THE RISE OF E-COMMERCE

New technologies are transforming the global economy and influencing how people live, work and consume goods and services, around the world.

Businesses like Amazon and Alibaba have revolutionized the retail industry. E-commerce is now an inextricable part of consumers’ everyday lives and retailers’ everyday experience. According to The Economist, worldwide online sales have grown by 20% on average over the past decade, reaching a total volume of US$2.7 trillion in 2017. And that’s just the beginning — despite this spectacular growth, e-commerce represents just 8.5% of the total sales volume in the global retail industry.

In an e-commerce framework, getting a product to its end destination requires up to three times as much warehousing space as traditional retail. That is why logistics are paramount. As an example, JLL projects the Chinese demand for logistics facilities at an extra 25.8 billion ft² (2.4 billion m²) by 2020. The location of these distribution centres is a strategic asset in facilitating the “last mile” or final stage of delivery — the linchpin to customer satisfaction.

Ivanhoé Cambridge is more active than ever in industrial/logistics real estate. It is capitalizing on the growing popularity of e-commerce to continue to broaden its presence in this thriving sector. The Company has also teamed up with its shopping centre retailers to capture a growing share of the digital economy.

industrial/logistics:
Optimizing the last mile

A growing presence in the industrial/logistics sector

The global surge in e-commerce has prompted Ivanhoé Cambridge to step up its investments in this segment of the market. This has entailed forging solid partnerships in the industrial/logistics sector around the world.

In the U.S., Ivanhoé Cambridge acquired Evergreen Industrial Properties, a company specializing in light-industrial real estate that owns and operates nearly 150 properties in 18 key markets including Atlanta, Chicago and Dallas, serving a diverse range of businesses that are spurring economic growth in the United States.

Since 2015, Ivanhoé Cambridge has had an interest in LOGOS, a company that acquires and develops logistics properties in the Asia-Pacific region. In keeping with the Company’s growth objectives in this area, LOGOS pursued its investment strategy in 2017 to expand its foothold in Australia, China, India, Singapore and Indonesia — all promising markets where individual consumption is on the rise.

In partnership with Peel Logistics Property, Ivanhoé Cambridge launched an investment vehicle in the U.K. The initial portfolio comprises three properties recently developed in Manchester and Liverpool and a prime development site in Sheffield.

In partnership with Peel Logistics Property, Ivanhoé Cambridge launched an investment vehicle in the United Kingdom.

In today’s world, we need to make sure we participate at multiple stages of the distribution and consumption value chain. We already enjoy a strong position in the brick-and-mortar retail landscape. With the growing popularity of e-commerce, we need to continue to build our presence in the industrial and logistics sector as well. We see this as a natural complement to our existing portfolio.

Mario D. Morroni

Executive Vice President, Industrial, North America

Mario D. Morroni

Executive Vice President, Industrial, North America

Mario D. Morroni is responsible for the development and growth of Ivanhoé Cambridge’s new Industrial, North America business unit.

Mr. Morroni is a seasoned senior manager with experience in finance, investments and strategy, as well as pension fund management and administration.

Over the past four years, as Executive Vice President, Strategy and Capital Allocation, he led the development of the investment strategy and coordinated the global capital allocation, as well as headed the portfolio management and research teams for the organization.

Mr. Morroni joined Ivanhoé Cambridge from the Association de bienfaisance et de retraite des policiers et policières de la Ville de Montréal (ABRPPVM) where he was President and CEO, responsible for executing the multi-asset investment strategy and overall administration of the pension plan with assets in excess of $4B under management.

In the past, he served on the Board of Directors of Otéra Capital, ABRPPVM and more recently the Advisory and Investment Committees of Kingsett Funds.

Mr. Morroni attended Concordia University, where he obtained a Bachelor of Commerce degree specializing in Finance.

He is a member of the Quebec Order of Chartered Administrators and a financial planner.

From the virtual to the real world:
there, every step of the way

The importance of an online + offline (O+O) approach

Retailers can no longer afford to operate on a strictly online or offline basis. The ideal solution has evolved from a linear “online to offline” (O2O) approach to the convergence and constant “to and fro” between both worlds — an O+O model.

