Tomorrow... as seen by Jean-Marie Tritant

Alumni BSB'91, President of Unibail-Rodamco-Westfield in the United States

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Jean-Marie Tritant, who graduated from BSB in 1991, is currently President of Unibail-Rodamco-Westfield (URW) in the United States. Here he explains how he sees the evolution of his sector, which in order to face online commerce is reinventing itself by giving pride of place to destination spaces. The major problem of transport, responsible R&D, social mobility, post-Covid-19 reconfiguration: it covers the key issues of today... and tomorrow!

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JM TRITANT- DEMAIN “A real estate company listed on the CAC 40, Unibail-Rodamco-Westfield is the leading global creator and operator of destination sites, which welcome 1.2 billion visits each year in 12 countries in Europe and the United States. The Group develops living centers where retail, leisure and catering are combined, as well as residential and office spaces.

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URW is also a developer of daring towers and office buildings, mainly in Paris and La Défense, and operates the main conference & exhibition sites in the Paris region through its subsidiary Viparis, co-owned with the CCI Paris Île-de-France.

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In 2017, the company launched a friendly takeover bid on Westfield and gave birth to the new Group, leader in its sector, the following year. At that time, I was offered to take over the presidency of the American entity, with the aim of working on the integration of the two companies and the creation of new synergies — this is how I ended up in Los Angeles after 20 years with the Group, including the last 5 years as Chief Operating Officer (DG Operations).

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The advent of destination places

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Today's commerce is developing around 3 main axes: Internet, Proximity, Destination. While e-commerce offers an undeniable practical dimension, the end of physical commerce is an illusion. The consumer wants to have a permanent choice to consume where, when and how they want. E-commerce offers convenience and low prices, without emotion.

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Local commerce, symbolized in France by convenience stores and neighborhood shops, is synonymous with efficiency: convenience. Destination centers, on the other hand, are places that we decide to visit with family or friends, we devote time to them, we come looking for a different experience, emotion, discovery, discovery, innovation, innovation, leisure, sharing.

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At Unibail-Rodamco-Westfield, we believe in the future of physical retail. There is no “retail apocalypse” but a necessary in-depth adaptation that the so-called “Covid” crisis has undoubtedly made even more pressing. For our part, we focus on large, non-reproducible assets in the most dynamic cities in the Northern Hemisphere.

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Our shopping centers are real destinations, located in the heart of catchment areas with a high population density and very connected in terms of transport. Today, we have around sixty flagship centers based on this model around the world.

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The populations of these big cities, where space is becoming scarce and transport times are becoming longer and longer, expect our centers to be places to live. Before they were purely dedicated to commerce, today we are bringing mixed uses: green spaces, offices, coworking, places of culture, relaxation, health and well-being, catering, sports...

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In the United States, it is very clear, the time of places only intended for trade is over. The shopping centers that perform well are those that combine lifestyle and retail, and develop mixed residential and office areas in the immediate vicinity.

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What is incredible is that this vision is none other than that of Victor Green, an architect of Austrian origin who, 70 years ago, created in Minnesota the first shopping center in the United States and certainly in the world: Southdale Center.

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For me, these places embody our new ways of life: more ecological, requiring less travel, meeting varied needs (in particular with a strong increase in the share of catering and leisure), combining the best of physical and digital... Commerce is gradually becoming part of a larger whole and is a direct part of living together.

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Physical presence reinforces the impact of digital technology

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I am all the more convinced of the relevance of these places because people need social ties and shared moments, it is human nature. I also believe in the complementarity of these places with the development of online commerce.

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It is time to put an end to the idea that Amazon and Ali Baba “disrupted” physical commerce. 25 years after the creation of Amazon, online commerce represents only 12% of total trade, with more mature markets such as the United States or Great Britain, which are respectively at 14% and 16% penetration rates.

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The real “disruption” of the Internet is access to the first customers! Before the Internet, the only way to access a customer was the store! Today it is easier to get started on the Internet, hence the boom of Direct to Consumer (DTC) brands.

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But these brands quickly realize that their development is limited by the cost of acquiring a new online customer, the virtual obligation to offer delivery combined with an aggressive product return policy... Profitability is almost impossible.

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The only way to make money online is to sell digital products like music. Amazon is still not making money thanks to its marketplace, it is AWS (Amazon Web Services) that allows it to no longer be in the red!

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The store, on the other hand, is profitable and it is a proven model. Consumers can see the product and test it. The store has natural traffic and creates a form of spontaneous loyalty. The cost of acquiring a new customer is 10 times lower than the Internet and the product return rate is 3 times lower on average.

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In addition, a store placed in a high-traffic location has a strong impact on online sales capacity. The CEO of Nespresso in France indicated 3 years ago in an article published in the economic press that he would continue to develop his network of stores because he saw a 50% increase in sales in the catchment area of the newly opened store.

