a decade of change in italy’s shopping centers
TRANSCRIPT
FEATURES
INTERNATIONAL COUNCIL OF SHOPPING CENTERS 1 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
Introduction
Over the last several years, Italy’s economic difficulties
(which are intertwined with its sovereign debt crisis) have
negatively affected the consumer and retail real-estate
development environments that shape the nation’s
shopping-center industry.
According to the International Monetary Fund (IMF),
2012 represented one of Italy’s worst years for its
economy. As shown in Table 6-1, Italy’s real GDP tumbled
by 2.4% in 2012 and the IMF projects that economic
activity will shrink by another 1.8% in 2013 before a
meager 0.7% recovery in 2014.
The 2013 economic landscape was complicated by
political uncertainty in the early part of the year. In
February, the parliamentary elections were inconclusive,
ultimately resulting in a new government, which was not
formed until late April, when Enrico Letta’s new left-right
coalition government took charge from Mario Monti.
Observers hoped that the new prime minister’s
government would implement much-needed structural
reforms to stimulate economic growth and to address
labor and taxation issues. However, Letta’s government
already is struggling as the Bank of Italy announced in
mid-July that it expects the unemployment rate to be
close to 13% in 2014 and it sees further downside risks to
Italy’s economy. The Bank of Italy’s July 2013 projections
for its economy anticipates household consumption will
contract by 2.3% in 2013 following a drop of 4.3% in
2012. The Bank’s estimate for 2014 household
consumption is essentially flat (-0.1%).
Admittedly, severe problems linger in Italy. However, it
is important not to lose sight of the country’s long-term
prospects. Italy boasted a 2012 per capita GDP at
purchasing power parity (PPP) of $30,100 (IMF, World
Economic Outlook, April 2013), just slightly below the
average for the European Union. Moreover, with
approximately 59.5 million inhabitants distributed among
20 regions, it continues to be on the radar screen of
retailers and developers who want to tap into a base of
sophisticated consumers in one of the world’s most
industrialized countries.
Overview of Italian Shopping Centers
Italy has nearly 1,300 modern retail destinations1
totaling about 18.4 million square meters (sq m) of gross
leasable area (GLA). The existing stock is composed
mainly of small shopping centers (56% of the total) with
an overall average of 14,234 sq m of GLA and 31 shops.
Retail parks, which account for 14% of the total shopping-
A Decade of Change in Italy’s
Shopping Centers
New Retail Forms Take Shape, Even in Troubled Economy
FRANCESCO TERRA*
Abstract: The Italian shopping-center industry witnessed impressive growth during the past 10 years. The current
economic crisis, while slowing the pipeline of new centers, has not diminished the appetite of investors for expanding or
refurbishing retail properties. New forms of retail destination are evolving, while the growth of e-commerce has not yet
threatened the performance of shopping centers.
Table 6-1
Economic Outlook for the Group of
Eight (G8) Industrialized Nations*
Key Economies
Canada
Germany 3.1 0.9 0.3 1.3
France 2.0 0.0 -0.2 0.8
Italy 0.4 -2.4 -1.8 0.7
Spain 0.4 -1.4 -1.6 0.0
Japan -0.6 1.9 2.0 1.2
United Kingdom 1.0 0.3 0.9 1.5
United States 1.8 2.2 1.7 2.7
2.5% 1.7% 1.7% 2.2%
2011 2012 2013F 2014F
* Year/Year Annual Percent Change in Real Gross Domestic Product
F= Forecast
Source: International Monetary Fund, World Economic Outlook, June
2013 Update
* Manager, Market Intelligence, Sonae Sierra 1 “Modern retail destinations” include factory outlets, retail parks, leisure centers, lifestyle centers, theme parks, etc.
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INTERNATIONAL COUNCIL OF SHOPPING CENTERS 2 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
center GLA, are concentrated in the North (57%).2 Three
centers that can be classified as very large (i.e., with a
GLA larger than 80,001 sq m) are in the Center and
South, while most large shopping centers (with a GLA
ranging from 40,001 and 80,000 sq m) are in the North
(22 out of 35 total large schemes). (See Table 6-2.)
Nearly half (46%) of the total resident population lives
in the North, where 54% of total national consumption
takes place. Considering the total stock of existing GLA,
the commercial density3 in Italy is equal to 310 sq m per
thousand inhabitants. Density is significantly higher in the
northern (387 sq m) rather than the southern (229 sq m)
provinces. (See Table 6-3.)
