Over $5 billion to be invested in Perth’s retail scene
Over $5 billion dollars is set to be invested in shopping centre developments across metropolitan Perth in the next five years, according to independent commercial property research and information firm, Y Research.
The bulk of this development will come from the once in two decade expansion of Perth’s major shopping centres.
According to the research firm, the expansion of Perth’s major regional centres is based on providing what the internet and neighbourhood centres can’t: public spaces where people can meet, eat and be entertained, in addition to shopping.
Centres will instead rely on the experience offered to customers to drive traffic into bricks and mortar shops.
The wave of development will create entertainment hubs across Perth’s suburbs. No longer just food courts, centres will establish dining precincts with top of the line restaurants and taverns. In limited examples, there is space planned for concerts. Refurbished and expanded cinemas are a key feature despite the rise of streaming services.
New service based retailers will become main stays of larger regional centres. Gyms, childcare centres, medical centres and children’s playgrounds will create daily interaction in expanded centres.
“With consumers having multiple shopping options, bricks and mortar shopping centre owners, and their retailers, need to innovate to retain their share of WA’s $34 billion retail trade market,” Y Research principal Damian Stone said.
“Shopping today can be done at home, on the go or in store,” Stone said. “Armed with a smart phone, most consumer goods could be ordered online and delivered to your door.”
Online retail continues to erode the market share of bricks and mortar retailers as consumers seek the best possible price, Stone added.
The launch of Amazon is expected to further increase competition for scarce consumer dollars and impact the bottom line of Australian retailers, he said.
Stone said, however, that the e-commerce giant’s launch in Australia will only likely have low to moderate impact on Western Australia’s 16 largest shopping centres based on their tenancy mix, according to a report released by Y Research.
Y research’s study analysed the vulnerability of the tenancy mixes of each centre against a risk matrix to determine each centre’s “Amazon Risk Score”.
The scoring system was based, in part, on online shopping data for Australia and the United States.
Grouped by retail category, stores were given a score between one and ten depending on their “Amazon risk”, with 10 representing the most at risk. The study showed all of the largest WA malls had a score of less than five.
Stores that sell books, music etc were considered to be most at risk with service providers judged to be least at risk to increased online shopping.
Stone said online retail continues to erode the market share of bricks and mortar retailers as consumers seek the best possible price.
Of the 16 centres reviewed, Warwick Grove recorded the lowest Amazon Risk score of 3.53 out of 10 indicating that due to its tenancy mix, Warwick Grove is 13.9 per cent less at risk to increased online shopping than the average centre.
Warwick Grove, Belmont Forum, with a 3.6 Amazon Risk score, and Mirrabooka Square, with a 3.72 Amazon Risk score, are at a reduced risk to online shopping due to tenancy mixes with high exposure to services such as hairdressers, skin and nail care professionals, drycleaners etc.
The abovementioned shopping centres have a high proportion of retailers that are impossible or difficult to recreate online – watch, shoe and mobile phone repair, massage therapists, optometrists and cafes.
Karrinyup, 4.59, and Garden City, 4.56, recorded the highest Amazon risk scores – this was due to their tenancy mix focusing on fashion. Online clothes shopping is one of the fastest growing sectors for online retail in Australia.
There is increasing anecdotal evidence that consumers are visiting stores to determine fit and how clothes look on them and then heading online to order. The focus on high end fashion may limit the impact of Amazon in the short term. The Amazon risk scores for these centres, due to their tenancy mix, make them 12 per cent and 11.2 per cent more at risk to increased online shopping than the average centre.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.