“What is the future of the shopping centre in a digital world?”

The future of the shopping centre in a digital world

Nick Bubb, Retail Consultant, commented “it seems like only yesterday that the Bull Ring shopping centre opened next to New Street station in Birmingham, but it’s actually 12 years ago and the fact that this development, with its iconic Selfridges department store, has stood the test of time shows that there is a future for well-conceived shopping centres in a digital age.”

Also on KPMG.com

  • Shopping centres need to be more than just a “collection of retailers”
  • The rise of destination shopping, consumers craving convenience, and creating community hubs will ensure shopping centres survive and thrive
  • The digital world will actually secure the future of the shopping centre


Nick Bubb, Retail Consultant, commented “it seems like only yesterday that the Bull Ring shopping centre opened next to New Street station in Birmingham, but it’s actually 12 years ago and the fact that this development, with its iconic Selfridges department store, has stood the test of time shows that there is a future for well-conceived shopping centres in a digital age.”

Figures from CBRE confirm this view highlighting that investment in UK shopping centres was at its highest for 10 years in 2014 – so, as Martin Newman, CEO, Practicology, noted “the money men are confident of future returns.” Property developers should therefore feel comfortable with the notion of building shopping centres in this digital age because the pipelining is growing rather than the opposite.

However, what is also true is that shopping centres need to adapt to and harness digital possibilities if they are to continue to flourish. Mike Watkins, Head of Retailer and Business Insight, Nielsen UK, commented, “the most valuable customers of the future will be the ones who shop in-stores and online and this is where shopping centres, with a unique blend of leisure, retail and lifestyle have an advantage over many high streets or traditional retail parks.”

As such, in order for shopping centres to differentiate, properly embrace the modern, connected consumer and continue to thrive, centre operators are considering additional strategies. These include:

  • Adding a sense of occasion and making visiting a shopping centre a fuller, enriching experience.
  • Selecting a location that enhances convenience for the time-poor consumer.
  • Designing shopping centres to act as a hub for the community in which they are located with the combination of retail, social, work and leisure spaces.
  • Consider adapting the traditional business model

The KPMG/Ipsos Retail Think Tank (RTT) met in October to discuss what the future of the shopping centre looks like, whether it’s centres at the premium end of the market or more traditional, local hubs, and how these sorts of outlets stay relevant in the digital world. The RTT also went off-site for this quarterly meeting, taking the opportunity to visit the new Grand Central centre and John Lewis store in Birmingham for further insight.

What do consumers want?

Martin Hayward, Founder, Hayward Strategy and Futures, pointed out “consumers are, and always will be analogue entities in a digital world.” On the one hand, having access to boundless virtual aisles at your fingertips adds choice, value and convenience, but on the other, consumers still like to peruse, touch and feel, particularly when it comes to fashion and beauty products. The human interaction and customer service, which is only possible in-store, also remains important to shoppers.

Added to this, Martin Hayward also posed the question “Why do pensioners go shopping on Saturdays?” It would undoubtedly be easier and quicker for pensioners to shop midweek when the stores are much quieter. However, they choose to shop on at the weekend because that’s when everyone else shops so you get something far more like the buzz of a marketplace which makes the experience more fun.

Not only does this suggest that efficiency isn’t everything, it also means that the in-store environment has the potential to add colour and humanity to a shopping trip that will never be possible through digital channels alone.

With increasingly connected shoppers, the role of the shopping centre in the digital world is therefore about getting new products, services and experiences in front of consumers in an innovative and engaging fashion. Digital can still enhance the in-store experience through the likes of personalised messaging but these channels compliment rather than replace the physical store.

A Destination

Internet shopping typically allows greater choice and convenience at a lower price. This means that shopping centres need to offer a different, more engaging experience across multiple demographics in order to remain relevant. With this in mind, Mike Watkins, Head of Retailer and Business Insight, Nielsen UK, suggested “shopping centres are the only true destination shopping trip.” However, in order to be successful this needs more than a handful of “anchor” clients, a cinema and a food court in order to drive traffic.

A good example of a shopping centre creating a destination to shop is Trinity Leeds. In its first year of operation the centre attracted 13 million shoppers and increased Leeds’ overall visitor numbers by one million. But aside from the novelty factor, what has really driven footfall at Trinity Leeds is the leisure offering which includes an Everyman cinema, premium dining options and a street food area with regularly updated food vendors.

Added to this, many shopping centres are increasingly offering entertainment for children. This allows parents to shop, watch a film or have a meal in relative peace and, if the entertainment is good enough, the kids see this as a “treat” and actually leads to the parents visiting the shopping centre more regularly.

Westfield London played a pioneering role in the destination shopping centre concept, stamping its mark on the Capital’s hospitality map and curating a culinary mix that catered from fast food to fine dining. However, the centre also opened KidZania earlier this year, an educational child-sized indoor city equivalent to the size of Leicester Square. Children aged between four and fourteen can try out a range of professions - playing a surgeon, firemen or fashion stylist for the day - in an ultra-realistic, indoor replica of a city. On entry to the park, the kids are tagged electronically with a bracelet allowing parents to keep track of them, while they relax or go off shopping.

David McCorquodale, UK Head of Retail, KPMG added “the best shopping centres offer a great experience all under one dry roof.  Combining easy access, free parking, mix of retail theatre and offering, food and leisure facilities – something for all - premium shopping centres provide the epitome of an experiential destination facility, driving footfall and dwell time.” It is the shopping centres that embrace the concept of destination shopping or offering a “day out” with a touch of retail that will continue to thrive in the digital world.

Consumers crave convenience

Martin Newman, CEO, Practicology, said “the best performing centres in the UK generate high footfall by providing convenience or are a destination (for leisure as well as shopping).” So, for the busy, on-the-move consumer, convenience in terms of location is everything.

