Just ahead of MAPIC, Retail Property Analyst got the chance to talk to Christophe Cuvillier, CEO of Unibail-Rodmaco-Westfield.
The following is a snapshot of what he told us about the future of the business.
Obviously the merger of Unibail-Rodamco and Westfield was huge news. Where is the business up to in terms of realigning the portfolio and determining its next steps?
CC: The Unibail-Rodamco-Westfield Group was officially created on June 7. Our teams are working hard on the integration and are committed to delivering the synergies announced earlier this year. We have already made significant progress: the Group’s Senior Management Team has been appointed, the new corporate identity implemented and the organization and target model defined.
We are continuing to work on the combined operations, organisation, and capital structure of the Group. At the end of H1, we had already achieved cost synergies ahead of what was originally budgeted. We expect the revenue synergies to be realised in the next three to five years as planned as we take the best of each entity to bring an unparalleled offer to our retailers and customers under the Westfield brand.
Do you feel that consolidation of shopping centre companies around the world is inevitable in the new market place? Does scale make more sense in a period with so many well-known challenges?
CC: We need to be very careful when looking at consolidation as situations can be very different. I do not believe that scale in itself is a sufficient answer to the challenges faced by the industry.
What shopping centre developers and operators need to have is first and foremost a solid strategy and execute it properly. Ours is to concentrate on the leading assets in the world’s most dynamic cities, to differentiate in offering the best customer experience and to innovate to anticipate the trends that are shaping the retail industry. If you look at the Westfield acquisition, the goal was not to grow for the sake of growing, but to acquire a company with an exceptional talent pool, the best brand in the industry, and a selection of outstanding shopping centres in the wealthiest cities in the US and the UK. In this particular context, growing size added value to our shareholders and retailers.
Shopping centres are developed over very long durations at enormous cost. How has the way capital is deployed (geographically and in terms of what money is directed towards) changed and are there any fresh considerations?
CC: We focus on the most dynamic and wealthiest catchment areas in Europe and the US, and carefully select the places where we establish. Public transportation connectivity matters more and more in the choice of new locations for developments, as our Mall of Scandinavia and Überseequartier developments illustrate. Beyond this, we focus on the right sizing of the new projects and on the densification of our existing sites, for which we have room for multi-use developments. Mixed-use is a key evolution, and we have a huge competitive advantage as we already have a mixed DNA, with retail, offices and convention and exhibition venues.
We are convinced that the future is about collaboration between players of various size and operating in different sectors. We need to bring on board the most successful partners and source new solutions that can complement the ones we develop internally. This is what we do through our URWLink platform which identifies new, innovative solutions and partners and drives our collaboration with them. For example, we collaborate with Too Good To Go, a French start-up specialised in fighting food waste through an app connecting restaurants and customers.
In addition, legacy – and even new – categories are experiencing challenges. Department stores are going through a very tough time in Europe and the US, some F&B chains appear to have over extended. So what does this mean for the configuration of both new centres and the possible realignment of existing ones?
CC: The whole retail value chain is undergoing radical changes at an unforeseen pace, notably as a result of the rise of digital, but not only. Many brands have failed to reinvent themselves, with store concepts that have become – let’s admit it – pretty dull, leading in some cases to bankruptcies. But retail is not dying: only boring retail is! Retailers who provide an exceptional customer experience and embrace the omni-channel revolution to satisfy customer expectations are performing very well. Our mission is to help them continue to do so, and to adapt our centres to new trends.
Today, what consumers expect is not only to shop. Experience is the keyword, and entertainment and dining offers are a strong part of it. We were the first to open Tesla stores in shopping centres in the United-Kingdom, in France and in Sweden. We just opened at Parly 2 near Paris a first e-Mercedes store, and this is just the beginning. Let’s take the example of food: at the beginning of 2000, only 5% of our European shopping centres GLA was dedicated to dining. It now represents between 10 and 15% and will keep rising.
We need to continuously reinvent our shopping centres. They are much more than places just to shop and eat – they are places to meet, connect, shop, work, and share memorable experiences! If you take our Los Angeles Century City shopping centre, one of our major recent redevelopments, it now features an open-air garden crafted in collaboration with lifestyle designers, an exceptional food offering, and an atrium where you can organise concerts and events, all while leveraging the best technology to enhance our visitors’ experience.
Finally, leadership – what does it mean in such a dynamic period and how is the acquisition of talent evolving?
CC: Leadership means developing a vision, sharing it and pushing it forward with the support of every member of the team. A dynamic period implies a dynamic attitude, forward thinking and proactive actions. All colleagues at Unibail-Rodamco-Westfield share the same passion for excellence, the same passion for the product, and we all know that the “product” (or service) of tomorrow will not be the one of today. Innovation requires drawing on diversity of thoughts, backgrounds and experience, and the ability to attract and develop very different sets of profiles, combining the best of analytical and creative people.