As an example, Alibaba, China’s biggest online commerce company, opened its first physical store in 2017 at Life Hub @ Jinqiao, a mixed-use property owned by Chongbang, one of Ivanhoé Cambridge’s main partners in China. This has encouraged the property’s other tenants to set up an online platform, since there’s no such thing anymore as “in store only” merchandise.

Like Henry Cheng, CEO and Executive Director of Chongbang, the Company feels it is important to change how retailers see e-commerce: as a complement — not an obstacle — to their brick-and-mortar sales.

In 2017, Alibaba, China’s biggest online commerce company, opened its first physical store at Life Hub @ Jinqiao, a property owned by Chongbang.

Welcome to Amazon Locker

Canadian shoppers spent $33.6 billion on online purchases in 2016, making it a lucrative market for e-commerce titan Amazon, with which Ivanhoé Cambridge came to a deal in 2017 to welcome Amazon Locker to its Canadian shopping centres.

Amazon Locker is a self-service parcel delivery program that lets customers pick up and even return their orders at a publicly accessible locale. The service has been greeted with great enthusiasm at Tsawwassen Mills, Metropolis at Metrotown and Guildford Town Centre, in British Columbia, and Vaughan Mills, in the Greater Toronto Area.

Driving footfall through special deals

In an effort to be more relevant than ever to consumers and gain deeper insight into their needs, Ivanhoé Cambridge has set up an online platform featuring coupons that can be redeemed at its retailers’ establishments. This initiative has enabled the Company’s shopping centres to increase local activations through VIP offers and develop a better understanding of how their patrons shop. This campaign has helped in promoting various retail initiatives, opening new stores and generating customer traffic.

The campaign has helped in promoting various retail initiatives, opening new stores and generating customer traffic.

Interactive recruiting for retailers

In partnership with Wirkn, Ivanhoé Cambridge deployed a next-generation job application platform that enables retail companies to vet suitable candidates quickly and efficiently using 30-second videos. Developed to facilitate recruiting efforts during peak periods throughout the year, the platform also helps establish ties between merchants, enabling them to exchange information about high-potential candidates. By making use of innovative technology to help retailers recruit new employees, the Company is doing its part to take customer service to new heights.

Through a partnership with Wirkn, Ivanhoé Cambridge connects retailers to the best candidates.

OUTLOOK

Toward new horizons

Omnichannel marketing makes it possible to have an ongoing conversation with consumers at every point of contact, be it in the virtual or real world. It’s an opportunity that opens up all sorts of avenues for creating richer, deeper experiences with brands and driving sales in our shopping centres.

Claude Sirois

President, Retail

Claude Sirois

President, Retail

Mr. Sirois has over 25 years of experience in various sectors of the real estate business. He started his career with Ivanhoé Cambridge in 1990 as a Leasing Representative. He was subsequently promoted to Leasing Manager and then later worked in development. Mr. Sirois also served as General Manager of the Galeries Rive Nord shopping centre in Repentigny, Quebec.

In 2005, he was appointed Vice President, Investments, and in 2011, Senior Vice President, Emerging Markets. He then became Senior Vice President, Commercial Investment and Emerging Markets. As such, he was responsible for implementing the Company’s investment strategies in BraziI and China. More recently, he served as Executive Vice President, Shopping Centres, North America, where he was, among other things, responsible for all the Company’s investments and operations in Quebec and oversaw the implementation of construction and development projects. He was appointed in his current role in April 2016.

Before re-joining Ivanhoé Cambridge in 2005, Mr. Sirois held the position of Real Estate Manager, Quebec and Atlantic Regions, at BMO Financial Group. He also previously served as Head of Human Resources, Quebec Division, for the same group.

Claude Sirois has a Bachelor’s Degree in Real Estate from McGill University as well as an MBA from HEC Montréal business school. He is also a member of the Board of Trustees for the International Council of Shopping Centers (ICSC).

E-commerce is now an inextricable part of consumers’ everyday lives and retailers’ everyday experience.

Given e-commerce’s growing slice of the retail pie, logistics and industrial real estate will continue to be a forward-looking sector in the years to come. Ivanhoé Cambridge will keep investing in these assets, which cover the last mile of the online buying experience, as well as further upstream in omnichannel initiatives, jointly with its shopping centre retailers.