The new Grand Central development in Birmingham is a prime example of this. 40 million people use New Street station below the shopping centre annually which ensures a captive audience of travellers and commuters who are able to buy goods on-the-go, distress gift purchases, and also collect online orders.

As a result, many shopping centres work extremely well as fulfilment points for click-and-collect services in addition to providing inspiration and a showroom environment for consumers who want to complete purchases online via their own devices or in-store terminals.

However, as previously highlighted, technology and the digital marketplace also have a role to play in order to ensure the future of the shopping centre. Therefore, taking this idea a step further, shopping centres could look to harness social media feeds to allow consumers the opportunity to purchase goods or services from all the centre’s retailers and collect in one, easy to find, location.

David McCorquodale, UK Head of Retail, KPMG, suggested “centres working with retailers to provide a single retailer agnostic click-and-collect facility can work with ease and provide a frictionless experience for the consumer.”

Creating community

Community is another differentiator for some shopping centres. Many continue to observe the “death of the high-street” affecting towns all over the country, so the model of a community orientated space is one that is relevant in many places in the UK.

Thus, a shopping centre that has value retailers competing under one roof within a community; that allows shoppers to compare bargains, pick up necessities and access essential services like a post office or a job centre as well as offering leisure facilities can thrive and survive as a community hub.

Added to this, shopping centres have an edge over the internet shopping experience when it comes to addressing demographic differences in the population. For instance, older consumers with a relatively high disposable income may want a safe an environment to socialise, which could put a greater emphasis on fine dining or theatre/concert venue. Alternatively, rising property prices and population growth are likely to mean younger people are increasingly living in a more condensed environment. These consumers may be looking for a more open and green space to spend their leisure time. Shopping centres that adapt to these sorts of trends are for more likely to remain relevant to the local community and also not be so impacted by the digital age.

Dr Tim Denison, Director of Retail Intelligence, Ipsos Retail Performance, highlighted that for shopping centres “acting as a community hub, meshing dwelling, working and social spaces together, such as the soon to be completed Friars Walk development in Newport…the future looks bright.”

Changing the business model

Martin Hayward, Founder, Hayward Strategy and Futures, pointed out that as the use and access to data has become more and more prevalent, it allows retailers to better engage with consumers. “We have the opportunity” he said “with their permission, to know our customers in intimate detail. We have the opportunity to talk with our customers whenever and wherever they are.” The possibilities opened up through data are significant for shopping centre operators, but may also mean they need to consider changes to their business model to be more than just providers of real estate.

For example, data could allow for an additional service offering with the centre operator delivering real-time footfall analytics and customer insights to retailers through the use of central localisation technologies. David McCorquodale, UK Head of Retail at KPMG, further noted that “This may mean a change to the financial model as well, with retailers and shopping centre operators working on a joint physical and digital revenue model or deriving some form of ‘services’ charge for data services provided.”

As such, for the centre operators prepared to embrace the possibilities technology affords and consider evolving their business model in order to drive change, a new structure of shopping centre may emerge in today’s digital world.

Practical tips

However, despite shopping centre’s embracing the concept of destination shopping, making sure to cater for convenience or creating a sense of community, there are practicalities to consider in order to continue to thrive.

With so much to include in these spaces, shopping centres are getting increasingly bigger. So in order to prevent shoppers from being overwhelmed James Knightly, Senior UK Economist, ING, suggested “a greater use of zonal shopping so consumers don’t get “lost”. This can also allow a deepening of the relationship with the customer by offering a more entertaining and interactive experience.” For instance, sports shops in close proximity to a sports centre or a technology zone with relevant retailers, but also where manufacturers can showcase new innovations before they come to market.

In addition, Open Access Wifi, something which was once rare, is now expected in any large scale retail outlet. In a connected world where people use smart phones as part of the shopping experience, whether it be to make price comparisons or receive special offers, consumers expect to be able to get online anywhere, anytime. David McCorquodale, UK Head of Retail, KPMG, commented “Free wifi should be a given in any shopping centre, almost like toilets – digital natives can’t last without wifi!”

Therefore, shopping centres that get the basics right, truly understand what consumers want when they visit, and also harness the power of technology will have a bright future.


It is important to keep in mind that the future of shopping centre is not about competing to outdo the digital sphere – this isn’t either/or – consumers have such diverse shopping habits in today’s connected world that there is room for both and likely even more channels to engage with shoppers and entice them to spend.

In fact, new technology tools can be used to increase engagement both in and out of store so the key is remembering that technology is not a replacement for the physical, rather an enhancement. Mike Watkins, Head of Retailer and Business Insight, Nielsen UK pointed out “it is no longer just about attracting shoppers to new stores, it`s now about getting new products and services to the increasingly connected shopper. This is the role of the shopping centre in the digital world.”

As such, the RTT concluded that the digital world, through the competition created by online shopping, has not only led to the design of better shopping centres, but will be instrumental to their continued improvement. As Dr Tim Denison, Director of Retail Intelligence, Ipsos Retail Performance, said “it may seem counterintuitive, but the digital age is helping to secure the future of the shopping centre within the retail ecosystem, rather than put it under threat.”

Nevertheless, owners, retailers and management teams also need to acknowledge that the shopping centres of the 21st century actually mean being more than just a “collection of retailers”. Whether it’s embracing the idea of destination shopping, selecting locations and offering services to cater for convenience, creating a sense of community or evolving the traditional business model, shopping centres in the digital world need to extend beyond a location where shoppers simply go to make multiple transactions.

In fact, the RTT further concluded that idea of the shopping centre as we know it might become a bit of a misnomer in the future and rather than the activity of shopping being its anchor, we may see a shift such that retailing is only a constituent part of a multi-purpose, multi-activity space.


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