This interview appeared first in HORIZONT Magazine on 28 October 2020.
Bernhard Klein, Head of International Marketing & Group Brands at Immofinanz, on the Covid-19 crisis and the consequences for real estate marketing
What are the major challenges arising from Covid-19 in real estate marketing?
Bernhard Klein: In the retail sector we were confronted with closures of our shopping centers and retail parks in Eastern and Southeastern Europe which lasted for several weeks. We had to completely reposition our retail campaigns within the space of a few days. All of the retail marketing campaigns that were strongly OOH-focused suddenly became unusable. The only channels available to us were our many social media channels, with almost a million followers. At the same time, the risk of a potential social media backlash was very high, for example if shopping with an emphasis on pleasure had continued to be communicated. And we very quickly started focusing on the post-shutdown period, the famous “new normal”, surrounded ourselves with international consumer psychologists and got up to speed in terms of the expected changes in consumer behaviour.
With respect to our office properties, there is currently a strong trend towards working from home due to Covid-19 and there are many general discussions about this topic. I am, however, convinced that this pendulum will also swing back the other way after the crisis. I know more people who are not happy working from home and would like to return to the social life in the office than vice versa – and that includes the younger generations. We also have the perfect answer to these uncertain times with our product focus on highly flexible office solutions – this is valued by many companies that are no longer able to make long-term plans. We’re placing a strong emphasis on this flexibility as a theme in our marketing.
What trends are you seeing in retail marketing and how has Covid-19 changed Immofinanz’s marketing?
Klein: Needs-based shopping currently carries more weight than consumer-oriented shopping for pleasure. This must also be reflected accordingly in the advertising. Three laughing girls, wearing high heels and carrying dozens of shopping bags, would now no longer function in the advertising. The caring mother with her child at her side, enjoying a short break from her daily routine, is better. This sentiment will remain with us well into next year. Hedonistic, party-loving, flashy consumers with an exuberant zest for life currently come across as an anachronism. Consumers are now focused on topics such as safety, family, welfare, neighbourhood, regional issues and manual crafts. We very rapidly redeveloped all retail advertising campaigns accordingly for the new, post-corona consumer needs and quickly rolled them out in the countries.
A second trend: Digital marketing has – unsurprisingly – become even more important than it was previously.
Which particular aspects should be taken into account in this respect?
Klein: On day one of the shutdown – along the lines of the well-known psychological process of crises – we launched a four-stage online marketing programme comprising “shutdown”, “ongoing breakout”, “recovery” and “new normal”, with specified content and a high degree of centralisation in close coordination with all of the countries. In doing so, we also achieved the level of speed and efficiency necessary in such exceptional times. People have different needs in each of these stages. In the shutdown consumers were anxious and did things which we would perhaps laugh about today, like stockpiling pasta and toilet paper. In the ongoing breakout stage boredom gradually began to set in. People sought diversion and inspiration. Topics such as cooking, DIY, online yoga, etc. were very well-received – we broadcast the right infotainment content and also closely cooperated with local influencers. During the recovery stage we then sent these influencers into the shopping centers, closer to the products, and communicated, for example, opening dates. The subsequent openings were thoroughly celebrated. We’re now in the new normal stage, with the corresponding changes in consumer behaviour I mentioned previously.
How well did this approach function in terms of revenues and visitor frequency in all of the countries in which you’re present with shopping centers?
Klein: Alongside our marketing strategies in recent months, we’re also benefitting from the specific locations and market positioning of our properties. In the last few months, shopping malls in capital and other large cities have recorded significant losses. We have, in contrast, preferred to establish our centers in medium-sized cities in Central and Eastern Europe in recent years – in secondary and tertiary cities where retail is not yet quite so developed. As can be seen, this strategy has paid off as they are vital for basic supplies there, especially our 90 retail parks which are proving to be very resilient to crisis.
There were also large declines in the luxury segment in particular. What is the explanation for that?
