Alex Linchev, Retail Asset Director at GTC and General Manager of Ada Mall in Belgrade, gives us an overview of how shopping centers are transforming in the new retail age and how their business is progressing.
Ada Mall just celebrated its 2nd anniversary; tell us how has Ada Mall changed during the Pandemic? How have you changed your approach?
The pandemic indeed changed the world overnight. I believe enough is being written about its long-haul business implications and the experts are almost daily providing analysis on it. Instead, I will try to grind it down to the three very practical implications I observed in our business and which define Ada Mall’s approach: the humane, the sustainable, and the local factor.
1. The Humane Factor
The humane part connotes a human-centric approach, which means creating an easy, experiential, and loyalty-driven shopping experience, while establishing a deep synergy between the landlord and the tenant, in order to share the COVID responsibilities together.
2. The Sustainable Factor
The sustainable part is the way forward for our business at large. We look at sustainability as a combination of implementing new long-term and needed retail changes while reflecting on the consumer behavioral shifts, and the global striving to achieve carbon neutrality and climate change prevention.
The consumer that has emerged out of the pandemic is someone looking for seamless online and offline experiences, and not simply having to choose one at the expense of the other. The shopping experience needs to be safe for the consumer and for the environment while reflecting their lifestyles and ethical values.
The modern consumer seeks a retailtainment journey that feels free, straightforward, personal, and rewarding.
3. The Local Factor
The local factor is a byproduct of the pandemic. People will continue to travel and roam the globe, but a bit less than before. However, consumers’ migration to spacious green and more affordable commuting areas around metropolitan cities, would mean that shopping centers will need to shift away from their conventional mass retail appeal and engage more with their immediate communities, in a way to re-invent themselves as neighborhood engagement mix-use centers.
Do you believe that shopping centers are going through a major transformation at this time, and how do you see the shopping center of the future?
The shopping center’s transformation is no longer a matter of “if” or “when”, as it has already commenced. The question is whether and how will each mall become part of this new wave. The future shopping center will be above all else an engagement mix-use center strongly tailored to its local community, feeling closer to the residential and hospitality sector than to a large-scale convey-belt type of retail.
The shopping centers will morph into consumer engagement centers – environments where people gather to engage with friends, connect with like-minded shoppers, seek out unique experiences, reaffirm values, and interactively relate to brands on a personal level.
Transactions will be a by-product of consumer socialization and engagement. Traditional retail stores may anchor them or they may be anchored by purpose-built specialty residential living units, an entertainment complex, a sports center, an educational institution, or a healthcare facility. They might even be organized around a theme or concept.
With “the human” in the center, everything that operators and tenants do must reinforce that value proposition and serve as a continuous demonstration of authenticity, integrity, values, and respect for the consumer.
Those consumers will be proud of their diversity, less interested in owning things than in having experiences and accessing functionalities. Consumers might even demand the right to co-develop and design the goods and services they buy, which is a trend already adopted by big names such as Nike, Ikea, and others.
Do you believe that consumer behavior has changed in Serbia in the past 18 months, and how? What is now important to offer visitors?
It has changed and certain things are a part of a bigger global shift that started even prior to the pandemic.
Today, for the first time in history, the consumer market includes mainly five generations of shoppers: the Baby Boomers (1946-64), Gen X (1965-80), Millennials (1981-97), Gen Z (1998 – 2016), and Alphas (2017 onwards). By 2030 every Boomer will be over 65 and our original Boomers will be celebrating their 84th birthdays. By contrast, the youngest of the Alphas will be only about five years old. The result for most shopping centers, in the decade ahead, Millennials and Gen Z will represent their key consumer targets.
Where Boomers tended to be more alike than different, Millennials and Gen Zens celebrate the values represented by human diversity. For this consumer segment labels associated with ethnicity, race, and religion increasingly do not matter. Younger consumers cherish access to functionality over ownership and demonstrate a clear preference for experiences over the acquisition of “stuff”.
While in the past, consumers flocked to the shopping centers to seek value, epitomized by the relationship of price to branded goods, the future mall will cater to the collective and individual values of its customer base.
