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Latin America’s retail landlords help shoppers buy online

August 19, 2019

Latin America’s retail landlords are embracing online commerce — turning what was once deemed a threat into a vital component of their growth strategies.

Some are even setting up e-tail platforms to process purchases and deliveries from their tenants. This convergence of physical and digital retail is evident across the region, as landlords accommodate a growing army of delivery riders collecting merchandise ordered online.

The delivery app of Barcelona, Spain–based startup Glovo is now available in nine Latin American countries. Uber Eats and Colombia’s Rappi are growing rapidly too. In Ecuador, meanwhile, DK Management, a landlord with eight retail centers, was in negotiations with Glovo and Uber Eats at press time.

Some landlords are going a step further and investing in the services. Last year Brazilian developer BRMalls purchased a minority stake in a fast-growing delivery-app provider called Delivery Center. The firm is developing a platform to provide same-day — in some cases even same-hour — delivery of merchandise from its malls. In April Multiplan, another major Brazilian mall operator, announced plans to buy a 19 percent stake in Delivery Center.

Walmart de México y Centroamérica tried to get in on all this with a bid to buy Cornershop, a delivery app operating in Chile and Mexico, but withdrew its offer after failing to secure regulatory approval in Mexico.

In any case, by accommodating these types of services, landlords are able to compete directly with online merchants, while boosting the percentage rent their tenants pay on what they sell. Furthermore, mall owners are getting a cut on delivery fees.

“Retail centers continue to serve these consumers through these apps even if the shoppers are not walking through their facilities,” said Luiz Alberto Marinho, managing director and partner of São Paulo, Brazil–based GS&Malls, a consulting firm that has worked with malls and retailers in Latin America.

“Our challenge is to improve conditions to ease the entry and exit of delivery people while maintaining the mall’s normal operations”

Annual growth rates of online sales in certain Latin American countries are in the double digits, and there is a parallel increase in the physical delivery or store pickup of purchases made through apps or online, according to Chile-based retail consultant Renato Figueroa Roig, who has worked throughout the region. “E-commerce is creating a new flux of Millennial consumers who consider malls appropriate and attractive to solve and satisfy their last-mile needs,” said Figueroa. 

The delivery-app market has become so important for tenants at Lima-based Jockey Plaza, one of Peru’s highest-grossing malls, that the mall has set aside an area for motorcycles at the main entrances, says Juan José Calle, Jockey Plaza’s general manager.

Chilean mall operator Mallplaza, which operates retail centers in Chile, Colombia and Peru, is also working to improve access to its properties for the growing number of delivery services, says Marina Tannenbaum, Mallplaza’s innovation and digital-strategy manager. “Our challenge is to improve conditions to ease the entry and exit of delivery people while maintaining the mall’s normal operations,” she said.

“Traffic is worsening in the region, due predominantly to economic and population growth, resulting in more cars on the road, increasing congestion”

Worsening traffic congestion in Latin America’s big cities is fueling the growth of delivery services, as shoppers are able to buy things without having to venture outdoors. The INRIX 2018 Global Traffic Scorecard, an analysis of congestion and mobility trends in about 200 cities across nearly 40 countries, lists 14 Latin American metropolises among the world’s 50 most congested. “Traffic is worsening in the region, due predominantly to economic and population growth, resulting in more cars on the road, increasing congestion,” said Trevor Reed, a transportation analyst at Kirkland, Wash.–based INRIX.

Another factor boosting the role of malls as distribution centers for merchandise ordered online is that they are “extremely well located within cities with large consumption power,” according to Armando D’Almeida, Multiplan’s vice president of finance and investor relations. “Consumers are also demanding more-reliable and fast delivery services of food and goods,” he said. “The combination of these factors makes malls a very attractive source for fulfilling a consumer’s demand.”

At Multiplan’s malls, Delivery Center operates in parking lots or at service entrances to avoid disrupting the flow of regular shoppers in the mall. Hand in hand with the boom of delivery services is the launch of online marketplaces on the part of malls. These carry certain products from the mall tenants, and the sales are processed by the marketplace operator. In Brazil three major landlords have rolled out such marketplaces: Cyrela Commercial Properties; JHSF Participações; and Aliansce Sonae — a company created by September's merger of Sonae Sierra Brasil and Aliansce. Multiplan, too, announced plans to roll out marketplaces.

“With these new platforms, we can provide our tenants with the opportunity to enhance their brand awareness, as well as expanding the physical limits of their stores, converging the online and offline experiences”

Sonae Sierra Brasil launched its Digital Mall in July, an online marketplace that will eventually serve each of its nine malls across Brazil. The first of these went live for its Parque D. Pedro Shopping, located in the city of Campinas, in the state of São Paulo. The site showcases at least 150,000 items across the fashion; cosmetics; electronics and smartphones; accessories; and household merchandise categories. The plan is to eventually bring all tenants onto the site, with the goal of delivering goods within two hours of a purchase transaction, inside a radius of 100 kilometers (about 60 miles). Shoppers also have the click-and-collect option of picking up the merchandise at the mall. 

Other landlords too are offering click-and-collect services. At Jockey Plaza some 60 tenants enable shoppers to buy online and pick up at the mall. The mall also offers a service it calls Jockey 2 Go, by which shoppers use a WhatsApp number to obtain information about shopping options, prices and the like. The service fee is $4.50 per transaction, and shoppers may receive the item at the mall’s pickup center or else have it delivered (for an additional fee).

Through the embrace of these and other digital technologies, retail landlords are ensuring that their well-placed properties have a place in tomorrow’s world of shopping, experts say. This applies equally to necessity and discretionary shopping alike, says Marinho. “Some purchases made from need tend to migrate to the digital format, and malls can continue to be relevant through delivery apps or marketplaces,” he said. “The trend will be for malls to zero in on pleasure-related shopping, services, food and entertainment.”

By María Bird Picó

Contributor, Shopping Centers Today

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