Shopping centres have long been a part of Australia’s urban culture but the threat of online sales, plus a pandemic-driven dent in consumer sentiment, means many are now in a fight for their lives.
- Economists say Australian retailers face their worst year on record
- The coronavirus pandemic prompted a sharp spike in online sales
- Retailers need to adapt to changed expectations, according to analysts
The decline of bricks and mortar retail has been accelerated by coronavirus which, for a period, saw buzzing hives of activity become eerily empty.
While the coronavirus situation is continuing to evolve in Australia, experts say a picture is emerging of a very different shopping landscape into the future, one that has the potential to reshape our neighbourhoods.
According to Deloitte Access Economics, Australian retail is facing its worst year on record.
While swings in consumer confidence over recent months make it difficult to predict just how bad things could get, the group has forecast a 1.4 per cent fall in turnover growth for 2020.
Shoppers adapt to changing environment
The coronavirus pandemic prompted a sharp spike in online shopping, exposing vulnerabilities in some retailers’ web platforms.
At the peak of demand, supermarket giants Coles and Woolworths were both forced to temporarily suspend their online service.
Curtin University researcher Billy Sung has been studying consumer behaviour during the pandemic.
He said shoppers had proven they could adapt to a changing environment very quickly and shopping centres needed to respond fast if they wanted to retain their customers.
“COVID-19 has changed consumer behaviour dramatically,” he said.
“Now that consumers are more digital-natured, these shopping centres should be investing a lot more in technology and digital platforms and [looking at] how they can provide an ecosystem of experience, whereby the offline and the online is integrated into a seamless brand experience.
“They need to provide a reason or incentive for consumers to visit.”
Retail life returns in Perth
Many major Australian shopping centres have been quick to adapt to the COVID-19 reality.
In Perth, where there has been no known community transmission of the virus, the relaxing of restrictions means life has largely returned to normal and shopping centres are hives of activity once again.
But operators are conscious of their need to adapt.
Retail group Hawaiian owns the Claremont Quarter shopping complex as well as string of local centres.
Hawaiian’s general manager of shopping centres, Scott Greenwood, said those smaller venues had weathered the storm surprisingly well.
“The recovery has exceeded our expectations,” he said.
“Shopping centre traffic is at pre-COVID levels. Only six to eight weeks ago it was a very different scenario.
“Customers are tending to shop local and visit convenient, neighbourhood-type shopping centres, and they’re looking more and more to support local small businesses.”
As the pandemic hit and people were forced into lockdown, Hawaiian launched a delivery service on behalf of its tenants.
It has since created an online platform that will see the service become a permanent arm of its business.
“We’ve had to reinvent ourselves,” Mr Greenwood said.
“Many of our mum and dad retailers don’t have the resources or the expertise to transact online, so we are providing the platform.
“We expect that will further grow through the years.”
Malls in the US facing closure
Around the world, shopping precincts have been exploring with new ways to attract customers by repurposing retail spaces for entertainment and experiences.
Those who have failed to adapt have suffered.
In the United States, retail giants that have been synonymous with the American shopping mall experience, like JC Penney, Neiman Marcus and J. Crew, have filed for bankruptcy.
They are among a number of US brands that had already been struggling in a market increasingly dominated by online shopping, when coronavirus pushed them to the brink.
Experts in the US are now predicting as many as one in four of the country’s malls could close in the next five years.
Becoming more than a place to buy
So what does that mean for Australian shopping centres, which serve as the nucleus of many suburbs?
Australia, too, is facing a rapidly changing shopping landscape, with big national brands like Target, David Jones and Flight Centre recently announcing they would close some of their stores and branches.
Sydney group Brickfields Consulting launched a study into how customers at shopping centres and malls were responding during the months of April and May as most states were emerging from their initial lockdowns.
Analyst Stephanie Bhim said the pandemic had shifted customer expectations.
“It’s clear that the expectations have been set for more efficient shopping experiences, tightened customer journeys and fewer staff interactions,” she said.
“There’s a huge potential for them to really start diversifying their typology and looking to the new consumer expectations that are emerging out of the pandemic.
“How can they better serve the community through more experiential spaces, more free and public spaces? So you don’t necessarily have to go to the mall just to buy things.”
The shopping centres of tomorrow
Ms Bhim said while there were lessons to be learnt from what was being observed in the US, Australia was better placed.
Unlike most American malls, Australian shopping centres house supermarkets and a greater number of local small businesses.
And Ms Bhim said it was the smaller players that were likely to drive the foot traffic that shopping centres relied on.
“The pandemic brought about stronger levels of community solidarity and support for local businesses,” she said.
“We’re going to see the more progressive property developers trying to see how they fit in the context of their surrounds, how can they better serve the community.”
Ms Bhim said she expected the pandemic would change the way future shopping centres were designed and built.
“I think shopping centres are really going to have to think about flexibility, particularly spaces built from scratch,” she said.
“If a pandemic occurs again, or if a natural disaster occurs, how can we flip this space at a rapid pace to suit these unforeseen events?”