Visiting the Shops a Study Into Consumer Choice at Western Australia’S Major Regional and Regional Shopping Centres
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Y RESEARCH THOUGHT LEADERSHIP VISITING THE SHOPS A STUDY INTO CONSUMER CHOICE AT WESTERN AUSTRALIA’S MAJOR REGIONAL AND REGIONAL SHOPPING CENTRES NOVEMBER 2017 To discuss this Thought Leadership study or any Y Research Report further, please contact: Mr Damian Stone Chief Problem Solver Y Research – Independent Commercial Property Information and Research M 0433 525 414 E [email protected] A PO Box 683, Applecross WA 6153 linkedin.com/in/damianstone Twitter: @YResearchNews Y RESEARCH UNIQUE DATA, UNIQUE INSIGHTS, YOU NEED ABOUT Y RESEARCH Y Research is an independent Western Australian property information and research firm. Since its inception in 2010, Y Research has developed unique databases on Perth’s office, retail, apartment, tourism, industrial and regional property markets through on the ground property inspections. We believe that for data accuracy, there is no better substitute than looking at a property in person. Our databases are supported by a wide variety of industry sources and extensive monitoring of the West Australian commercial property markets. Y Research produces a series of regular reports on Western Australia’s office, retail, industrial, apartment and tourism markets, as well as providing consultancy and advisory services to a range of Government and private clients. Y Research aims to provide high quality and more useful information to our clients, ensuring that they are better equipped to make decisions regarding their business. DISCLAIMER The information contained in this report has been prepared with care by Y Research and may include information from apparently reliable secondary data sources and which the author have relied on for completeness and accuracy. However, Y Research offers no warranty that the information it contains is accurate and disclaims all liability for any losses, damages, costs or expenses suffered by any person as a result of any reliance on this information. Accordingly, all interested parties should make their own enquiries to verify the information and it is the responsibility of interested parties to satisfy themselves in all respects. No part of this document should be construed as investment advice, either in relation to the real estate sector or a particular transaction. Information in this publication has been obtained from a number of sources outlined in the report. Y Research does not guarantee its accuracy or completeness and disclaims any responsibility for loss of damage whatsoever arising in any way for any representation, act or omission, whether expressed or implied (including responsibility to any person by reason of negligence). Opinions and estimates constitute judgements, which change when circumstances change, if not before. © Copyright 2017 Y Research Pty Ltd ABN 44 146 744 434. All rights reserved. No part of this publication may be reproduced or retransmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the prior permission of the author. Visiting the Shops - November 2017 2 WELCOME Mr Damian Stone | Chief Problem Solver Choice and Convenience. On the 20 February 2005, a much younger version of myself, as part of my previous role at a property industry association, repeated this phrase handing out how to vote cards outside a polling place in Applecross during the referendum on extended trading hours on weeknights and the introduction of Sunday trading. Choice and Convenience - was the key message of the Yes Campaign to voters. Extended trading hours would allow shoppers to pick times suitable to their lifestyle to shop, rather than rushing to fit their lifestyle into the arbitrary constraints of Government regulation. 57.4% of West Australian’s voted down extended trading on weeknights and 59.6% voted down Sunday Trading. Given my polling place was located between two of the most successful IGA’s in Perth, I was not surprised by the result, given the feedback I received on the day. Within 5 years, the new Government had introduced extended weeknight trading and Sunday Trading on the back of the resources fuelled boom in Perth’s population. As intended, extended trading has created jobs, fuelled the expansion of existing centres and been widely accepted by West Australians. Choice and Convenience. In 2017, WA consumers are increasingly spoilt for choice and convenience in terms of retail options. Perth is poised for a $5 billion wave of shopping centre development focusing on new neighbourhood centres, as well as the expansion of major centres to offer more dining and entertainment options, international retail and services such as gyms and child care. At the same time, the large format retail market, fuelled by the growth of Bunnings and the former Masters chain, has matured into a major part of the Perth retail property market. Online retail continues to erode the market share of bricks and mortar retailers as consumers seek the best possible price. The looming launch of global e-commerce giant