Westfield marketing boss questions long term future of pure-play online retailers
The marketing boss of Australia’s largest shopping centre owner has dismissed the threat of online-only retailing, arguing “very few” pure plays have ever made a profit.
John Batistich, marketing and digital director of Westfield owner Scentre Group, even questioned how many of them will be around in five years as he launched a robust defence of the shopping mall, insisting people still “crave physical experiences”.
Responding to reports from the US that many shopping malls are suffering and will shut down, Batistich referred to a decade-old story from Fortune magazine which also foretold the demise of the physical store environment.
Describing the story as “rubbish”, he told a conference that “things have changed dramatically” since the days when online saw annual growth of 30 per cent.
Today, sales growth at Westfield shopping malls are almost on par with that of online, he said.
“Physical retailers at Westfield…..are growing in line with how online in Australia is growing,” Batistich said, adding that bricks and mortar still generate 93 per cent of sales.
“In Australia online had been growing at 20-30 per cent but it is now growing at only 6.9 per cent and Westfield is growing at 6.1 per cent on $21b worth of retail.”
While acknowledging online-only sales remained as “issue” for the physical environment, the Westfield executive said the demise of the shopping mall has been “exaggerated”.
“Humans crave physical experiences,” he told the Forrester marketing leaders summit in Sydney.
“What we are focused on at Westfield is connecting the physical environment with the digital shopper.”
That meant driving people to shopping malls by creating experiences, services and products that cannot be replicated online, he said, including “food experiences” and a focus on health and beauty.
“You can’t download a meal and you can’t subscribe to a haircut,” Batistich said.
Westfield was also set on creating location and analytics platform to help brands create “personalised, contextual content for the future”.
“We are helping shoppers move from web to store because the big game in town is not online,” he said. “There are very few pure play retailers which are making any money and who may not be in this market place in five or 10 years time.”
He added: “At Westfield we have stopped talking about multi-channel and omni-channel because our customers don’t talk that way. Our focus is around one seamless experience.”
Bricks and mortar stores are dead or dying? Not in the US:-
*Using Census Bureau data, researchers found that e-commerce — including catalog sales — vaulted nearly tenfold, from $35 billion in sales in 1992 to $348 billion in 2013. By comparison, the warehouse club industry grew from $40 billion to $420 billion, a 10.5-fold increase.
For those unfamiliar, Costco is a warehouse club.
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Yes, and enough of this SMS and Email marketing stuff too. I crave a fax.
So tactile and warm.
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He’s quoting 6.1% growth in Speciality Stores which hasn’t been noted here – I’m assuming he noted that in his comment. So it excludes Department Stores and Supermarkets and a few others. Department stores are trending down – see the Scentre August 2015 results announcement. Dept stores are obviously a sector heavily affected by online shopping. And some of Scentre’s largest tenants!
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@Investor The NAB Online Retail Sales Index had eCommerce as a percentage of Retail sales at 4.4% in 2010 at the beginning of 2015 (5 years later), it sat at 6.7% so in 5 years eCommerce has grown 2.3%. Hardly booming I would say.
Shopping is becoming a great experience for everyone, especially in the Malls where it is becoming a “day out” for most families and people in general with food, movies and entertainment, oh and of course shopping.
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Reminds me of that movie studio head in the 80’s (Sony?) who said the internet was nothing to worry about, and would not survive.
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It is just hard to take anything serious from someone who’s business is driven by bricks and mortar. It is like print saying online will not have an impact. 1 + 1 = ?…. depends on who you ask to conduct the research.
Studies have shown, locally, that footfall to big malls are in decline…. however the people going to the stores are purchasing more items (bigger $ value basket) as they did the research online before going in store. Would companies like Westfield endorse studies like that? Probably not if they are charging shops on footfall.
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Really…? Marketing boss of offline retail business says online retail is a fad? How is this credible?
Perhaps he’s talking about Australia only where online retail is frankly terrible. In the US, Europe, China it’s a different story.
Amazon is becoming so strong, you can pretty much order any retail product, at the cheapest price, and receive it in less than 48 hrs for free. Often in only a couple of hours. Who would rather overpay at a mall, eat shitty fast food, get crap customer service and waste half their weekend…? Please…
Amazon vs Walmart growth figures for a dose of reality on where things are headed, internationally at least: http://qz.com/462605/amazon-is.....n-walmart/
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@Sceptical Did you manage to scroll to the Net Income figures? There you go!
That is why Amazon is opening brick & mortar stores now.
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Just walked out of a mall it seems the food courts were full and the retail was empty. Maybe everyone was eating but as WhatIF said it depends on who you ask to conduct the research.
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Thank you ‘what?’, but video didn’t actually kill the radio star.
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@Cameron Wall
4.4% to 6.7% represents a 52% increase (in 5 years) or, ~ 10% CAGR,
Where are you investing?
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