If stand-alone stores next to a mall are counted, the
largest Italian shopping center is Etanapolis in Sicily, with
102,000 sq m of GLA; excluding this adjacent freestanding
space, the largest centers are Roma Est (98,000 sq m)
and Porta di Roma (97,000 sq m), both in the nation’s
capital.4 However, if centers are ranked by the number of
retailers, the largest malls are Porta Di Roma (241 shops5)
and Roma Est (210 shops). (See Table 6-4.)
According to shopping-center developer Sonae Sierra,
nearly all Italian shopping centers6 are anchored by
grocery operators of different sizes. At the same time,
leisure components such as cinemas, bowling, fitness
clubs or organized playgrounds are becoming increasingly
present. However, the number of shopping centers that
currently host a leisure tenant is still quite low (169 out of
1,071 schemes), representing 15.7% of the total.
The grocery format most represented in Italian
shopping centers is the hypermarket, with a sales area
larger than 2,500 sq m. More than four out of five (85%)
shopping centers larger than 5,000 sq m of GLA contain a
hypermarket. Shopping centers that opened in the past 10
years tend to be larger than their predecessors, boasting a
growing number of specialized tenants. This trend has
affected especially large and very large hypermarkets,
which started to witness losses in non-food related sales.
Table 6-2
Number of Shopping Centers, Factory Outlets and Retail Parks by Macro Region, 2013
Source: UrbiStat (www.urbistat.com)
Table 6-3
Gross Leasable Area (GLA) and Densities by Macro Region, 2013
Count Euros
GLA per Thousand
Inhabitants
(Square Meters)
Consumption
per Square
Meter of GLA
North 27,194,765 €523,291,001,272 10,533,968 387 €49,677
Center 11,591,705 19.5 196,042,107,784 20.4 3,175,794 274 61,730
South and Island 20,640,762 34.7 241,818,274,834 25.2 4,730,454 229 51,119
Total 59,427,232 100.0 961,151,383,891 100.0 18,440,216 310 52,123
45.8% 54.4%
Macro Region
Commercial Density
Total GLA
(Square Meters)Share of
Total
Population
Share of
Total
Total Consumption
Source: UrbiStat (www.urbistat.com)
2 Data provided by UrbiStat, a leading European retail software house. For comparative purposes, Italian regions are collected into larger macro
regions throughout this article. These geographic divisions are formally recognized by the Italian national institute of statistics (ISTAT). For simplicity
here, the Northeast and Northwest macro regions and South and Island macro regions are aggregated. This geo-aggregation is widely accepted in
Italy. The macro regions are centered around the following key cities: Milano (Milan), Segrate, Venezia (Venice), Genoa, Ravenna, Villese, Brescia,
Vinovo, Parma, Verona, Bolzano, Sarzana, Castelli Calepio, Jesolo, in the North; Roma (Rome), Firenze (Florence), Bologna and Barberino di
Mugello, in the Center; and Bari, Naples, Partinico, Reggio Calabria and Salerno, in the South. 3 The commercial density, or per-capita space, is calculated based on the total stock of GLA divided by total resident population. 4 UrbiStat. 5 According to Corio’s website. 6 97%, excluding retail parks and factory outlets.
Less Than
15,00015,001 < 40,000 40,001 < 80,000
Greater Than
80,001
North 398 181 22 0 15 112 728
Center 161 46 4 2 9 28 250
South and Island 153 94 9 1 8 34 299
Format Total 712 321 35 3 32 174 1,277
Format Share of National Total 56% 25% 3% 0% 3% 14% 100%
TotalMacro Region
Traditional Shopping Centers (Square Meters)Factory Outlet
Centers
Retail
Parks
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The Industry State of the Art
Hypermarket sales began to decline in Italian shopping
centers long before the more recent intense phase of the
economic crisis, according to the quarterly sales index7
elaborated by the Italian Council of Shopping Centers
(Consiglio Nazionale dei Centri Commerciali, or CNCC).
During 2011, quarterly sales in the sampled hypermarkets
declined by 6%; traditional shopping centers, by 3%.
During 2012, however, malls’ quarterly sales declined at
approximately the same pace as those of hypermarkets.