Klein: Now is not the time for luxury. People are fearful about their jobs and are therefore concentrating on what they really need.
Online commerce has grown significantly in recent months. Are you not worried that the shopping center business model is dying out?
Klein: Radio didn’t replace newspapers, television didn’t replace radio and the Internet hasn’t replaced all other forms of media. Similarly to in the media sector, there are also diverse channels for shopping. The pie is divided, but it is also becoming larger. Of course, if someone needs a particular “me too” product, some people will buy it on Amazon. But shopping is more than purely purchasing. It’s an experience and consequently there will also be shopping centers in the future, providing the setting for the shopping experience. These don’t, however, only include shops, but also restaurants, services and entertainment. So, we will also have shopping centers in the future. The question that we must, however, ask ourselves today is which needs these shopping malls must satisfy in order that people come. Additionally, our shopping formats – especially the retail parks – are geared towards discount and convenience products. These are barely affected by online commerce.
Have you spent less on marketing in 2020?
Klein: We used the crisis to increase our share of voice in the markets.
Do you plan to reduce the marketing budget in 2021?
Klein: In our view it would be wrong to significantly reduce marketing expenditure now. We want to grow and invest, and this requires the supporting communications. We learned from the experience of the euro crisis in 2010/2011 that now is the time to gain market share and we consistently pursue this goal. Obviously, the measures that we are able to take and must take in the coming months will depend on the further development of the pandemic.
Is the Covid-19 crisis not also a type of rejuvenation process in marketing? Old practices are being set aside and new ones developed?
Klein: The Covid-19 crisis has definitely led to a broad rethinking. What is already becoming apparent is a major boost in digitalisation. Although this trend was already present prior to Covid-19, we’ve now experienced a real transition towards digitalisation within the space of a few months. It can be assumed that this trend will continue. Whereas a few years ago in retail marketing people talked first about print and posters and only then about digital, the sequence has completely reversed.
In the office sector you also have new challenges to meet. Which far-reaching changes are becoming apparent?
Klein: The discussion about whether there will still be demand for large office spaces in the future caused us to enter a process of deliberation. It’s a fact that large global corporations have switched to working from home in recent months and now realise that this also somehow functions. It can be assumed that going forwards there will be demand for smaller office spaces and an increase in working from home. We’ve responded to this and provide extremely flexible office solutions with respect to lease term along with fast adaptation of office space for our tenants.
Which new customer requirements are arising as a result in the office sector?
Klein: As I mentioned, the answer is more flexibility. Tenants’ requirements are changing rapidly and we have to be able to respond to them. Commercial space will be planned in the future in such a way that it can be increased or reduced at any time in accordance with customer needs. The issue of flexibility is also reflected in the lease contracts. Whereas in the past commercial leases with five-year rental commitments were the norm, lease terms today are significantly shorter.
Is there a requirement among tenants for greater ambience in office premises? Are Google, Apple, etc. setting new standards?
Klein: Properties today are becoming communities. One doesn’t simply rent office space; one also wants to become part of a particular community. Small businesses seek contact with large companies, while these need the creative input from the small companies. For this reason office properties have to be specifically positioned in particular communities. The issue of lifestyle is also growing in significance with respect to commercial real estate. The times of standardised, colourless, mediocre all-purpose offices are past. Today there’s an emphasis on making a statement – also in terms of the fittings.
What objectives have you set for yourself in marketing at Immofinanz in the coming year?
Klein: Speed is becoming more and more important in marketing. While in the past one had months to prepare campaigns, today consumer sentiment changes significantly more quickly. One must be able to respond swiftly and get entire campaigns under way within a few weeks or even days. We’re already succeeding very well in doing that today. The next major issue for us is the question of what form the path back out of the pandemic and the “new normal” will take and above all when this will happen. Marketing automation is another area that we are currently placing stronger focus on. The Anglo-American countries are significantly more advanced in this field, but we’re catching up in leaps and bounds.