This helps explain the success of businesses such as Uber, Airbnb, Lyft, online designer clothing rental sites, in-store personalize-your-garment services, and electric car-sharing companies. The new consumers clearly prefer personalized, authentic brand interactions, a preference often combined with a belief in the benefits of creating and sustaining strong connections to their local communities.
Talking about Serbia, of course, there are other factors. The country is experiencing a more recent shift towards delivery services at an accelerated pace, especially in the food and beverage sector. However, customers here are not only online savvy but also they uphold a strong preference towards physical experiences – from food and entertainment to shopping with added benefits. This helps explain the booming local show business, the outdoor café and restaurant society, and so on.
You have introduced loyalty cards and an app, tell us how is this program progressing?
Ada Loyalty Club program is designed having one thing in mind and one thing only: the local customers.
What do they want, what do they appreciate and what do they need assistance with? Ada Loyalty Program addresses these needs and “pains”, while offering a diversified solution, which is extremely easy, intuitive, and at the same time available for free to all consumers which are of legal age.
For the customer who is a shopaholic and needs to be dressed in the latest fashions, Ada Loyalty Card is perfect for them as it provides permanent discounts on new collections from 5% to 25% in around 70 shops.
The difference between our loyalty program and various other traditional sales discounts, like Black Friday, is that our loyalty card discounts are valid all throughout the year. Also, our discounts are applicable mostly on new collections even at the start of a new fashion season, and not at the end of the season when traditional sales and Black Friday campaigns are usually organized for the clearance of previous or expiring collections.
For the general customer that seeks even more value for choosing to shop at Ada Mall, each dinner spent at our mall is also rewarded with points.
When the customer collects a certain amount of points they can choose some of the 100 000 EUR worth of annual prizes, provided by the loyalty card. These range from cash vouchers for future purchases in the shops, to exclusively branded merchandise, including high-tech gadgets such as the latest smartphones, drones, and tablets.
The big added value is that unlike conventional proof of purchase campaigns in other malls, Ada Loyalty is not based on an arbitrary lottery principle where a few lucky ones win big prizes. With the Ada Loyalty card, you collect points, you win and it is guaranteed. The only rule is that the prizes are available on a first-come, first-served basis.
For long-term loyal customers, Ada Mall Loyalty program also organizes various members-only events which further reward and enhance the customer’s journey with us.
Ada Mall Loyalty Card also has a free Android and IOS application for registration. Registration takes only 5 minutes and all you have to do afterward is to pick up your card at the mall’s Info Desk. You can immediately start shopping with discounts, collect points, and claim prizes. It is as easy as that. No maintenance fee, no banking products, no commitment, and no strings attached. If you don’t like it, you can bin it any time you want.
From the numbers I see, people who first encounter and understand it, love it. The most common customer feedback we have to deal with is “we can’t believe such a thing is for free”.
You had plans to develop a bridge to Ada Lake, is this project still in your pipeline?
Yes, the bridge is fully done as you can see from the picture. We are just waiting for the official permit and would hopefully open it for this summer.
You have recently sold some of your other assets, tell us what are your next steps, do you have new projects lined up? Tell us a bit about these projects.
The sale of our office assets in Belgrade served, as GTC S. A. Global CEO eloquently summarized it, for relocating the free cash flow for the development of brand-new, ambitious projects in Serbia and other markets of CEE who will be even more sustainable and futureproof.
As part of this strategy, GTC recently has invested 160 million EUR in the acquisition of two office properties in Budapest: the Ericsson Headquarters and the Siemens Evosoft Headquarters. GTC also plans a few ambitious projects, including those in Serbia – GTC X and Project Blaze, designed to stand out with modern building systems and the latest architecture trends to meet the most exquisite tenant requirements.
About Alex Linchev
Alex Linchev is a Retail Asset Director for GTC S. A. currently in charge of Ada Mall Belgrade. He has been present in the real estate industry for over 15 years leading residential, commercial, and retail assets as well as signature world golf clubs.
Throughout his career, he has strategically collaborated with over 300 international tenants, managed more than 150 000 m2 of shopping center and office space, and worked for one of the biggest international developers in the CEE region.
Mr. Linchev’s asset management experience includes United Kingdom, Bulgaria, and since September 2019 Serbia. He is ICSC certified and is one of the longest-serving GTC S.A. retail asset directors. His side interests include digital marketing, psychology, and consumer analytics.