THE FUTURE ACCORDING TO JEAN-MARIE TRITANT - Burgundy School Of Business

THE FUTURE ACCORDING TO JEAN-MARIE TRITANT

Alumni BSB’91, President of Unibail-Rodamco-Westfield, USA

Jean-Marie Tritant, BSB alumnus from the class of 91, is currently President of Unibail-Rodamco-Westfield (URW) in the USA. In the following article he explains his perception of the changes happening in his line of business, where re-invention is required in order to compete with online trade by prioritising places of destination. The major topic of transport, responsible R&D, the social ladder, and re-doing business in a post-COVID-19 world are all issues of current and future importance tackled by Jean-Marie. 

JM TRITANT- DEMAIN

“The CAC 40-listed real estate company Unibail-Rodamco-Westfield is the world leading destination environments creator and operator, receiving an annual total of 1.2 billion visits across 12 European countries and the United States. The Group designs life centres comprising business, leisure activities, catering, residential homes and offices.  

URW also operates as a developer of towers and ambitious office buildings, mainly in Paris and at La Défense, and manages the main convention and exhibition venues in the Paris area via its subsidiary Viparis, which is co-owned with the Paris Île-de-France Chamber of Commerce and Industry.

In 2017, the company made a non-hostile takeover bid for the Westfield corporation, thereby giving birth the following year to the Group as we now know it, the leader in its industry. At that time, I was offered the opportunity to become president of the American entity with the target of working on the incorporation of two new companies and creating new ways of collaborating. This is how I now find myself in Los Angeles after 20 years within the Group, the last 5 of which I spent as Chief Operating Officer.

The emergence of places of destination

Modern-day business is thriving in three main areas: the internet, convenience, and destination. Whilst online business offers an undeniable practical advantage, any notion that physical trade is disappearing is an illusion. Your average consumer still wants to retain the option to consume or not, where, when and how they want. Online business offers practicality and low prices, and no emotional dimension.   

Convenience trading, as seen in France in the form of mini-markets and local corner shops, is synonymous with efficiency: the commodity. Places of destination, on the other hand, are sites that you can choose to visit with the whole family or with friends, where you can spend time, and go in search of a different experience, emotion, discovery, innovation, leisure activity, or shared feeling.

At Unibail-Rodamco-Westfield, we believe firmly in the future of physical trading. There has been no “retail apocalypse“, just a necessary and fundamental adaptation that the so-called COVID crisis has no doubt made even more pressing a need. As far as we are concerned, we are concentrating on large-scale, non-reproducible assets within the most fast-moving metropolises of the Northern Hemisphere. Our shopping centres are like actual destinations, located at the heart of densely populated catchment areas and well served by transport networks. At present we own around 60 flagship centres based on this model around the world.

The populations of these large towns and cities where space is at a premium and travel time longer and longer expect that our centres also act as living areas. Previously they were dedicated to trade alone but now they have a whole host of facilities to offer: green spaces, offices, coworking spaces, cultural venues, relaxation areas, health services, catering and sport, to name just a few.

In the United States, it is very clear that the days where places of destination were designed for trade alone are long gone. The highest performing shopping centres are those which offer a blend of lifestyle and trade and develop easy-to-reach areas combining residential homes and office space. Surprisingly, this vision is down to none other than Victor Green, an Austrian-born architect who 70 years ago created in Minnesota the Southdale Center, the first every shopping centre in the US and probably the world.

To my mind, these places represent a new approach to life and living: more environmentally-friendly, requiring less travel time, meeting a wide variety of needs (with a particular rise in catering and leisure services), offering the perfect combination of physical and digital business. Trading is gradually becoming part of something much bigger, making a direct contribution to living together.

When physical presence strengthens digital impact

I am even more convinced of the relevance of these places when I see the extent to which people need a social link and time spent together, which is a very natural human urge. I also believe in the complementary qualities of these places in tandem with the development of online business. 

It is time we forgot the notion that Amazon and Ali baba have somehow “disrupted” physical trading. 25 years after the foundation of Amazon, online busines represents just 12% of all trade activity, with the more mature markets in the US and the UK displaying respective penetration rates of 14% and 16%.

The actual “disruption” supposedly caused by the internet was the access given to the first clients! Before the web, the only way if accessing a client was via a shop! Nowadays it is much easier to go via the internet, hence the boom of Direct to Consumer (DTC) brands.

However, these brands are quickly realising that their growth is limited by the cost of acquiring new clients online and the near obligation of offering free delivery linked to an aggressive returns policy. Profitability has been made almost impossible to achieve. The only way of making money online is by selling dematerialised products such as music. Amazon still does not make any money via its marketplace. It’s thanks to AWS (Amazon Web Services) that the company manages to stay out of the red! 

The shop is a profitable, tried and tested formula. Consumers can see and try the product. A shop has a natural flow of traffic and instils spontaneous loyalty in its customers. The cost of acquiring a new client is 10 times lower than online and the rate of product returns 3 times lower on average.

In addition, when a shop is located within a high traffic flow area the impact on online sales is significant. The Chief Executive of Nespresso in France pointed out in an article 3 years ago in the economic press that he was going to press on with the development of his network of shops on the back of a 50% rise in sales at the company’s newly opened catchment area shops.

