What are the major changes you have seen over the last 10 years with regards to tenant demands?
Firstly, expansion strategies (including cross-border expansion)–there is a more professional approach and a better defined focus as to where to expand, which sizes and shapes of stores are needed, and which neighborhoods or co-tenancies are necessary. Also, risk management-especially with regard to operations, lease contracts, potential sales forecasts, and cost control (investments and operations), of course. Last but not least, accessibility–the markets have been much more open and international; there are no ‘borders’.
Which type of tenants do you aim to attract in your centers?
We prefer all tenants which are popular among customers now, and in the future, irrespective of whether they offer fashion, food, or other services. The concepts and the products should be absolutely up-to-date, state-of-the-art, and sustainable. Concepts in our centers should preferably be able to operate a multi-channel business and communicate on all possible channels.
The retail market in Turkey has attracted a high level of investments in the last five years. Tell us a little bit about your Turkish projects and how they are evolving.
The Turkish market is one of the most vibrant markets in Europe. The main drivers are the growing economy and the very positive consumer and shopping behavior. Shopping in Turkey is not limited to merely buying products; it involves fulfilling desires and wishes, leisure, entertainment, meeting people, and spending time.
The sales in our malls are developing great; there is a huge demand for space, especially in the bigger cities. These are the main reasons why we intend to expand further and develop more shopping centers in Turkey; particularly when looking at our latest very succesful projects in Eskesehir and Istanbul. Moreover, we must not forget our extension projects are absolute success stories such as: Maltepe-Park Istanbul, in which we acted as a service provider for Carrefour. We are very proud of our team behind ECE Turkey and their achievements.
Do you think the concept of entertainment will see further development?
Shopping centers are always dependent on the shopping behavior and alternative offers. At the moment, there are less entertainment alternatives in Turkey than in other countries or cultures. Therefore, the entertainment and leisure components in Turkey are extremely important for a successful shopping center development.
In your opinion, what trends will dominate the retail market in the near future?
Multi-channeling, which means selling and–very importantly–communicating on all channels will be the most important driver on the retail market. Additionally, we need to accelerate the speed when adapting and adjusting concepts to the market and when individualizing and customizing offers in the near future.
Are space requirements changing as brands are adopting a multi-channel strategy? How will the multi-channel strategy play a role in ECE’s future?
Of course there are changes and new requirements–but this is good news. Some concepts optimize their stock, number of products, delivery–time etc. which all affect the size and design of the stores. Moreover, the increasing number of products or lines within a brand could lead to an increasing demand for space.
At ECE, we support our retailers in managing a proper multi-channel strategy. Two years ago, we initiated two ‘future-labs’, which test new ways to interact or communicate with customers and how to link them to their shops. We also provide support by introducing them to strategies which help them to create additional sales or improve customer loyalty.
What are the major differences between Germany and Turkey’s tenant demands? (m², rent, contract duration)?
Firstly, the market in Turkey is not yet saturated like a matured market. New concepts have the chance to enter the market, especially from outside the country and from globally operating brands. The sales per m² are slightly lower on average, but looking at well-established branches there are already strong sales figures which are higher than in Germany. Looking at the rents in shopping centers, I can say that these are more or less on the same level, depending on the location and the city.
There are considerable differences with regard to legal regulations; Turkish procedures cannot be compared to German ones, especially if you look at contract durations for example. The speed of creating new concepts to expand all over Turkey, and to make things happen, is amazing. If you close a deal with a Turkish retailer today, their store might be open tomorrow.
What are the major challenges that international brands face when entering a market like Turkey?
The Turkish market is already strong and established (it only seems to be an emerging market). There are strong players, who are more or less dominating especially in food and in fashion retail; which constitute the majority of retailers in a shopping center. The people in Turkey love their Turkish brands, there is great brand loyalty, and so domestic players should not be underestimated. Entering the existing network is the second challenge. It is important to understand the rules and to be accepted and honored by the market players.