Traffic in Italian shopping centers decreased in 2012 by
a monthly average of 1.7% compared to 2011. This
footfall indicator8 shows that Italian consumers cut the
number of trips to shopping centers; however, it does not
consider traffic in other emerging retail formats, such as
retail parks and factory outlets, as well as shopping
centers smaller than 20,000 sq m of GLA.
New GLA delivered to the Italian market decreased
considerably after the economic crisis hit the country in
2009. Approximately 131,000 sq m of GLA are expected
Macro Region Municipality Name
Gross Leasable
Area (Square
Meters)
Number of
Shops
South and Island Belpasso Etnapolis 102,000 130
Center Roma Romaest 98,000 220
Center Roma Porta Di Roma 97,000 241
Center Campi Bisenzio I Gigli 82,787 124
North Grugliasco Shopville Le Gru 78,500 165
North Orio Al Serio Oriocenter 75,204 184
North Busnago Il Globo 71,500 155
North Martignacco Citta' Fiera 70,800 186
South and Island Marcianise Campania 68,800 200
South and Island Nola Vulcano Buono 68,600 159
Center Fiumicino Leonardo 61,690 209
North Marcon Valecenter 59,839 130
North Cortenuova Le Acciaierie 57,100 152
South and Island Misterbianco Centro Sicilia 56,000 140
South and Island Palermo Conca D'Oro 54,890 100
North Carugate Carosello 52,842 130
7 Based on a sample including 300 shopping centers and some 3 million sq m of GLA. 8 The Italian Footfall Index, compiled by Experian Footfall, is based on data collected in 30% of all shopping centers larger than 20,000 sq m of GLA
and located throughout the Italian peninsula, including the two major islands.
Table 6-4
Largest Italian Shopping Centers, 2013
* Includes traditional shopping centers, retail parks and factory outlets. F=Forecast
Source: UrbiStat (www.urbistat.com)
Macro Region 2008 2009 2010 2011 2012 2013F
North 504,392 558,942 226,320 382,886 111,400 97,100
Center 182,975 130,474 64,178 36,438 20,758 17,625
South and Island 214,534 274,219 255,174 348,588 162,218 16,246
Total 903,909 965,644 547,682 769,923 296,388 130,971
Table 6-5
New GLA Added by Macro Regions (Millions of Square Meters)*
Source: UrbiStat (www.urbistat.com)
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INTERNATIONAL COUNCIL OF SHOPPING CENTERS 4 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
to come onstream in 2013, representing nine newly
opened centers. (See Table 6-5.)
The Italian pipeline of new shopping centers is difficult
to estimate due to several announced projects that were
either canceled or postponed due to financing difficulties.
Most announced projects are in the North or Rome.
Foreign investors remain willing to develop large or very
large shopping centers, including new entrants such as
InterIkea and Westfield. By the end of 2013, InterIkea
will open the first IKEA-anchored shopping center in Italy,
in the Northeastern region. The company has two more
large projects in the pipeline. Westfield partnered with
local investor Percassi to develop Westfield Milan. The
project, just outside Italy’s fashion capital in Segrate, next
to Linate Airport, showcases some 170,000 sq m of GLA
with more than 500 shops for a total investment of more
than €1 billion,9 as seen in Table 6-6.
Trends in the Italian Shopping Center Industry
Expansion and Refurbishments
Although the pipeline of new shopping centers was
significantly reduced following the recession, local and
institutional investors are still willing to strengthen their
presence by expanding or refurbishing their existing
assets, as seen in Table 6-7.
According to Sonae Sierra, 149 expansions of shopping
centers took place in Italy during the last 10 years.
Moreover, 69 expansions or refurbishments are planned to
be delivered in the next two to three years, adding some
300,000 sq m of new GLA to the existing stock.
Among these expansions, the most significant is taking
place at Citta’ Fiera, a shopping center in the Northeastern
region, which is jointly owned by Corio and local developer
Bardelli Group, boasting about 94,500 sq m of GLA and
generating an annual traffic of 6 million visits.10 Among
other destinations,11 the nearly 80,000-sq-m expansion
project includes a fashion outlet of some 30,000 sq m and
a large area entirely dedicated to home furnishing.
One example of successful expansion and refurbishment
is Valecenter (see Figure 6-1), a shopping and leisure
center in the Northeastern region in Marcon, a suburb of
Venice. The shopping center, built in 1993 and acquired by
Sonae Sierra in 2005, comprises about 40,000 sq m of
GLA and 80 shops. Its 3,500-sq m expansion in 2007
added approximately 40 tenants, bringing the total to 124.