Amazon in Australia, in late 2017, is expected to further increase competition for scarce consumers dollars and impact the bottom line of Australian retailers. Shopping today can be done at home, on the go or in store. With consumers having multiple shopping options, how can Perth’s major shopping centres compete? Smaller neighbourhood centres offer more convenience for shoppers. The internet offers a choice of affordable, shopping options from around the globe. Increasingly shopping centres in Perth, Australia and across the globe are moving towards offering experiences not found online or in smaller centres. Centres are introducing fine dining precincts, expanded entertainment options (cinemas and concert facilities), services (child care and gyms) and introducing new types of retailers. Where is Perth today in this evolution of shopping centres? What choice do WA consumers have when visiting our major shopping centres? This study seeks to define consumer choice in Perth’s major regional and regional shopping centres by examining the similarity of these centres in terms of their current tenancy mix. To establish the similarity of these centres, Y Research developed the Shopping Centre Similarity Score. We hope these findings will assist Perth’s major shopping centres to differentiate themselves to thrive in the increasingly competitive retail market as well as provide the public with information about the shopping choices available to them in major shopping centres. Thank you for making the choice to read this study. I hope the findings are convenient for you. Visiting the Shops - November 2017 3 INTRODUCTION We live in a world where, increasingly, products and services we As a result, major shopping centres are evolving to become more want can be ordered on demand. Thanks to companies such as than simply places to shop. The expansion of Perth’s major Uber (and Uber Eats), to Netflix, Amazon, AirBnb and Facebook, regional centres is based on providing what the internet and we no longer have to wait for a taxi, to cook, go to the video or neighbourhood centres can’t: great public spaces where people book store, or tomorrow’s newspaper. can meet, eat and be entertained, in addition to shopping. These centres will rely on the experience offered to customers to drive Armed with a smart phone, most consumer goods could be traffic into bricks and mortar shops. ordered online and delivered to your door. How do bricks and mortar retailers compete to retain their share of WA’s $34 billion Central to the next decade of retail is getting consumers retail trade market? to the door of the shopping centre. The choice each centre offers consumers, based on their tenant mix, plays a key The performance of Department Stores, the anchor tenants of part in attracting customers to centres from beyond their major regional centres, continues to erode. Sales in Department primary catchment area. So in 2017, ahead of the wave of Stores in WA were down 4.3% in the year to July 2017 according redevelopments, what level of choice do Western Australia’s to the Shopping Centre Council of Australia. Supermarkets, food, major shopping centres offer WA consumers? fashion, international retailers and services are becoming the new pillars of modern major shopping centres. These pillars This Thought Leadership Report will: are set to underpin the biggest change in Western Australia shopping centres in nearly two decades. > Analyse the current tenant mix of Perth’s 16 largest shopping centres using our new metric (the Shopping According to Y Research’s May 2017 Shopping Centre Centre Similarity Score) to determine the level of consumer Development Report, an estimated $5.14 billion dollars is choice across these centres; set to be invested in shopping centre developments across metropolitan Perth between 2016 and the end of the decade. > Examine how frequently consumers would visit each centre These developments are a balance of new local services based on their tenancy mix; and and regional entertainment hubs. Nine of Perth’s largest shopping centres are set to expand dramatically adding new > Analyse the potential impact the arrival of international Department Stores, supermarkets, international retailers and e-commerce giant, Amazon, could have on the performance over 1,000 speciality stores due to the Activity Centres Policy. of these centres. The Policy, which aims to establish community focal points, is also facilitating the development of non-retail spaces, such as childcare centres, gyms, medical facilities, offices, apartments and public meeting spaces. Visiting the Shops - November 2017 4 STUDY METHODOLOGY This study reviews the occupancy of the 16 largest shopping SCORING SYSTEM METHODOLOGY – Y RESEARCH centres in Western Australia. These centres contain WEST AUSTRALIAN SHOPPING CENTRE approximately 41% of the space in West Australian shopping SIMILARITY SCORE centres, despite representing just 5.5% of the 293 shopping centres in WA (Shopping Centre Council of Australia/Centre To measure the diversity of the tenancy mix in these centres, owners/Y Research).