Are We Building into a Retail Apocalypse?

With many of the major Shopping Centres in Perth about to embark on another round of major expansions, I fear we may be headed for a “Retail Apocalypse”!

Josh Sanburn wrote In his article in Time Magazine last year,:

  • “By 2022, analysts estimate that one 1 out of every 4 Malls in the U.S. could be out of business

  • In 2017 alone, more than 8600 stores could close, many of them brand name anchor outlets, that real estate developers once stumbled over themselves to court”.

Here on the west coast of Australia we are witnessing the opposite trend!

So, is the market in Australia so radically different to that of the U.S.A, or are we building our way into what Sanburn quotes as a “Retail Apocalypse”?

Meeting Centres vs. Profit Centres

In Sanburn’s article, he raises the subject of ‘The Mall’ being a meeting place; a contemporary evolution of the central public meeting places stemming back to ancient Greece.

For the latter half of the 20th century and into the 21st, we have found our meeting places in between ‘Coles & Woolies, Myer & D.J’s, Kmart & Target’.

The basic design premise has been to offer a closed environment:

  • Placing the ‘anchor tenants’ at each end

  • Promoting foot traffic to the smaller stores in between

For several decades this simple plan worked well. But increasingly the meeting places were squeezed out, in favour of maximising lettable space.

And now in Australia, as we have seen in the U.S, many of the traditional anchor tenants are said to be in terminal decline.

Follow the Leader to a Retail Apocalypse?

Since Australia’s first ‘modern’ retail shopping centre opened in Brisbane in 1957, we have largely followed the American model for suburban Retail Centres.

We have been adopting the ‘Mega Mall’ concept, right at a time when the very concept of ‘The Mall’ in the U.S. is facing its greatest threat since the original archetype opened in Minneapolis in 1956.

Is Perth so radically different that we can ignore overseas trends – or are we blindly constructing our way to a ‘Retail Apocalypse’?

Online Shopping – A Symptom Not A Cause!

The challenges facing Retail Centres these days are enormous!

The most obvious being online shopping. But I wonder if too much emphasis is being placed on this one issue.

As far back as the mid-1990’s, Retail Centres began to realise that attracting shoppers to their Centres was not enough!

Customers were no longer going to their local Centres to meet up and linger but arrived knowing what they wanted, bought it and left!

Who saw that coming? (Maybe someone should have!)

As the Experience Declines – The Retail Apocalypse Moves Closer!

The progression towards a Retail Apocalypse has been steady and gradual.

The ‘Meeting Centres’ began to be replaced with ‘Profit Centres’.

First the fountains went, then the stages in the Centre Courts.

Anything that gave the place a soul was stripped away!

Maximising the return on floor space saw Pop-up Stores and casual leasing explode.

Any sense of community or meeting place being obliterated by the quest for higher and higher returns!

Bit by bit, the profit centres began to win out.

Sowing the Seeds of Future Failure!

Not only did the meeting centres begin to vanish, but many centres often actively discouraged one group from meeting at there – our youth!

Apart from the occasional store and perhaps cinemas, what is there to interest to this group who:

  • Have disposable income

  • And will become the adult shoppers of tomorrow

This group are tech savvy and unless they can be attracted to Shopping Centres, the online exodus will likely accelerate in the future.

But it is not just the youth who no longer visit – but also their parents. Where the youth go the parents invariably follow.

As Shopping Centres become as clinical and appealing as a dental surgery the ‘Retail Apocalypse’ moves perceptibly closer!

Without a Purpose – Customers Stay Away!

Think about any major Retail Centre: do you ever go there other than for a specific purpose? When was the last time you went just to browse?

You are usually confronted by a soulless box in the centre of acres of tarmac!

The free or open space within Retail Centres is being squeezed.

Free space has been converted to leasable space and the soul of the shopping experience has been destroyed.

Increasingly most people now go to Centre for a specific purpose, get what they want and get out!

Retailers are crushed by diminishing returns as the ‘Retail Apocalypse’ becomes reality!

Avoiding the Retail Apocalypse - Green Shoots of Change

In the U.S. Centres that remain vibrant in an otherwise gloomy market are beginning to show signs of a reversal of the trends of recent decades.

The ratio of free space to commercial space is swinging back toward a higher percentage of free space. Some Centres are also bringing back open-air sections within their boundaries.

They have realised these changes are necessary to avoid a Retail Apocalypse!

But in Perth, are we somehow different, or immune? Or are our developers just slow to catch on? The seeds of this downturn were clearly evident as the current cycle of expansions began to be announced and approved.

Putting Soul Back into the Shopping Experience

Avoiding a ‘Retail Apocalypse’ is about creating a destination and an experience that surprises and delights!

A destination where customers go, and because they find what they like, they are comfortable in the environment, they linger. Naturally and most importantly, they may spend that little bit more.

Whilst this may mean slightly less lettable space, retailers will ultimately benefit – which in turn will improve the Centre’s return on Investment.

It is not rocket science, but simple common sense.

If you would like to learn more about how to transform your Retail Centre and to become a destination call me on 0417 992 075

BOO Creative was the driving force in visual merchandising – including Christmas - in Perth for almost 30 years.