From department store to Wanghong

People used to go to the corner shop when they needed to buy something. In the 1980s, the mail order catalogue was popular. Now, online shopping is on the rise. Who knows exactly what shopping will look like in the future? But what we do know is that the changes will affect not just shop owners, but also real estate.

Online shopping is revolutionizing the world of shopping. Almost every German with internet access now uses his or her laptop, tablet or smartphone  to buy clothing, shoes, books and electronics^[1]. Last year, German citizens ordered goods worth 53 billion euros online, and the trend is rising^[2]. In Europe, only the British and Irish shop online more^[3].

Still, shopping via social media channels and platforms still plays a subordinate role here. But the story is changing elsewhere. Young people in China are increasingly shopping via the Wanghong economy^[4]. Wanghongs are China’s influencers^[5], people who are prominent  on social media and who, for example, give tips on make-up. But whether we are talking about a shopping website or social media commerce, online sales are increasingly challenging conventional business models. And that’s true, too, for retail and logistics real estate.

Bricks and mortar retail is not dead, but...

The increase in online shopping is not only changing supply chains and logistics real estate. It is also having a massive impact on traditional shopping centers and high streets. It’s forecast that two thirds of purchases will still be made locally in 2030^[9]However, bricks and mortar retailers will also have to adapt to the digital expectations of their customers. This means, WiFi needs to be a matter of course, so that current information and special offers can be uploaded to customers’ mobile phones while they are in the shop. One in two Germans already expects that today^[10]. Service and flexibility score highly with the customer.

A glance at Milan shows what this could look like in concrete terms. The supermarket chain, Coop Italia, opened a fully digitized branch in Milan in 2015. Fruit and vegetables are displayed on interactive shelves. As soon as customers hold their hand over an apple, a screen displays its origin, vitamin content and calorie count^[11]. Sensors make it possible to translate customers’ hand movements into information. 

Another future trend is that  “Microhubs”, where visitors can shop and pick up goods that they ordered online whenever they want^[12], could become standard in shopping centers. This is literally a tall order for existing properties. The entrances to traditional multi-storey car parks are often only two meters high and therefore too low for delivery vans^[12]. However, the shopping experience in bricks and mortar retail can be a major plus. The old chat in the corner shop will in future be shopping center entertainment. They are likely to become lifestyle hubs,^[13] where shopping and communication meet.