The €37-million project created 363 new jobs. The center’s
performance improved dramatically both in terms of traffic
and sales, leading to the prestigious ICSC European
Table 6-6
Shopping Centers in the Announced Italian Pipeline
Macro Region Municipality Name
Gross Leasable
Area (Square
Meters)
Year
North Villesse Villesse Shopping 90,000 2013
Center Roma Laurenino 60,500 2014
North Vinovo Mondojuve 58,000 2014
North Parma Parma Urban District 49,600 2014
North Castelli Calepio Castelli Calepio 39,347 2014
North Venezia Marghera 38,800 2014
North Jesolo Jesolo Magica 38,000 2014
South and Island Bari Barinova Shopping Center 37,545 2014
South and Island Salerno Le Cotoniere 31,732 2014
North Segrate Westfield Milan 170,000 2015
North Brescia Brescia Shopping 85,000 2015
Center Roma Aurelia 50,000 2015
North Verona Verona Porta Sud 42,385 2015
North Milano Cascina Merlata 40,000 2015
South and Island Partinico Partynico 35,711 2015
Center Roma Pescaccio Corio 220,000 2017
Source: UrbiStat (www.urbistat.com)
9 Westfield. 10 Corio. 11 Data on expansion of Città Fiera from the center’s Web site.
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INTERNATIONAL COUNCIL OF SHOPPING CENTERS 5 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
Shopping Center Award in 2010 in the category
“Refurbishment and Extension.”12
Factory Outlets and Retail Parks
Beside expansions and refurbishments, Italy’s
shopping-center industry witnessed in the last 10 years
the rapid development of factory outlets and retail parks
as new forms of retail destinations. Factory outlets and
retail parks help to maximize consumer time and money
through clear value propositions.
Similar to their counterparts in North America, factory
outlets in Italy are usually developed in a “village style”
and located well outside urban areas near highway exits.
Their retail proposition is to sell fashionable and luxury
brands at discounted prices. Moreover, they offer
organized entertainment, transforming the visit into a
family gathering and weekend destination.
The oldest of Italy’s 32 factory outlets, Designer Outlet
Serravalle, opened in 2000. Developed by McArthur Glen,
it is currently owned by Henderson Global Investors. The
outlet forms, together with an adjacent shopping center in
the Northwestern region, one of the largest aggregated
retail destinations in Italy with nearly 100,000 sq m of
GLA.
Italy’s 124 retail parks (the European counterpart to
North American power centers) are open-air structures.
While initially occupied by large, specialized category
killers, they are now often located near shopping centers
complementing their offer or integrated with eating
facilities in order to make visitors stay longer and
stimulate synergies with other activities.
Among Italy’s retail parks with a GLA larger than 5,000
sq m, the oldest is Centro Navile. Opened in 2003 with a
GLA of 23,300 sq m, this retail park in the Northeastern
region is owned by Henderson Global Investors and
features seven large, specialized tenants and two
restaurants.
Table 6-7
Renovations and/or Expansions in the Announced Italian Pipeline
Source: UrbiStat (www.urbistat.com)
12 See “ICSC European Shopping Centre Awards 2010,” retrieved June 11, 2013.
Macro Region Municipality Name
Additional Gross
Leasable Area
(Square Meters)
Opening
South and Island Reggio Calabria Porto Bolaro 13,700 2013
North Sarzana Centroluna 9,600 2013
North Venezia Auchan Mestre 16,500 2013
North Milano Bicocca Village 9,000 2013
Center Barberino Di Mugello Barberino Designer Outlet 6,000 2013
North Bolzano Twenty 13,000 2014
North Bussolengo Auchan Bussolengo 9,827 2014
North Vimodrone Auchan Vimodrone 2,682 2014
North Ravenna Esp 17,000 2014
South and Island San Giovanni Teatino Centro D'Abruzzo 3,006 2014
North Roncadelle Le Rondinelle 15,000 2015
North Savignano Sul Rubicone Romagna Center 7,787 2015
North Bassano Del Grappa Il Grifone Shopping Center 12,100 2015
North Martignacco Citta' Fiera 82,000 2016
Figure 6-1
Valecenter, Exterior View
Source: Sonae Sierra. Used with permission.
