Paul Wallbank – Brilliant Communications

Tag: retail

ABC Brisbane on the future of retail
This morning I’m talking with Steve Austin on ABC Brisbane about the future of retail as the city’s biggest shopping mall opens.

What does such a huge complex mean to the local economy and is it sustainable as the retail industry evolves?

Having had a massive upgrade, we can be sure Westfield Chermside will have plenty of technology to help customers spend money and we covered some of the ways modern retails have to understand consumer behaviour and predict what individuals will spend.

Prior to the segment (which starts around the 60 minute mark), Steve took calls from listeners about how retail has changed in Brisbane over the past fifty years. The demise of fondly remembered department stores is a reminder of how the sector changed as consumer behaviour changed over the last half of the Twentieth Century.

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April 6, 2017
Retail’s evolving face
On the back of last week’s discussion about Amazon’s Australian expansion, I spoke to Sydney community radio station 2SER-FM this morning about the challenges facing suburban shopping strips.

Like the rest of the world, Australia’s suburban and small town retail strips have been doing it hard for a generation. While technology has a lot to do with this, it’s not online commerce that’s the killer.

The decline, recovery and shift of the suburban retail strip really started in the 1960s as people moved to the suburbs and started shopping at supermarkets – the technology driving that shift was affordable motor cars and refrigerators.

Around the developed world, the removal of tram (or streetcar) systems during the 1950s and 60s also hurt the inner city shops as local foot traffic declined. In Sydney it’s striking that fifty years after the removal of the tram system those suburbs that developed around them are still easily recognisable.

Shifting back to the city

In the 1980s another shift happened. Suddenly in the inner city became fashionable again for affluent and young residents and a new generation of shopkeepers sprung up attracted by relatively cheap rents.

The shift we’re now discussing is that generation of the 1980s and 90s has been dispersed as rents become increased or shops are demolished for apartment blocks that cater for the populations moving back into the inner cities now suburbia isn’t so fashionable.

Like all shifts this has consequences – just as the corner grocery store and local butcher was forced out of business by supermarkets in the 1960s and 70s, today the indy fashion store or old fashioned immigrant run cafe is being displaced by high priced gelato shops and restaurants catering for whatever the current food fad is.

The push against consumerism

With increasing rents, tenants increasingly become upmarket brands although the upper end of the market though is not what it was as the middle classes – particularly in cities like Sydney, San Francisco, Singapore and London – find soaring property prices make it harder to indulge in luxury items.

So high rents are driving shopkeepers out of business and in Australia at least, the perverse incentives in taxation laws and investment regulations means that landlords have a positive disincentive to drop their asking prices, which means vacancies increase.

Renew Newcastle successfully skirted landlords’ reluctance by ‘licensing’ space rather than leasing it from landlords. This allowed land banking property developers and valuation conscious commercial owners to let out space without formal leases that created legal or financial issues.

Regional challenges

It will be interesting to see how Newcastle will perform as that land banked buildings are being developed into apartments and, the developers hope, high rent shops.

For other regional areas the news isn’t as great with technology in everything from mining to agriculture automating more jobs out of existence. Much of the decline in country towns and regions during the Twentieth Century was due to the mechanisation of farming.

Pervasive broadband promises some hope for regional communities but at present both jobs and wealth are being increasingly concentrated into major population centres. This however may be a transition effect exacerbated by governments propping up financial sectors after the 2008 economic crisis.

It’s interesting too that the financial sector now is undergoing an automation revolution not dissimilar to that of the twentieth century agriculture industries, something that’s bad news for cities and governments staking their future on those sectors.

Technology driving change

A lesson from the last hundred years is how technology changes our communities, the arrival of refrigeration and the motor car allowed suburbs and supermarkets to develop. While tractors and trucks radically changed the structure of rural communities.

With the rise of new technologies in everything from agriculture to transport and manufacturing, we’ll see similar changes to our societies and businesses in coming years.

The changes faced by today’s retail business are part of an evolving economy, just as the horse and tram dependent city of hundred years ago looked very different from car dependent suburbias of the late 20th Century, tomorrow’s cities will look very different from today’s.

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April 3, 2017
Surviving Amazon’s onslaught
The long awaited launch of Amazon in Australia seems to be finally happening with reports the giant is scouting locations for logistics centres for a late 2018 launch.

While some are predicting a retail apocalypse, not all are convinced Amazon will do well. Australia doesn’t have a catalog culture buying culture like the United States and, as german supermarket chain Aldi found, the nation’s high property prices and restrictive zoning rules makes acquiring sites difficult.

A further impediment for Amazon in Australia is the last mile with Australia Post dominating the delivery business, despite its mediocre service, and the dominance of incumbent retailers in the suburbs where most Australians live means the US giant isn’t guaranteed success.

Whether Amazon’s entry into a market does mean a retail apocalypse is also another question, while its clear the mall era is drawing to close there are plenty of success stores with chains like Ulta Beauty, Sephora and Kiehls – not to mention the Apple Store – thriving despite Amazon’s growth over the past twenty years.

