Retail bricks to endure challenge from retail clicks

February 02, 2011 | Retail | Commercial

Retail competition in Australia is no longer just local and physical, but with the rise of e-commerce it is also international and virtual, fuelling retail landlords to build larger high impact centres and tenants to reassess their marketing strategies, according to the latest Colliers International National Retail Research and Forecast Report.

Nora Farren, Colliers International Director of Research, who compiled the report, said consumer demand is rising for sophisticated and integrated online offerings, with one of the key drivers of the growth in online shopping being consumer adoption of new channels and technologies.

“Australian retailers need to view the internet as part of a multi-channel approach, while landlords should be implementing strategies in which to co-exist with their virtual competitors,” she said. 

Data released by Frost and Sullivan shows e-commerce activity in Australia equated to just five per cent of the $240 billion in domestic retail sales recorded in the year ending November 2010.

 

Ms Farren said the potential impacts the increase in online shopping will have on property are diverse.

“Despite internet sales growth being primarily focused on established retailers, there could be impacts on retail floor space productivity, property requirements and store networks,” she said.

“That said, turnover leakage to online trading will have to reach significantly higher levels before it will impact on rental growth.”

 

Ms Farren said that while online retailing is effective as a transactional medium, traditional retailing has long proven to be one of the most enduring and compelling forces in consumer culture, and shopping centres are one of the most evolutionary of any commercial property sector.

“Many Australian retailers have established an online presence to complement their primary business, such national fashion retailers Witchery, Mimco and Country Road have reported robust online sales,” she said. 

“Sales turnover in US shopping centres have not collapsed in face of a more mature online retail market, having adapted to become increasingly competitive and clever about combining online and offline sales.

“Ultimately, in-store is still the principal method of shopping for most consumers and, for the majority; internet shopping will never completely replace the need for shopfronts.”

Ms Farren said Australian purchases from overseas online retailers comprise only a small percentage of all online sales – and a tiny proportion of Australian retailing in general – and despite recent hype from major national retail players it is unlikely to have a major impact on revenue.

Nathan Clark, Colliers International National Director of Retail, said in order to adapt to the changing retail environment and to encourage consumers to spend domestically, major Australian retailers will need to continue to work with developers and investors to provide shopping destinations that will continue to attract consumers.

“A number of high profile shopping centres in Sydney, Melbourne and Brisbane have been subject to multi-million dollar refurbishments and redevelopments in recent years, in a drive to increase existing customer bases and push up moving annual turnovers,” he said.

The $860 million Westfield Sydney redevelopment, which is in its final stages, has involved integrating the former Westfield Centrepoint Shopping Centre and the smaller Skygarden and Imperial Arcades into one iconic retail centre, offering some of the finest local and international brands.

“Once completed, up to 250 fashion, food and lifestyle stores will be located over a staggering seven level, 40,000sq m space.”

Mr Clark said Chadstone Shopping Centre in the inner south-eastern suburb of Malvern East in Melbourne has also undergone significant redevelopment in the last four years.

“A $100 million upgrade commenced in December 2007 saw the centre's owners extend Chadstone's lettable area to 190,000sq m making it the largest in Australia,” he said.


“In Queensland, the popular Robina Town Centre on the Gold Coast, recently benefited from a $200 million multi-staged expansion, which involved the addition of a new 11 cinema Event Cinema Complex, three new enclosed air-conditioned malls, including a two level galleria mall and curved skylight roof, which all up connect existing components with new to house boutique retailers and restaurants as well as anchor tenants David Jones, Myers and Big W.”

Mr Clark said many retailers and landlords feared the demise of the traditional shopping centre when discount factory outlets started growing in popularity early last decade,” he said.

“However, outlet retailing is now considered a permanent part of the retail landscape, just like online shopping, as many businesses have adapted by integrating this format into their channels of distribution as a way of moving older stock and raising their profile with a fresh set of consumers

”Retailers such as Apple, The Athlete’s Foot and Sportsgirl have used this concept to create a unique shopping experience, not just flagship stores, but retail venues and destinations.

“These larger format outlets provide customers with the complete shopping experience, engaging them through entertainment and interactivity, often providing different retail zones throughout the store.

“Some examples include the addition of a concierge in the case of the Apple store, a computerised fitting system at the Athlete’s Foot, and a DJ and in-store stylist at Sportsgirl.”

For further information please contact:

Susan Epp
PR & Communications Manager | Queensland

Tel: +61 7 3026 3322

Mob: +61 434 573 026

Email: susan.epp@colliers.com  

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