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Alexander Otto: "The concern of downtown dealers is justified"

2019-09-02T16:38:00.820Z

HafenCity is home to the city's largest mall. Alexander Otto, boss of the market leader ECE, about the new competition



ZEIT ONLINE: Mr. Otto, your company ECE includes more than 100 shopping centers throughout Germany, including several in Hamburg. Now your competitor Unibail-Rodamco-Westfield is building the largest shopping center the city has ever seen, right in the middle of HafenCity. Does that worry you?

Alexander Otto: That does not worry us so much, because our centers are deeply rooted in the city districts or, like the Europa Passage, are in the best running position. We therefore fear no excessive redistribution of revenues.

Alexander Otto - CEO of ECE, the market leader for shopping centers © ECE

ZEIT ONLINE: Most downtown dealers see it differently. A study commissioned by the city also forecasts a redistribution of almost ten percent in the fashion and shoes sector for its largest and most modern shopping center, the Alstertal shopping center.

Otto: The redistribution is very situation-dependent. At our shopping centers, we therefore rely on places that are very well connected to public transport and constitute a central point of contact in their catchment area. The concern of downtown dealers is absolutely justified. If you are not in the main shopping streets, you have to expect sales losses. For the peripheral areas this will certainly be an additional challenge. I am not worried about the city center as a whole, but the topic of shopping there will probably have a slightly lower significance for future developments than, for example, offices, apartments or restaurants.

ZEIT ONLINE: Do you think the new shopping center will be a success?

Otto: It's not my place to judge that. At ECE we made the decision not to develop new shopping centers in Germany, we would rather continue to improve our existing centers and ensure that there is the best possible customer service. We will only open a center in Singen, on the Swiss border, next year. We believe in this location because there is no shopping center and many Swiss go to Germany for shopping. Almost all centers on the Swiss border work extremely well. Apart from that, the time for major new developments in Germany is over.

ZEIT ONLINE: Why?

Otto: In Germany, it is currently quite difficult to re-let the space in shopping centers. Many retailers are struggling with declines in sales due to e-commerce and are trying to maintain their existing locations, where they have employed their staff and invested a lot of money in shop fitting. To put it mildly, most dealers in Germany are currently not on an expansion course. Therefore, no matter how great the project, it is currently quite difficult to establish a new center in the German market.

ZEIT ONLINE: How do you counter this?

Otto: The most important thing is to improve the product shopping center itself. For example, we try to locate first-class restaurants, we invest a lot in service to make it really easy and convenient, and we work on many details: from the arrival in the car park to the lounge areas in the mall to the signage in and around the center. We also want to bring the concepts into our centers, which are still successful in the digital age. This includes catering and entertainment, but also some fashion chains such as TK Maxx run very well. At the same time our new digital initiative is running, which is the key for us. The fact that it is possible to check with a smartphone whether a product is in stock in one of our shopping centers is a one-time service and an investment in the future.

ZEIT ONLINE : At a "digital mall" tinkering as well as any shopping center operator.

Otto: Of course everyone has a kind of digital initiative, but often these are just gimmicks that offer no real benefit to the customers. We also have something like that, for example a parking space finder. You scan where you parked and the phone then leads you back to the car. Many use it, but it does not decide the success or failure of our shopping centers. But an application with which the actually available assortments of a shopping center can be searched live, has nobody. Many others claim this, but then only pass on the website of the respective business.

ZEIT ONLINE: What distinguishes ECE and the new Hamburg player Unibail-Rodamco-Westfield?

Otto: Basically, a lot is similar. Unibail also invests a lot in the quality of its centers. Therefore, I am sure that the new center in HafenCity will be architecturally quite spectacular. We are both investing in other uses around the center. Of course, it's great to have a shopping center embedded in a neighborhood like Überseequartier, where there are hotels, apartments and the like. We are currently analyzing all of our existing shopping centers and are looking into: Where can we locate other uses other than trade? In the Ring Center in Berlin we now have a hotel with 150 rooms on the top parking deck, something we are also testing for other locations. The same applies to apartments. We already have some concrete projects in Greater Hamburg and Berlin. If it is possible to build apartments on or around the center, this is perfect because it brings its customers directly to the site.

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ZEIT ONLINE: Just like in southern Überseequartier. At the time, you were also in the bidding competition - would you have liked to build it?

Otto: That was in the first trial in 2005 and another time, the online trade did not yet have the meaning it has today. The selected consortium failed then too. In the second round we did not force an application any more.

ZEIT ONLINE: Because the shopping center business is not going so well?

Otto: Last year in our centers in Germany we had a decrease in visitors of about one percent per year, the turnover was stable in 2018 and this year is an increase of one percent. In other countries, we are still growing significantly, for example in Hungary or the Czech Republic, where demand is very high. The development outside of the shopping center area is particularly dynamic, as we are planning and investing a great deal right now. After all, we are also a major developer of hotel, office and logistics projects in Germany, and are also investing in residential neighborhoods. In all these segments, we benefit from a very good real estate market. The focus of our new developments is therefore shifting away from shopping centers to these other uses.

Elbvertiefung - the daily newsletter for Hamburg

Every day know what's important in Hamburg. Relevant and concise. Personally and pointedly. Elbvertiefung is the new daily newsletter of the ZEIT for Hamburg.

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ZEIT ONLINE: What will make the success of a shopping center in the future?

Otto: The same as now: the right tenants. You have to offer the concepts that customers want. The greatest car park or entertainment program will not help if people find the shops in the center boring. The time of the simple ideas that applied: the bigger, the better, is definitely over.

Source: zeit

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