Sitting down with Lionel A. Lapira, CEO of Plaza Centres plc for the past nine years, reveals a man who is respectful of the rich history of the Plaza. This knowledge provides him with the roots from which he can think ahead and anticipate future solutions for future challenges that Plaza and the retail industry in Malta will face, without losing touch with the founding principles of the company. He begins the interview by explaining that Plaza was already a landmark in the Maltese economy long before he joined the company in 1994.
In fact, Plaza began life as a popular cinema in the area, however it wasn’t spared from closing its doors due the rapid decline of cinemagoers following the boom of television sets and the introduction of video on the islands. Always forward-looking, the directors of Plaza didn’t let this setback faze them and they envisioned exactly where the opportunities of the future lay in terms of their core business.
The premises were developed into a shopping centre that aimed to bring ‘the best names under one roof’. Fast-forward 20 years after Mr Lapira joined the company, and that promise seems to have been more than fulfilled. However, like the cinema industry before it, the retail business is facing growing competition from an easier and more convenient way for consumers to make purchases: online shopping.
Lionel Lapira is acutely aware that the retail business has to keep pace with the changes of modern world; bricks-and-mortar outlets have to respond effectively to the changes in consumer behaviour. As CEO of one of Malta’s most recognisable offline retail brands, Lionel acknowledges that the increase in popularity of e-shopping has definitely impacted on the way Plaza is trying to attract customers.
He doesn’t mince his words about the effects of internet shopping and most of his efforts in recent years were addressed towards improving Plaza’s offering to its customers. In many ways, Lionel and his colleagues at the head of Plaza have been at the forefront of the changing face of physical retail here in Malta. In fact, Plaza was the first brand that sought to provide its customers with more than just the promise of many outlets where to shop from; it made shopping fun.
This transition, from product-marketing to experience-marketing, is at the cornerstone of offline retailers efforts to step up their game and compete more effectively against the digital marketplace. It has become increasingly obvious that busy customers won’t leave the comfort of their homes to buy a product they can easily purchase online. Given the choice, customers – barring those extremely loyal towards a particular brand – will always adopt the easiest course of action when it comes to spending their money.
Under Mr Lapira’s leadership, Plaza’s management did not try to fight this inevitable, some would say natural, change in customers’ habits. Instead, Plaza underwent several phases of expansion that saw it evolve and position itself differently in the market, turning its focus on the entertainment aspect of shopping. Lionel admits that getting his partners on board with his vision took some convincing. The expansion programme actually took off four years after Lionel first fielded the idea, but the move set the ball rolling and introduced 21st century retail methods in Plaza, and in Malta.
Lionel is quick to point out that expanding Plaza’s offering didn’t come at the expense of its original vision. In explaining the changes Plaza made to adapt to the dynamic marketplace it is doing business in, Lionel emphasises a sense of continuity in the company’s operations.
Changing tactics without trading principles
The changes he and his partners brought about were firmly based on the principles of their founding forefathers, who envisaged Plaza as a place which offers wide choice and convenience to customers from a variety of high-quality retailers. The ‘best names under one roof’ promise was the original inspiration that launched Plaza in the local retail scene, and this promise continues to guide the decisions made by the company’s management to this day.
Rather than changing track completely, Plaza’s expansion saw it elaborating further its core concept, complementing it with a fun-filled and relaxing experience which cannot be replicated online. Plaza’s positioning of its brand now combines retail with entertainment, but in a way that doesn’t dilute or subvert the foundational premises of high-quality retail choices, excellent customer service and good prices.
The expansion programme yielded positive results to the brand, which saw strong growth in revenues during the whole process. Notwithstanding the presence of several key competitors in the Sliema and St Julian’s area, not to mention the shopping scene in Valletta, Plaza has retained a positive outlook towards its position in the industry. Lionel doesn’t omit to mention the fact that soon after Plaza started providing customers’ a more engaging shopping experience, with prizes, incentives and children activities, competitors followed suit.
Understandably, Lionel is proud of the fact that Plaza has been a trend-setter in the retail arena, a position it has enjoyed since it opened its doors back in December 1993. The company has grown a lot over the years and added more retail space to offer customers a wider choice of shopping outlets. However, a business the size of Plaza does find challenges in trying to reinvent itself for modern times.
As a large company, complexity and bureaucracy tends to get into the way of progress and Plaza had to contend with its fair share of difficulties along the way. Soon after he joined the business as CEO, Lionel noticed that the company required a lot of streamlining in order to make it more efficient and cost-effective to run. He didn’t shirk from what some would describe as the unpleasant aspects of management, and promptly set in motion the process to optimise the company’s complement of staff and reducing costs substantially. Although nowadays Plaza employs more people than it did back in the day, Lionel’s decision helped the company gain more traction in its ability to keep up with the dynamic forces of the market and respond more effectively to the changing tides of the retail industry.