In the Australian context, a bigger question should be around why local equivalents haven’t thrived with Billabong, Pumpkin Patch and Kathmandu all failing while the established majors have barely glanced at overseas markets – Harvey Norman and Westfield being the stand out exceptions, although the former hasn’t been a great success.

Even in Amazon’s original market of bookselling, big chains like Borders have fallen victim but local independent bookshops have survived and grown despite the online threats. So local retailers can weather an Amazon onslaught.

Another benefit of Amazon starting in Australia is to encourage new business, particularly given the US giant is rumoured to be focusing on groceries as it gives new entrants to the market an opportunity to enter without having to deal with the stultifying duopoly that dominates the market.

One thing is clear though, Australian retailers have been slow in moving into online and international markets, probably due to the luxury of catering to consumers in an economy that hasn’t been troubled by recession for a generation.

The year’s warning that Amazon will be opening shop is a warning for Australian business to lift their game and compete. Those who don’t won’t have any excuses.

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March 31, 2017
Malls and the economic divide
Yesterday we posted on how a lack of education is contributing to the decline of America’s middle class. An article on Bloomberg’s Gadfly website illustrates the direct effects of this change in comparing the fortunes of two different shopping malls.

It’s not news that America’s malls are dying in the face of changing demographics, consumer tastes and economics but some centres continue to thrive.

Bloomberg’s Shelly Banjo and Rani Molla put the success of some malls down to the affluence of their customers. A centre that boasts Tesla, Apple and Louis Vuitton stores such as Atlanta’s Lenox Square thrives and charges high rents to its tenants.

Just the presence of an Apple Store boosts a centre’s rents by 13% claim the authors.

Eight miles away from Lenox Square is Northlake Mall which only attracts a quarter of the rents on a per square foot (psf) basis and doesn’t boast the high quality names but rather a range of fading chains and department stores.

Northlake’s woes lie in demographics with its shoppers scoring poorly compared to Lenox Square’s on all measures.

The key points are per capita income and the education level with only just over half of Northlake’s customers having a college degree or better with the result earning only 2/3rds of that of Lenox Square’s shoppers.

Northlake’s lagging educational and income levels isn’t unusual as this is exactly the problem facing most of the lower middle classes as their earnings fall as their skills are left behind by an increasingly technological society.

The decline of Northlake, and most of America’s malls, illustrates the effects of an undereducated workforce on the local economy. Making sure the population has the skills to compete in the 21st Century is more than just a problem for the individuals affected.

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December 26, 2015
Creating a retail community – A tour of Microsoft’s Sydney flagship store
Microsoft today opens the doors to its first flagship store outside of North America in Sydney, Australia. A look inside the project gives some insight into the company’s retail strategy.

Situated in Westfield’s Pitt Street Mall, the store promises “cutting-edge retail and experiential spaces that allow consumers to get hands on with products in an immersive way.” What’s immediately notable is the lack of obvious security with all the devices on display being available for customers to pick up and walk around the shop with.

Most of those devices showcase Microsoft’s various projects and alliances. Everything from XBoxes running Minecraft to Lumia phones are on display along with a range of laptops from partners such as Dell, Toshiba and Lenovo.

Looking across the shop floor

Notable among the devices is are the Surface Book and Surface Pro 4 along with the Microsoft Band 2 taking place of pride in the displays. As with everything else, customers can slip the wriststaps on and walk around with them. Microsoft’s representatives were coy on how they will prevent the less honest walking out the store with them.

Microsoft Band 2 wearables on display

Acting as a store greeter, the Answer Desk is the hub of store where representatives direct traffic whether it’s technical support – which like the Apple Genius Bar is provided free – sales, or directions to events in the upstairs community theatre.

Welcome to the Microsoft Store Answers Desk

Community is a big theme in the store and the company announced $4.8 million in software and technology grants to 11 not-for-profit Australian organisations to coincide with the shop’s opening.

That emphasis on ‘community’ is reflected in this quote from the company’s press release;

“Our new flagship store is here to showcase the very best of Microsoft to the local community and we are delighted Sydney has been chosen as its home,” said Pip Marlow, managing director, Microsoft Australia. “This is a key part of our commitment to delivering a truly interactive retail experience that gives customers, partners and community organisations the opportunity to see, experience and do great things, all made possible by Microsoft technology.”

Pip Marlow sees the upstairs community room as being an opportunity to engage with various school, business and technology groups. The space itself is a little cramped, however it can be isolated from the store’s general hubbub, unlike the Apple Store’s equivalent space.

The community theatre

Overall the store is modernistic but somewhat cramped and should the store be successful congestion is going to be a real problem, particularly around the Answer Desk and the narrow stairwell which, like its Apple competitor two blocks away, features a translucent stairwell.

A narrow translucent staircase

In comparison to both the nearby Apple and Telstra stores, the Microsoft Showcase is surprisingly low tech with its retail experience. While the assistants will have mobile Point Of Sale terminals there’s little in the way of location technologies and contactless payments.

Overall the Microsoft Store comes across as a touch crowded and, dare one say, a little old school retail. As a showcase for the company’s products, it’s probably no more impressive than those of the better retailers.

However if Pip Marlow’s aim of building a community around Microsoft’s products is successful, that could prove to be the long term winning strategy for the company.

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November 12, 2015