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Airports and Railway Stations
Shopping centers, factory outlets and retail parks
represent the main shopping destinations in Italy. Their
total sales (grocery excluded) account for €33.3 billion or
2.1% of the national GDP.13 However, retailers are also
increasingly expanding in unconventional places such as
airports and rail stations.
The largest retail space in an Italian airport is at the
Leonardo da Vinci International Airport, or Rome Fiumicino
Airport. Its nearly 25,000 sq m of GLA consists of 140
units and 30 restaurants. In 2012, shops at the airport—
the nation’s largest—were visited by 41 million
passengers, while recording €25 million in cumulative
purchases.14
The largest retail space in an Italian railway station,
Milan’s Centrale, comprises 80 shops and restaurants. It
receives approximately 120 million passengers on an
annual basis.15
Evolution of e-Commerce
Despite the ongoing economic crisis, Italian consumers
are finding alternative ways to maximize time and money.
In addition to traditional stores, they are increasingly
shopping online, though mainly within certain
merchandising categories.
According to Casaleggio Associati,16 the amount of
online retail sales in 2012 was €21.1 billion, up 12% from
2011. However, that increase was smaller than the growth
rates registered in 2011 or in the previous years. (See
Chart 6-1.) This is clearly a sign that online sales, not just
traditional retail sales, are influenced by the overall
macroeconomic environment.
Furthermore, Italian online sales are strongly influenced
by purchases done for traveling and gambling, accounting
for 73.5% of total online retail sales, according to
Casaleggio Associati. That statistic demonstrates that
Italians still prefer to shop in traditional stores for some
retail items such as fashion apparel, grocery, home
furnishing and health/personal care.
What Lies Ahead
During the past 10 years, Italy witnessed an increasing
presence of medium- and large-sized shopping centers,
lifting its commercial density closer to the European
average. Still, most existing shopping centers tend to be
smaller, anchored by a grocery store and lacking any sort
of leisure component, including modern food courts.
Italy shows potential for additional shopping centers,
especially in its more affluent central region. However, the
current adverse macroeconomic environment has limited
the pipeline of new projects. Large and very large centers
are still being constructed by national and international
developers, especially in the North, which has attracted
the interest of institutional investors.
The economic crisis that began during 2008 has
hampered Italian purchasing power and caused a steep
decline in consumer confidence. The results of this
negative environment are visible in the 2012 shopping-
center sales and footfall indexes elaborated by the CNCC
and Experian Footfall, with overall sales decreasing by
12%.
Nevertheless, investors are reinventing their assets.
Expansions and/or refurbishments will continue to
strengthen or create new competitive advantages through
adding leisure activities, creating or enhancing food courts,
downsizing underperforming hypermarkets, and
incorporating new brands or category killers that are
entering or expanding in the Italian market.
Even amid the current crisis, new formats such as retail
parks, factory outlets, airports and railway stations’
galleries all provide consumers with the best value in the
most convenient destinations.
Digitization provides always connected, increasingly
savvy consumers with tools to investigate products and
services before purchases. The challenge for the industry
is to leverage these new tools and to create the most
convenient and exciting destination for consumers to shop
in the mall.
Chart 6-1
E-Commerce Sales in Italy, 2004-2012
Source: Casaleggio Associati
13 “Shopping Centres, Retail Parks and Factory Outlets—Italy 2012,” UrbiStat, retrieved August 2, 2013. 14 Data from Aeroporti di Roma, retrieved August 2, 2013. 15 Data from GrandiStazioni, retrieved August 2, 2013. 16 Casaleggio Associati, “E-commerce in Italia 2013 – I trend dell’e-commerce e le opportunità del mobile.”
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INTERNATIONAL COUNCIL OF SHOPPING CENTERS 7 RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
Francesco Terra is a manager in the Market Intelligence department of Sonae Sierra, a leading
international shopping-center developer with over 70 assets under management with an open-market
value of €5.8 billion. He has worked in the retail industry for over 10 years, researching shopping
centers and focusing on development conceptualization, consumer dynamics, merchandising mix and
rental sustainability. Mr. Terra earned his Master’s in Business Administration in Marketing from
Youngstown State University, Ohio, and currently manages a team of experienced researchers,
conducting market feasibility studies in the EMEA (Europe, Middle East and Asia) and South America
regions. He can be contacted at: [email protected].
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