A changing retail landscape
Article5 min27 April 2017
Dexus's $4.6 billion retail portfolio, offers a fully integrated model that provides third party clients with access to expertise including asset and investment management, development, leasing, marketing and capital transactions.
Our 100 strong retail team ensures our retail destinations are constantly evolving and engaging with our ever-changing communities.
Change is everywhere
We only have to look at the past year to see the transformation that has unfolded around the globe. Brexit to the Trump Presidency, to the rise of smaller political parties in our own backyard, to social uprising across the Middle East and Europe. A theme has emerged; people are demanding change and it’s happening fast.
In 2017 the Dexus team is embracing change at every opportunity, the ability for our business to be agile and relevant will drive our future success.
Our three tier retail model allows us to respond to the changes that come before us, in a risk adjusted way. Our Sub-Regional shopping centres are strategically located to capture population growth and focus strongly on providing localised experiences that are meaningful to the communities they serve. Our City Retail precincts operating in Australia’s leading cities offer world class food and beverage and great general amenity. Finally the investments of Dexus Wholesale Property Fund (DWPF) and our other third party clients provide exposure to seven regional and super regional shopping centres that dominate their trade area catchment, whilst providing rich customer insights and a deeper understanding of the current market trends.
Through collaboration with our 2,500 customers we continue to unlock opportunities that not only benefit our returns; they drive sustainable growth outcomes for them.
Retailers need to be profitable in order to evolve and grow. Dexus needs profitable retailers to drive its ongoing business success. Over the coming year our engagement with our customers is centred on understanding real issues and sharing rich shopper data to implement change. This will only happen when the parties are willing to have open conversations, listen, respect, work together and agree to partner for future mutual success.
Our City Retail precincts operating in Australia’s leading cities offer world class food and beverage and great general amenity.
The importance of delivering will drive the change in our business in 2017. Significant investment in our financial systems and processes allows our team to be more efficient. The capital works program invests millions of dollars into operational improvements across our centres from ambience upgrades to improved services, enhanced amenities and localised place-making projects. All designed to ensure our shopping centres deliver experiences that our visitors and retailers expect. Our real motivation and drive is to exceed their expectations, resulting in delighting our communities.
The $612 million development pipeline will continue to build on the considerable progress made in 2016 at Tweed City, Galleria Melbourne, Southgate Melbourne, Westfield Miranda, Westfield North Lakes and stage one of Willows Shopping Centre in Townsville.
The stage two investment into Willows Shopping Centre will deliver an expansion that will transform the current retail offer into a leading shopping destination within the region.
Smithfield Shopping Centre in Cairns will welcome a new entertainment and dining precinct featuring Event Cinemas. The Cairns local community has been waiting for a quality experience to socialise and entertain for a long time.
Gateway Sydney officially launched in early 2017. The $80 million project’s goal was about maximising the iconic Circular Quay location and addressing the undersupply of quality dining in the precinct. The response is the opening of over 25 world class food and beverage operators including Neil Perry’s Burger Project, Adrian Zumbo’s Patisserie and the ever-enticing Popina bar and dining experience. The most important aspect of the Gateway Sydney development is how the building’s design envelope gives back to the City of Sydney by activating space and connecting to the surrounding streetscape. Residents, CBD workers and tourists will all benefit from the transformation that is Gateway Sydney for years to come.
Westfield Plenty Valley in Victoria will see investment into a new dining, leisure and entertainment precinct, anchored by Village Cinemas. Westfield West Lakes in South Australia is currently in development, featuring the reconfiguration of David Jones to a modern, contemporary offer and the introduction of mini major tenants.
Enabling our retail portfolio to be socially connected is essential for driving shopper engagement and securing loyalty. Our strategy is centred on unlocking opportunities to drive growth, deliver meaningful engagement and capture insight into the 100 million plus people movements that our retail centres experience each year.
Take a standard shopping centre Facebook page that might have 5,000 followers today, with the centre sitting in a primary trade area of 50,000 people; imagine the power of engagement if 50% of the primary trade area followed the shopping centre’s page. That’s 25,000 opportunities to engage directly to the target market. It makes local press advertising and direct mail activity look fairly average with very few ways to measure engagement success.
A community following a shopping centre sounds exciting but it’s not enough; we need to deliver compelling content to drive the conversation and participation. Our marketing team is working hard to showcase local stories from local people which support their local places. It’s this style of content management that’s connecting to the hearts and minds of the community. Staying socially connected to our communities is a way of encouraging a reason to visit our retail destinations and drive a conversion opportunity for retailers.
As seen around the world in recent times people want greater interaction, they want to participate at every chance. Put simply, people like people. Showcasing and presenting activations in our retail destinations with the community front and centre provides a wonderful opportunity for people to come together and connect, in turn making our shopping centres vibrant and the hubs of their communities.
In 2017 we will further enhance our retail websites with more personalisation. The roll out of Wi-Fi continues and will assist both shoppers and retailers whilst driving data insights.
One problem we face, which is common to many businesses, is we have so much data coming at us. We have to sift through the insights to really identify the trend, the opportunity or the risk that could be emerging. The role of the data scientist has never been so important to unlock future business growth.
We now operate in a retail sales environment that is lower growth over a longer period of time. We see retail sales growth sitting between the 2-4% range for some time.
Deloitte Access Economics Partner, David Rumbens view notes; “We expect that real retail sales growth will remain low over 2016-17, before recovering somewhat to 3.0% over 2017-18.” (6 December 2016).
It’s never been so important for shopping centre managers and owners to have sound long term master planning strategies in place that continue to shape our retail destinations for the generations of tomorrow. We are continuing with this with the recent DWPF acquisition of Carillon City in the centre of Perth. Carillon City has a proud history in the Perth market and strategically sits between the city’s two main pedestrian malls. Working through the master planning process we will look to unlock the value of the asset and position the retail destination for the future.
Our City Retail division is capitalising on the demand from Australia’s appetite for great experiences in our major cities. Dexus is well positioned with management and ownership of some of the best office buildings in the country across Sydney, Brisbane, Melbourne and Perth. We are working to open up the ground-plane of these iconic buildings and deliver experiences for more than just the office tenants within.
According to Urbis, food and beverage sales in regional centres are up 90% in a decade, 2006-16. Delivering destinational brands and a range of food experiences from fast, casual to fine dining in a quality setting is transforming our office portfolio. Attracting not only surrounding CBD workers but new users from local residents to the large tourist market in each city is paramount.
The pace of change is accelerating and the Dexus team is enjoying the challenges and opportunities to add value and continue to improve and transform retail in Australia. The future is exciting, innovation is everywhere and people are motivated for change. The retail landscape of tomorrow will be very interesting and relevant, forming up on the basis of better data and information than we’ve ever had before.