a decade – a clear sign of transformation. The key challenge is to redefine growth: not in square meters, but in added value.
At the heart of this transformation lies a natural market adjustment within the placemaking industry. In saturated markets such as Austria, the sales area per capita is decreasing as oversaturation puts a strain on productivity. At the same time, digitalization is driving e-commerce. Nevertheless, bricks-and-mortar retail will remain relevant in the long term – thanks to unique experiences and direct product contact. As space becomes available, it will be redeveloped for food and beverage, leisure or multi-use concepts that meet the changing needs of society.
The industry is also increasingly moving towards the poles of the market: on the one hand, discount formats such as Action, Tedi and Primark are successfully scaling up through efficient processes and low prices. Especially in times of economic uncertainty, they offer an important way to meet demand. On the other hand, there are experience-oriented concepts that focus on exclusivity and the quality of the shopping experience, creating loyalty and driving additional sales through generous interior design, integrated gastronomy and digital interactions.
Brick-and-mortar retail’s success hinges on its ability to evolve and leverage the strengths of physical shopping. Shoppers crave experiences – the opportunity to test and discover products in a way that online shopping cannot replicate. There is also the potential for impulse buying, which is almost impossible to achieve online due to the limitations and high costs of available technology. Face-to-face contact and on-site advice are also crucial: experiences created through personal interaction add value that cannot be replicated digitally.
Looking ahead, my wish for the industry is not only to preserve these core strengths of brick-and-mortar retail, but also to consistently build on them. By optimally linking the online and offline worlds, we can create experiences that inspire people and ensure long-term prosperity.
Silvio Kirchmair
Silvio Kirchmair is CEO of umdasch The Store Makers, and Member of the ACROSS Advisory Board.
