There is much speculation of late about the state of the Australian retail sector.
Low wage growth, stagnant discretionary expenditure and exploding online retail sales are pushing centre owners to reconsider their very own existence.
At a time of great uncertainty, one property group is doubling down on its investment by taking a bold approach to shopping centre development.
Frasers Property Australia, the local arm of the S$30 billion Singaporean property group Frasers Property Limited (FPL), is one of those groups that can see opportunity in a changing climate.
With a focus on food, convenience, community and entertainment, Frasers Property is reinventing the entire notion of a shopping centre with the birth of a concept known as the "Super-Neighbourhood Centre".
A recent report from Australia Post revealed a stark reminder of how quickly Australia's retail landscape has changed.
In 2015, less than 10 per cent of Australians used a smartphone to make an online purchase and the online spend on physical goods grew by a mere six per cent.
Only three years later, one in five online purchases in Australia are now made through a smartphone and online spending has grown at almost 20 per cent.
AfterPay, the buy-now-pay-later success story and stock market darling is the perfect tell-tale for an industry undergoing dramatic change.
After launching its first product in 2015, the company now has 1.8 million customers, 14,000 retailers and oversaw nearly $1.5 billion of transactions in the first three quarters of this financial year.
It is estimated that 25 per cent of all online apparel retail is conducted using AfterPay.
Of Australia's $267 billion retail expenditure in 2017, online goods represented only $21.3 billion. When observing growth, however, the numbers tell a different story. Retail expenditure grew by 2.5 per cent in 2017, while online goods spend grew by almost 10 times that figure at 18.7 per cent.
Shopping centres are no longer just a place to transact – they are places where people socialise, access services, eat, drink and be entertained.
Twenty-five year veteran of retail property and Frasers Property executive general manager, retail, Peri Macdonald says its new format for centres, with an emphasis on food, convenience, community and entertainment, will provide a "must-visit" antidote to the malaise of internet shopping and weakening apparel sales.
“They will be larger than traditional neighbourhood centres, typically over 10,000 square metres in size, and, along with a supermarket, will have strong traders in the food, food catering, and entertainment sectors along with services like gym, medical and childcare facilities”--Peri Macdonald, Executive General Manager - Retail, Frasers Property Australia
Macdonald is confident that "super-neighbourhood centres" would be more immune to the impact of online retailing and, more importantly, have a tenancy mix that supports sustainable sales.
“The centres now offer, in addition to traditional retail, wellness, health, leisure, dining, education, workspace and entertainment options. A lot of these cannot be accessed online.”
Frasers Property is developing a portfolio of retail centres geared to the specific needs of the local catchment to ensure these centres have greater relevance to people.
With a focus on identifying and extracting shared value, Frasers Property is creating projects that embrace and are embraced by the local community.
Burwood Brickworks shopping centre, for example, includes a 2,000sq m rooftop urban farm that will serve as the centrepiece of the community experience.
Central to this approach is an adventurous spirit of leasing and an open-source approach to sustainability that has been recognised by the industry both locally and internationally for leadership.
For developers and centre owners from across Australia and the globe, this brave approach to retail is perhaps the only way to steer through the uncertain times for the sector ahead.
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