Friday, 21 April 2017

Retail Evolution or Revolution?

I visited Chermside Shopping Centre a weekend or two ago which in itself is not all that extraordinary.

Like many centres around the country, Chermside seems to be in a constant state of re-building and expansion. More stores, larger stores, more food to be sold and new, diverse food outlets.

I walked through the new area and sure, it was fine. JB HiFi had moved to a larger outlet, as had Kathmandu. Nike joins Adidas as specialist stores, the later having moved from the older area of the centre.

However, are there really that many more people, with the necessary disposable income or credit card capacity to justify this continual expansion.

In the subsequent weeks, several retailers announced disappointing sales figures and others announced update, reduced sales expectations for this year.

On-line sales continue to grow meaning many of our retail sales dollars are passing by traditional shopping centres.

And then Amazon announce they are taking on Australia, aggressively, warehousing goods on shore for delivery, quickly and cheaply. Amazon not only have a history of expansion success (see Spain for example), they research and plan meticulously, invest heavily and execute superbly and dare I say quite ruthlessly. The commit for the long term – they do it properly.

In Australia last year, on-line sales reached $20.8 billion, an increase of 14.2% over the previous year (source National Australia Bank Research).

According to Nielsen Omnibus, 56% of all Australians say they will consider purchasing from Amazon, a figure that must cause concern for traditional retailers, and in particular electrical and clothing outlets.

The more things change, the more they stay the same. Shoppers are forever attracted to more convenience when shopping.

The self service supermarkets of today, offering the convenience of everything being under the same roof superseded a time where the first stop on the shopping trip was the greengrocer for fruit and vegetables, it was then off to the butcher for meat and finally the milk bar for milk, cream, ice cream and cheese.

Speak to those “experienced” enough to remember; they will talk of a time where the shop keeper knew you by name, everyone, where the greengrocer might say the carrots are not that good today but the parsnips are superb.

At each “shop stop”, there was a chat about the news and views, the goings on up the road and the latest film showing in the picture theatre on the corner. And if in Melbourne, no conversation is complete without debating the weather.

As much as shopping was an important communication and social activity, the sheer convenience of the one stop supermarket resulted in the demise of the local speciality retailer.

We are merely seeing history repeat itself. The convenience of on-line shopping could ultimately replace much of the need for Chermside style shopping centres, and it could be quicker than we expect.

At the start of 2017, American retailers Macy’s and Sears announced the coming closure of 218 stores. Worse still, another Mall based retailer, The Limited, suddenly closed down all 250 stores with 4000 staff losing their jobs.

The impact such closures has on the Shopping Centres they occupy is potentially crippling.

Australians are known for being rapid adopters of technology and change.

Amazon launching in Australia will have an impact, and one that could change our societal culture and behaviours, quickly.



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