It is for this reason that so-called “DTC” brands in the US such as Untuckit, Warby Parker, and Casper have chosen to open new shops, offering the most economically secure way to develop a brand and establish customer loyalty.

The most successful chains today are those who manage to combine a digital strategy with a physical one: an omnichannel approach. Generally speaking, they will require less space and will focus on places with a large pulling power, meaning places of destination.

In all areas where trading is being reinvented, new concepts are being rolled out, necessary links are being created physical and digital activity, and business is prospering. It is with this vision that we have been working on extending the renovation of the Toison d’Or in Dijon.

Respectful transport, responsible R&D and the social ladder

Our Group can be viewed as a developer of infrastructures, which offers us significant influence on the communities in which we operate. The social and environmental stakes are of fundamental importance to us. 

We are fully committed to managing our impact and helping improve towns and cities. Our Better Places 2030 CSR strategy was launched in 2016 based on three main cornerstones: Better SpacesBetter Communities and Better Together.

Better Spaces comprises the aim of reducing by 50% all greenhouse gas emissions along the Group’s value chain by 2030. This encompasses emissions by our stores as well as the transportation used by our visitors in order to reach our destinations. It is not solely a matter of accounting for what we can control directly but also the entire carbon production associated with the running of our centres. 

One of our main priorities is to develop transport that is more respectful of the environment. In Dijon, we have worked in tandem with the Communauté Urbaine du Grand Dijon and the town authorities themselves in order to prioritise the development of the Toison d’Or. In Los Angeles, a second underground line is in construction and we are working in close collaboration with the city in order for it to be connected to our centre.

We are also involved in the design of an electric car, along with car manufacturers such as Renault and Tesla, by installing charging stations on our car parks, for example. And let’s not forget pedestrians and cyclists as part of our mobility action plan!

Another aspect of Better Spaces relates to building construction. We are committed to using local materials, wood above all, and we attach great importance to energy issues. 50% of the energy consumption produced by centres such as our own is due to lighting, so we are seeking to innovate architecturally and technically in order to limit the problem.  As regards office spaces, 4 years ago we completed in La Défense the first tower in Europe (and certainly the world) fitted with external loggias and opening windows as the biggest problem with a high tower is not how to heat it but how to cool it down!

Better Communities translates the desire to become a catalyst for growth for our communities and support local developments, as well as providing assistance in difficult times such as the one we are currently experiencing. Better Together involves providing colleagues the means to become drivers of change in terms of diversity and sustainable development.  

This also involves facilitating the social ladder, as we consider trade to be one of the last industries where it can be truly activated. It is for this reason that it is not uncommon for sales personnel to end up becoming managers. With this in mind, Unibail-Rodamco-Westfield has launched the URW for Jobs scheme, which provides concrete support to jobseekers in our centres by putting them in direct contact with our retailers.  

In France, for example, we have implemented a partnership with the Second Chance School. In the US we work with an NGO on the “Destined” project designed to help young students from underprivileged backgrounds obtain internships and jobs of which their incredible talents are worthy. 

We promote access to employment positions and internships in our centres that will enable chains to access local resources and vice versa. Trade is not unlocalizable, which is also one of its assets.

Re-shaping business post-COVID-19

Maybe it’s just the way I am but I am feeling fairly optimistic about the post-COVID-19 period that will arrive. There are clearly still reasons to be worried about the economy on a global scale as we will no doubt go through recessions, as the millions of newly unemployed caused by the pandemic in just a few weeks here in the US attests. The impact of the virus is enormous. 

However, if we take a medium- and long-term perspective, I am more confident. This is neither the first nor the last crisis we will have to endure. I believe that the current one will accelerate the evolution of trade to which I referred earlier, as well as the re-positioning of the sector – between the internet, convenience, and destination. The crisis provides extra confirmation of the relevance of our strategy and vision of retail in tomorrow’s world.

Some outlets will no doubt not re-open their doors, but many of those were already experiencing difficulties or in the process of going out of business. We are going to witness retailers accelerating their decision-making processes in order to focus their resources on the best shops and locations. Top-quality sites offering ease of access and the highest health and hygiene conditions will be identified.  

Much has been said about the growth of e-commerce during the crisis and for good reason as the places of destination (the core of our business model) were closed. But post-crisis, relevant physical retailing will return in force. For weeks on end people were deprived of places to meet. But the desire to do so again remains.

Who could really accept to see no-one outside of their close family for 2 or 3 months? You need only look at the pleasure and desire we derived from going to a restaurant, and exhibition or the cinema after all that time. Never has our strategic shift towards the experience, shared emotion, catering and leisure activities been more relevant than now. 

The other intriguing fall-out from this period is experimenting with distance work. It would appear to have been a success and that developing it further still is unavoidable, but without losing sight of the limitations of purely virtual exchanges. The increase in distance work will be combined with moments of face-to-face meetings, which will assume even greater importance as a result.  This change in working methods is interesting to experience. It will strengthen the collaborative aspect to corporate life, but also highlight the limitations of coworking spaces. Coworking is a way of working but not an entirely appropriate service and one we will certainly need to take into account in order to continue revamping our places of destination in the future.” 

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