Leveraging the fun-factor in shopping
Plaza’s financial performance throughout the years have ensured that it remained a key player in the industry, despite competing with at least 20 other shopping centres which share its same format. Lionel believes that what sets Plaza apart is its willingness to provide customers with added value on their shopping experience. By choosing to leverage another aspect of consumer behaviour: their desire for memorable experiences with a feel-good factor, rather than competing against internet retailers on price or choice (both impossible for an offline enterprise), Plaza found a way to mitigate the rapid encroachment of the internet on physical retail businesses.
Competing against online shopping by offering customers a fun-filled atmosphere and a unique shopping experience, as well as personal attention, was a sensible strategy that has served Plaza well. Lionel acknowledges that Plaza didn’t emerge unscathed from the rise of online shopping, the company did register a decreased footfall in the premises over the years, however he is convinced that the strategy they adopted has done much to lessen the full impact of the adverse effects of online shopping on physical retail, and helped Plaza maintain healthy profits throughout the years.
One particular point of pride for Mr Lapira is the fact that Plaza doesn’t only lead the retail industry in terms of innovation and responsiveness to market changes, it also sets an example in terms of customer care. Lionel explains that customer care extends well beyond helpful and courteous service at the point of sale.
He views customer care from a holistic viewpoint that also embraces health and safety on the premises. He goes into great detail in explaining the reasons that make Plaza one of the leading retail brands where it comes to health and safety regulation compliance, stating that all the employees of the company, from the management downwards, have to qualified first aiders.
Lionel is very mindful of the importance of the image that a brand projects to its customers. In his case, he emphasises that Plaza is committed towards delivering not only choice and convenience to its customers, but also an enjoyable experience while on the premises.
This is why he believes that it is critical for a business to carefully analyse and understand the particular needs of its clients, and use that information to make customer-centric choices. Modern retail operators have to move on from traditional methods of marketing which simply involved placing an advert on a magazine, and instead start focusing on creating an ongoing conversation with customers to find out better ways to serve them a shopping experience tailored to their expectations.
The threat of online shopping
In the past, before the advent of the internet and social media, retail in Malta took a more conservative approach towards marketing: preferring to emphasise products over experience. A shop was as good as the variety of products it stocks, and the prices it offered. This retail environment dictated that the best approach to win customers was by going large. Supermarkets gobbled up corner shops, and premises like Plaza offered the same kind of one-stop-shop opportunity for customers looking to shop for clothing, accessories and books under one roof.
The rise of online shopping brought about a second shake-up to the retail industry. No longer could physical retailers depend on variety of choice and price as their only selling proposition to their customers. The internet took care to bring all that directly into their customers’ homes. The market had changed considerably and for physical retailers to keep up they had to adapt to a new way of doing business.
Online shopping has given rise to a globalised marketplace that has intensely localised effects. It opened the floodgates to countless other competitors that retailers in Malta, even large ones like Plaza, had to contend with, and that were snatching customers away at a fast rate. Even in a conservative marketplace like Malta, where consumers are more wary of shifting their spending habits, started finding many of the added convenience that online shopping offered. According to Mr Lapira, for retailers to compete successfully they had to re-think their pricing, positioning and branding, in a way that adapts to this situation.
Lionel says that Plaza anticipated this shift and took the steps necessary to address it head on. As already mentioned, the company began competing on a point which the internet simply cannot match: human interaction. By emphasising customer care and enjoyment during the shopping experience, Plaza managed to maintain its relevance in a digital world and continue attracting customers.
Moving with the times
Lionel reminisces about a meeting he had in the United States, when e-shopping was still at its beginnings. He vividly recalls the participants at that meeting, people representing the retail industry, complaining loudly about the unfair advantage that online stores had and how easily online outlets were undercutting physical stores’ marketing efforts now that the customer had the comfort of purchasing online at home with no strings attached. Lionel shares that to him that episode was very telling of the likely transformation of the retail industry and it set in motion the plans to refurbish Plaza’s image in order to be better prepared to face the challenges of customers migrating to digital.
By emphasising on customer care and on enjoyment during the shopping experience, Plaza began competing on a point which the internet simply cannot match: human interaction. Although he was intent on building a successful future for Plaza, Lionel wouldn’t betray the principles on which the company was founded; instead he sought to upgrade them in accordance with the times. This launched the sequence of three expansion phases which saw Plaza grow bigger and stronger, thanks in no small part to adopting an innovative marketing approach for its offering.
The main challenge to the retail industry in the very early years was to successfully persuade the customers of the importance of brick-and mortar-shopping. This could be achieved by emphasising the feel-good factor which is inherent in venturing outside of one’s home and in an environment which provides comfort and enjoyment.
This factor determined the change in marketing techniques; forgoing traditional advertising messages which were product-centric, to actually marketing a shopping experience which couldn’t be replicated on a computer. Lionel explains that this new shopping experience had to involve entertainment: an emphasis of what he calls ‘the feel-good factor’, linking shopping every more strongly to relaxation rather than a chore and offering additional incentives to customers like prizes and play areas for children.
