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Shopping centres can benefit from e-tailing

SHOPPING centres can benefit from the impacts of e-commerce through strategic planning and flexibility, and can prosper during the ‘e-tailing’ era according to the Property Council of Australia.

Property Council of Australia National President Carol Schwartz believes traditional shopping media cannot compete with on-line retailing because the basic propositions of e-tailing are too powerful.

Those propositions, which are yet to be tested fully in the real world, are that the web will deliver anything to anyone, will have an infinite product range and will offer more convenience, better value and greater user control.

“Shopping centres as we know them will be totally transformed.

“Those who fail to use the new communication channels offered by the web will be the biggest losers. However, there are also massive opportunities,” Mrs Schwartz said.

“If we look at the way the web is already transforming banking, stock broking, travel, book and CD sales, it is clear we have little time to waste.

“For any investor who’s built a centre in the past couple of years, the full force of the changes in consumer buying patterns will hit before the first major refurbishment.

“Shopping centres need to become lifestyle centres. If we shift from retail to lifestyle, property investors can continue to play the facilitation role that created the shopping centre success story in the post-war period.

“The rise of shopping centres was all about meeting the demand for convenience and value. Shopping centres represent the triumph of the village and the bazaar over the

hassle of strip shopping and suburb hopping,” she said.

“It’s only natural that, if a more convenient alternative comes along, people will grab it.”

She described potential benefits of on-line retailing, including ultra convenience, infinite shelf space, the guarantee of comparable pricing and more personal and family time as a persuasive value proposition.

Mrs Schwartz predicted the online revolution will become unstoppable as the Net generation grows into the dominant consumer group.

At the same time technology will continue to improve and more

manufacturers will bypass retailers.

Compounding this is the fact that the computer industry wants the online revolution to happen and will do everything it can to push the virtual marketplace.A major down side is that the

simple formula of shopping centre success is based on customer traffic.

Online buying encourages leakage from centre sales, which reduces the profitability of retailers, dampens percentage rents and long term rental growth.

Investment returns fall as vacancies rise. In short, the new online convenience will translate into less demand for some types of retail bricks and mortar.

Industry practitioners believe major regionals and convenience stores will survive, while mid-size centres will die out.

Mrs Schwartz said that, despite the impending change, there were survival strategies which shopping centres could embrace to flourish in the new retail environment.

“Firstly, the successful shopping centre will facilitate bundle buying, which means offering online and offline services.

“Bundle buying means the shopping centre acts as an information processing business. It heralds a shift from a brick and mortar real estate format to a click and mortar business model.

“Success will be determined by foot traffic through the centre and finger traffic on the web, both of which need to convert into sales.

“Secondly, the centre should offer total lifestyle solutions – everything from financial management and health care to laundry and child care.

“In short, the shopping centre manages a network that delivers full customer service with maximum customisation.

“Thirdly, the centre should host lots of community and entertainment activities that cement loyalty equity and reinforce physical visits.

“Successful centres will also foster strategic alliances that include firms such as mortgage originators, that can deliver lifestyle products and services.

“Fifthly, use the physical centre to manage multi-channel buying. Ensure the web site offers information on sales, upcoming events and online ordering. It’s really important to give the site lots of personality and make it entertaining as well as super easy to use.

“Develop a distribution/delivery network for the entire centre, with a coherent brand that promotes the centre.

“Even though such a service will probably be contracted out, ensure quality control over the look and performance of the delivery staff.

“In the online world many things will be reversed. The delivery person will often be the first human a customer meets.

“Seventh, upgrade the shopping centre lease and marketing

strategies to ensure they cope with cyber sales, more flexible tenancies and percentage rents.

“Redesign the centre and persuade retailers to do the same with their stores.

“Ninth – focus on branding the centre as a community institution. Build trust in the brand and use it to persuade shoppers to buy into bundled lifestyle products.

“Finally, survival strategy number ten: integrate your marketing strategies in order to improve the brand power of your centre.”

“Any owner who can create a successful click and mortar formula is going wipe the floor with bricks and mortar-only competition.”

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