In Husum in Northern Germany a “Live City Summit” on Forward-Looking Topic: “What Do Cities Need in the Digital Age?”

Husum / Hamburg, 20 November 2019. Last week, the “Live City Summit” convened in the northern German town of Husum as a political event to mark the opening of the THEO shopping centre, with around 120 guests in attendance. It centred on the question of “What Do Cities Need in the Digital Age?” and included key notes by Dr. Bernd Buchholz (Minister of Economic Affairs of the Federal State of Schleswig Holstein), Peter Cohrs (a THEO investor), Martin Mörl (Prelios Immobilien Management), Dr. Daniel Terberger (Katag AG), Ekkehard Voss (Tchoban Voss Architekten) and Christoph Werner (dm drugstore multiple). The evening was hosted by Stefan Kläsener (of the publishing house Schleswig-Holsteinischer Zeitungsverlag) and Uwe Seidel (of the consulting firm Dr. Lademann und Partner).

The discussion yielded the following takeaways: There is growing pressure on retail businesses and inner cities to change. Well-positioned mid-size cities such as Husum benefit from the development. The trend is driven by digitisation as well as by growth in the areas of mobility, urbanisation, individualisation as well as by technological progress, tourism and demographic change. Attendees also agreed that brick-and-mortar retailing should do more to exploit its intrinsic strengths, and take bespoke, innovative and, above all, bold approaches to do so. Locations need to keep developing: from a shopping destination into a third place where people come to enjoy a stimulating mix of shopping, gastronomy, culture and leisure options.

Dr. Bernd Buchholz, Minister of Economic Affairs of the State of Schleswig Holstein, added: “Husum is an example for successful conversion and revitalisation that is without analogy in Schleswig-Holstein so far. Especially the subject of conversions and infrastructure presents an opportunity for municipal politics to get things moving. The state level should dedicate itself to the task of reviewing certain regional development plans. Product range restrictions are outdated, not least because the true competition lies elsewhere. We in Europe should no longer allow certain players on the European market to gain advantages by paying virtually no taxes – unlike local retailers. It is an intolerable situation.” Dr. Buchholz went on to say: “However, the primary responsibility simply rests with the companies themselves. We need more of the bold entrepreneurs who seize the opportunity and position retailing as an experience the way it has been impressively accomplished here in Husum.”

Christoph Werner, CEO of the dm drugstore chain with its 62,000 employees in around 3,600 outlets across Europe, elaborated: “In Munich, we are currently testing a click & collect system that lets customers pick up the goods they ordered via the dm app in a physical store within four hours. It is, in any case, not the customer but the industry that differentiates between online and offline. Digitisation is not an end in itself; shopping patterns are no longer what they used to be. Certain well-known players may serve as examples for consistent customer orientation. To us as retailers, it is important that customers have the possibility to screen our product spectrum. It is then up to them where and how they shop for the offered goods, be it online or in-store. Retailers are generally well advised to go where the customers wish to be, and to experiment. The companies that will prevail over competitors are those which know what to make of technological changes and adapt their offers accordingly. We need to keep evolving in ways that ensures our continued appeal to our customer base.”

Dr. Daniel Terberger, CEO of Katag AG, a company that was formed in 1923 and that, with 350 partner companies, is Europe’s largest fashion service provider today, added: “We offer mid-market companies the digital tools they need to network their inventories among themselves, on the one hand, and with online platforms, on the other hand. The response of many retailers can be quite emotional. Some say, ‘you cannot do that,’ whereas others rejoice over the increase in footfall and the growth in sales because here is a chance to get rid of slow-selling items. That being said, there are no patent recipes in retailing. So many differences in purchasing power, cityscape and a retailer’s equity base come into play. What matters is to have appropriate concepts, make the right decisions and muster the courage to implement them. Given the right parameters, entrepreneurship has every opportunity to prosper in Germany. It is of the essence to be willing to enter into strategic partnerships, to imagine new types of use and to appraise each situation on the ground. Today’s retailers have to be entertainers and offer experiences.”

Ekkehard Voss, Managing Partner at the architectural firm of Tchoban Voss Architekten, said: “Husum is, of course, exceptional because of its high centrality and attractiveness. What makes the THEO mall work so well is its central location and the urban-planning idea of creating an axis between Grossstrasse and Schlossstrasse, although it is now the operators’ job to fill the mall with life. Maximum centrality is key when seeking to restore the vitality of inner cities. As builder and developer, you should aim for centrality, seek the regional focus and integrate projects into their urban context. Refurbishments, which represent the next wave, offer amazing opportunities for cities.” Voss went on to say: “Architecture calls for integration. Urban planners need to brace themselves for intensifying discussions about the best ways to change retail properties to ensure their long-term survival. Some discussions, like those about heritage protection, are not necessarily an impediment to change. Rather, they stimulate the exchange about the criteria that come into play when building in a city, and increase local acceptance of architecture. It all hinges on creative change and creative ideas that should not solely come from architects and builders.”

Martin Mörl, Managing Director of the commercial and retail real estate specialist Prelios Immobilien Management in Hamburg, summarised: “Digitisation does not imply bleak prospects for brick-and-mortar retailing. On the contrary: People’s need for social interaction, unique ambience and high service quality is greater than ever now. It is the job of in-store retailing to meet this need in its very own ways and to channel it by introducing innovative concepts. Both new and established projects must try much harder to take an integrative approach to high-street retailing and inner cities. This has lately turned integration, networking, gastronomy, service amenities and profiling into key areas of activity for developers, operators and owners of retail properties, in addition to aspects of location, size, atmosphere and product line diversity.”

He added that it will not do to connect online- with offline-retailing and leave it at that. Physical retailers and restaurateurs should work out up-to-date customer-oriented concepts in order to retain their appeal among customers. Refurbishments and modernisations will dominate the discussion in the foreseeable future, because the retail real estate market is largely saturated. “While promising and functioning concepts have been identified for most retail sites now, converting venues in inferior locations to serve different types of use is no longer taboo. Naturally, the parameters must be structured by the political and administrative stakeholders in ways that make it possible to keep inner cities and high-street retailing profitable and viable,” Mörl went on to say.

Peter Cohrs, co-investor of the THEO shopping centre in Husum and owner of the time-honoured department store CJ Schmidt, had this to say at the “Live City Summit”: “Digitisation is a quiet but forceful revolution that affects all levels of public and private life. The key question in this context is: What can and should cities do going forward in order to remain the place where people congregate and trade? We as retailers have to fulfil the most ardent task in this context, which is to present the optimal product for a given customer with conviction and an element of surprise in ever nicer and better ways. To make it all work smoothly, we should complement it with digital options.” Cohrs went on: “The in-store retail sector has to fight for fair opportunity today. Pedestrianised town centres, at least outside the metropolises, are not the solution. It would be much more helpful, for instance, if available urban development funding was not poured into concrete and steel, but invested in digital structures instead. The main theme in our day and age is city and location marketing for towns and municipalities.”

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Prelios Immobilien Management GmbH
Based in Hamburg, Prelios Immobilien Management GmbH specialises in retail and commercial real estate. Prelios develops and manages shopping centres, office schemes, hotels, commercial buildings, multi-story car parks and department stores as well as mixed-use properties, retail warehouse parks and urban quarters. With activities across Germany, Prelios offers owners and investors integrated services as a one-stop shop along with location-specific solutions and custom concepts. Prelios has more than 1 million square metres of lettable area and c. 2.2 billion euros worth of real estate assets under management.