Mr Lapira oversaw the expansion of Plaza through three phases which formed part of his long-term business plan. The first expansion programme was carried out in 2009 and this was followed by two more programmes which ensured that the Plaza maintained a fresh and relevant brand image, as well as fine-tuning its business practices to adapt better to the changing market and compete more effectively.
Insights derived from Lionel’s experiences:
Customers – barring those extremely loyal towards a particular brand – will always adopt the easiest course of action when it comes to spending their money.
It is the market which must adapt to the customer, and not the customer to the market. Exceptions to this could be those enjoying monopolistic relations with their buyers.
It is typical for the partners, or shareholders’ representatives, to resist change. A convinced Executive needs to strategise and work on getting them to embrace it.
Change should not come at the expense of the original vision. And in explaining the changes one should emphasise a sense of continuity in the company’s operations.
Change can nonetheless remain based upon the principles of the founders. Changing tactics without trading principles is thus urged.
Being truly concerned about customer care perforce necessitates the embracing of solid health and safety principles on the premises.
It is critical for a business to carefully analyse and understand the particular needs of its clients, and use that information to make customer-centric choices.
The new shopping experience has to involve entertainment: an emphasis of ‘the feel-good factor’,
Organisations must always be on the ball and constantly adjust its business operations as required.
The analysis of business patterns and consumer movements should always be effected and capitalised upon.
Organisations must develop their core competences, invest in equipping employees with the skills they need, upgrade their location, fine-tune their strategies, and even develop customised IT systems which support speedy delivery of service whilst ensuring quality.
Outsourcing non-core operations to external contractors who share the contractor’s work methodologies can indeed have a beneficial and substantial impact on the bottom line.
Staff training must reflect exactly the direction towards which the organisation is heading.
By documenting every scenario, greater transparency and accountability of the company’s proceedings for the authorities and the company’s advisors happens.
The internet has changed the face of retailing irrevocably and business owners had to learn how to adapt their industry in order to co-exist with it. But the retail industry cannot ever decline.
Continuous progress in a dynamic marketplace
Even though Lionel Lapira is obviously very satisfied with the great strides forward done by Plaza, he says that the company management team refuses to sit on its laurels and let itself be swept away by the next big revolution in retail. He and his partners keep a very close eye on what is happening overseas and locally, and this careful analysis of the situation ensures that the company always stays on the ball and constantly adjusts its business operations as required.
Lionel says that the long history of Plaza gives the group an undisputed advantage in being able to analyse business patterns and consumer movements which they are able to capitalise upon. He adds that this information has enabled the company to: develop its core competences, invest in equipping its employees with the skills they need, upgrade the location, fine-tune the strategies, and even develop customised IT systems which support speedy delivery of service whilst ensuring quality.
These factors have given an edge to Plaza which, despite its strong financial position, is actually the smallest shopping centre in the area where it is located. This situation means that the company has to always be on its toes in order to face its main competitors in the Sliema/St Julian’s area, even though it is located in one of Malta’s prime commercial areas. And one of the ways by which Plaza has held up to the competition was by embarking on an aggressive cost-cutting strategy, whilst also outsourcing some of its operations to external contractors.
This has had a substantial impact on the bottom line. However, Lionel realised that, at a certain point, growing the business had to become an inside job, so he started recruiting people to fill posts in each department and ensure that their training reflects exactly the direction to which Plaza was heading.
Nowadays, the company manages everything in-house, meaning that management calls the shots on every aspect of its operations. Lionel confides that they document every scenario, which allows greater transparency and accountability of the company’s proceedings for the authorities and the company’s advisors to consult.
Mr Lapira doesn’t believe that the retail industry can ever decline. Throughout the history of retail there have always been shopping centres; traders have always been there to provide their goods and there have always been customers. In the past, it was open air markets; the first enclosed shopping area was in Turkey and it still exists to this day. The first major shopping malls as we know them today were built in the 1950s, in the United States, where retail-outlet malls became the main place where consumers congregated to make all their purchases under one roof.
The internet has changed the face of retailing irrevocably and business owners had to learn how to adapt their industry in order to co-exist with it. Lionel says that one of the most important lessons was realising the importance of getting in touch with the potential customer and listen to their needs.
He insists that business owners bear in mind the importance of the customer, because without them there is no business. Lionel summarises this nicely when he says that survival in the modern retail environment depends on the ability of each individual outlet is at meeting its customer’s individual needs and expectations.
One way Plaza adds value to individual customers is by providing its tenants the opportunity of forming part of a reputable organisation with 20 years’ experience in the retail industry that has changed and adapted according to the market.
By collaborating closely with their tenants, shopping centres like the Plaza can offer an unparalleled shopping experience to their customers by providing them with an enjoyable experience that benefits all the stakeholders in the business.
Mr Lapira readily admits that the Plaza has learnt a lot during its 20 years’ experience, especially from mistakes committed in the past. Learning from these mistakes was a crucial part of Plaza’s growth and he is certain that in the final analysis the advantages from the progress made are there to be seen, and benefitted, by all involved.