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Professor finds Helsinki-area shopping centre plans "odd"

Over the next few years a total of six new large-scale shopping centres are planned to be built or expanded upon in the Helsinki area. In a time when e-commerce is outpacing growth in the traditional retail sector, an economics professor says he's surprised about the construction frenzy.

Kalasataman Redi-kauppakeskus, valmistuu 2018.
Rendering of the Redi shopping centre in Kalasatama district of Helsinki, to open in 2018. Image: SRV

There's a construction boom in the Finnish retail sector going on, particularly in the capital region. In Helsinki there are plans for six major shopping centre projects to be built or - expanded upon - over the next few years.

Between the years of 2012 to 2014, the brick-and-mortar retail sales have contracted by about one percent point while online shopping continues see strong growth.

Meanwhile, a consumer research group estimates that Finnish e-commerce retail sales saw growth of about 20 percent during that time.

Professor of Practice at the Aalto University School of Business Pekka Mattila says that he finds building large scale shopping centres and malls in the face of the current trends "odd."

"Shopping centre investors have placed more than a billion euros towards construction and development over the past few years. At the same time, consumer purchasing power has not increased, and the number of consumers has not substantially increased," Mattila says.

The professor, who has studied shopping centre investment and development trends, says he finds the ambitious shopping centre plans in the capital region to be inconsistent.

"It seems odd that the industry is making large investments in physical retail stores when it's known that shopping for goods and clothing has moved online," Mattila says.

Big plans for brick-and-mortar

The six major projects include entirely new centres, like one in the Kalasatama district currently under construction, as well as extensions of existing shopping centres, like the planned expansion of the eastern Helsinki shopping centre called Itis.

When it was originally built under the name Itäkeskus in 1984, Itis' 115,000 square metres of retail space became - and remains - the biggest shopping mall in the Nordics.

When complete, the planned construction and expansion of the six new projects will result in shopping centre space of up to 350,000 square metres – or roughly the equivalent size of three additional Itis shopping malls over the next few years.

The projects in Kalasatama (Redi), in Pasila (Tripla) and in Vantaa will be roughly 60,000 to 80,000 square metres in size.

There are two projects in Espoo. The expansion of the Iso Omena centre plans to double its current 50,000 square metres to 100,000 square metres, and the shopping centre in Tapiola will expand to 30,000 square metres from its current 10,000.

Kesko Group has initial plans to expand at the Itis shopping centre by about 26,000 square metres but says it could grow to as much as 60,000 square metres.

Big centres threaten smaller ones

Mattila says there's the possibility that when the larger centres are built, it could hurt smaller centres' bottom lines.

Mattila added that the way people shop in Finland is also fundamentally changing.

While consumers will visit stores to check out and learn about products they're thinking about buying, he says they increasingly end up making their final purchases online.

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