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This is the reason why so-called “DTC” brands in the United States such as Untuckit, Warby Parker, Casper decided to open stores. It is the most economically secure way to develop a brand and maintain customer loyalty.

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The brands that succeed today are those that know how to combine a digital strategy with a physical strategy: omnichannel. Overall, they will need less space and will focus on highly attractive places, such as destination centers.

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Wherever commerce reinvents itself, deploys new concepts, creates the necessary bridges between physical and digital, it thrives. It is with this vision that we worked on the extension and renovation of the Toison d'Or in Dijon.

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Respectful transport, responsible R&D and social mobility

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Our Group can be considered an infrastructure developer, and as a result we have a significant influence on the communities in which we operate. Social and environmental issues are therefore fundamental for us.

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We are committed to controlling our impact and contributing to better cities. Launched in 2016, our Better Places 2030 CSR strategy is based on three pillars: Better Spaces, Better Communities and Better Together.

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Better Spaces is the objective of reducing greenhouse gas emissions by 50% across the Group's entire value chain by 2030. This includes emissions from our brands, as well as the transport used by our visitors to get to our destinations. It is not a question of taking into account only what we can control directly, but all of the carbon production linked to the operation of our centers.

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One of our priorities is the development of transport that is more environmentally friendly. In Dijon, we worked hand in hand with the Greater Dijon Urban Community and the city itself to promote the integration of the tramway with the development of the Toison d'Or. In Los Angeles, a second subway line is under construction, and we are working closely with the city to connect our center to it.

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We also contribute to the development of the electric car, with car manufacturers such as Renault or Tesla, by installing charging stations in our car parks for example. And of course, we don't forget pedestrians and bicycles in our mobility action plans!

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Another dimension of Better Spaces concerns the construction of buildings. We are committed to using local materials, especially wood, and we attach great importance to energy issues. 50% of the energy consumption of centers like ours comes from lighting, so we are innovating in terms of architecture and technical solutions to limit this.

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In terms of offices, four years ago, in the La Défense business district, we delivered the first tower in Europe (and certainly in the world) with exterior loggias and windows that can be opened... because the problem with a high-rise tower is not to heat it but to cool it!

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Better Communities is the desire to be a catalyst for growth for our communities and to support the development of territories, but also to support in difficult times like the one we are experiencing today. Better Together means empowering employees to become agents of change in terms of diversity and sustainable development.

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It is also about making the social elevator work, because we consider commerce to be one of the last sectors where we can still really activate it. Thus, it is not uncommon for a salesperson to become a manager. With this in mind, Unibail-Rodamco-Westfield has launched the URW for Jobs initiative, which provides concrete assistance to people looking for work near our centers by putting them in direct contact with our retailers.

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In France, for example, we have set up a partnership with the Second Chance School. In the United States, we are participating with an NGO in the “Destined” project, which helps young students from disadvantaged backgrounds to have access to internships and jobs that match their incredible talents.

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We promote access to jobs and internships in our centers that allow brands to access local resources, and vice versa. Trade cannot be relocated; it is also one of its assets.

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Reconfiguring post-COVID-19 trade

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It may be my temperament, but I am quite optimistic about the post-Covid-19 period ahead. Obviously, there is reason to be worried about the global economy, we are going to experience recessions, as suggested by the millions of unemployed people generated in a few weeks here in the United States. The impact of this virus is colossal.

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But looking ahead to the medium and long term, I am optimistic. It is not the first or the last crisis we are experiencing. I think this will accelerate the evolution of commerce that I was referring to earlier, and the repositioning of the sector — between Internet, Proximity and Destination. The crisis reaffirms the relevance of our strategy and our vision of tomorrow's retail.

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Businesses will probably not reopen, but most of them were already weakened or in the process of extinction. We're going to see retailers speed up their decision-making process to focus their resources on the best stores and the best locations. Top quality places, easily accessible and with high level health and safety conditions.

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There was a lot of talk about the growth of e-commerce during the crisis, and for good reason, destination centers, the core of our model, were closed. But after the crisis, the relevant physical trade will resume its place. For many weeks, people were deprived of places to meet. But the desire is there.

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Who can be satisfied with not having seen anyone (apart from their family, of course) for 2 or 3 months? You just have to see how happy and impatient we are to go back to the restaurant, to review an exhibition or to go to the movies. Our strategic shift around experience, shared emotion, catering and leisure is in this sense more relevant than ever.

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The other interesting effect of this period is the life-size test of remote working. We realize that it works, that its development is inevitable, and at the same time we perceive the limits of virtual exchange. The increase in remote work will combine with moments to meet, which will in fact become increasingly important.

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This evolution in working methods is interesting to experience. This will reinforce the collaborative dimension within companies, but also highlight the shortcomings of coworking spaces. Coworking is a form of work, not a relevant service. An element that we will certainly be able to take into account in order to continue to reinvent our destinations in the future.”