How shopping centres are changing to fight online shopping
As Payless Shoes, Topshop, David Lawrence and Rhodes & Beckett enter administration, university lecturers Jason Pallant and Sean Sands unpack what shopping centres need to do to fight the Amazon invasion in this crossposting from The Conversation.
Even before the arrival of Amazon, online shopping is devastating Australian retail. In the past year, sales in physical stores grew only 3% while online shopping grew almost 10%. Foot traffic in physical stores has fallen by almost 5% this year alone.
Both retailers and shopping centre operators have to work together to create compelling reasons for customers to leave their homes and go shopping in physical stores. This has already resulted in a lot of experimentation, from VIP shopping nights to pop-up stores and events.
As the likes of Amazon enter Australia, shopping centres and retailers are going to need to be extra creative.
The decline in foot traffic is reflected in the retail industry’s profit margins, which have consistently declined since 2008-09. Physical stores have seen their profit margins hover around 5% since 2008-09, while online retailers’ have grown. Profit margins for online retailers are now roughly double that of bricks-and-mortar stores.
Our QIC strategy of including hotel accommodation for Eastland Shopping centre in Melbourne will add another revenue and sales channel.
Yet shopping centres like Westfield still make you go through boom gates and potentially have to pay to park for the privilege of shopping.
No such issues online and the products are usually cheaper.
The other barriers to entry for Westfield to me are as follows:
I am an opportunistic shopper, if out and about. I will study and research online and make intentional purposes there. I work a stones throw from the main Westfield in Sydney’s CBD. My issues with the place is getting lost; literally. If I am on my lunch break, I want to easily find a few shops, have a scout around and possibly, quickly buy something, It’s just too hard. I liken the feeling inside the shopping centre to being in a casino, or on a cruise ship; soulless, loads of people, with no agenda, ambling around, swarming around each other like ants – it is awful.
I guess Westfield caters for the people who want to stay indoors and shop, but for an ‘in and out, I am in a hurry’ opportunistic shopper – it is hell on earth.
Country Road on the corner of Pitt and King St is too easy. Firstly, I know where it is. I can walk in from outside and do not have to content with the cathedral of despair, which is Westfield.
Great article. I think another way that shopping centres are looking to combat online is by increasing their services to attract foot traffic and also extend their hours beyond the normal 9-5. Nail salons, childcare centres, swim schools, hairdressers, etc.