Scentre chief’s warning for retailers
Scentre Group chief executive Peter Allen has warned retailers failing to keep up with evolving customer needs that they risk falling away as the Westfield ANZ owner moves to ensure that it has the best brands in its centres.
Speaking at Scentre’s Annual General Meeting (AGM) on Thursday, Allen said that digital disruption was necessitating a change in the role of physical stores and that Scentre must respond to changing customer tastes.
“We continue to see structural changes in consumer behaviour, their expectations and the options presented to them are making it more important to create a compelling reason for customers to visit,” he said.
But while Scentre has introduced 289 new retail brands into its 34 centres in Australia and New Zealand last year Allen said those who are not delivering on customer needs have been placed under increased pressure.
“There’s no doubt the industry’s evolution will continue, as those brands that no longer perform or are relevant or desirable to customers will fall away,” he said.
Affirming Scentre’s commitment to maintaining a relevant retail offer, Allen said the landlord will “proactively curate” its tenancy mix to meet the needs of customers.
“We understand the value of our space and want to facilitate those retailers who customers engage with at our centres.”
The comments come amid escalating tensions between large shopping centre owners and retailers as a variety of large discretionary traders look to trim their store portfolios to cut back on costs.
Specialty Fashion Group, which owns the Katies, Millers, Autograph, Rivers and City Chic brands, has already flagged the closure of 300 stores in the coming years, while beleaguered department store Myer is currently negotiating with landlords on lease exits to reduce its occupancy costs.
A host of retail veterans have also weighed in publicly with their views on rental conditions in recent months, including Premier Investments chairman Solomon Lew, who has previously accused centre owners of providing certain brands with favourable rental deals.
“Where landlords to not continue to invest in overall shopping experiences and/or adjust their rent expectations in line with the performance of their own centres and the major shift in consumer behaviour, further store closures will be necessary,” Lew said in February.
Premier closed 10 stores in 1H18, including Just Jeans and Portmans flagship stores in Melbourne’s Bourke Street Mall.
Scentre unveiled a $700 million securities buy back on Thursday in a bid to more actively manage its capital structure in line with similar moves from other large listed landlords recently.
Scentre will also add 106,000 square metres of additional space to its portfolio in 2018, including the addition of an entertainment lifestyle precinct in its Plenty Valley centre in Melbourne, which opened two weeks ago.
Additionally, the landlord has just embarked on its first ‘greenfield’ development in more than a decade at Westfield Coomera, which will see a new community hub created within the Gold Coast centre, costing $470 million.
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