Major shopping centres will look very different in aftermath of COVID-19
Experts are predicting Melbourne’s shopping centres like Chadstone and Highpoint will change drastically after the COVID-19 crisis. This is what you might expect on your future shopping trips.
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Childcare, health and medical hubs, innovative entertainment precincts, council services and even police offices may replace many traditional fashion brands and food outlets within shopping centres as a consequence of COVID-19.
Bricks and mortar shopping destinations such as Chadstone, Westfield Doncaster, Emporium, Highpoint, Eastland and The Glen, were already feeling the strain of falling foot traffic and had begun adapting with incremental changes to the mix of stores and services, as well as the way they operated.
But experts predict those changes will now come into effect far quicker and more dramatically than ever anticipated.
The economic and social impact of the coronavirus will see many retailers forced to shut up shop completely, while others will consolidate and re-evaluate how they operate.
Australian Retailers Association CEO Paul Zahra says the COVID-19 pandemic is already having an impact on the way people shop and the way retailers engage with their customers and that is likely to have long term impacts.
“We know the pandemic will speed up many changes that were already occurring such as the growth in online shopping,” he says.
“The tenancy mix in most shopping centres will continue to evolve as most retailers will assess their portfolio and reduce the number of stores they need, and choose not to renew leases which lack commercial value while investing heavily in their digital strategies.”
They won’t just be places for shopping
Con Stavros, associate professor in marketing at RMIT University, says shopping centres are likely to see a shift to more non-retail, service and entertainment oriented tenants.
“I am surprised we haven’t seen more of this already. In the United States, spiritual home of the shopping mall, council services, police offices and similar government providers are sometimes found in such locations,” he says.
“Australian shopping centre managers might try and lure more of these service providers into their complexes given it broadens their retail mix and enhances the potential to maximise foot traffic.”
Colliers International head of retail Michael Bate agrees shopping centres will become home to more non-retail and experiential services.
“This was a trend we were seeing prior to COVID -19 where there is the expansion into non-retail sectors such as child care, medical, office, hotels and service based businesses,” he says.
“This diversification gives more resilience in income streams and we expect this trend to continue. There will be a focus of landlords on creating a good experience for consumers.”
Chadstone has already diversified with the opening of Hotel Chadstone last year and plans for a $685 million redevelopment which includes a new nine-storey commercial office building, expansion of the current dining terrace and leisure precinct, upgraded fresh food precinct, with focus on workplace, wellness and lifestyle retailers, and further expansion of Australia’s biggest luxury mall.
The southern hemisphere’s biggest esports and games entertainment venue, Fortress Melbourne, opened at Emporium just weeks before the full force of the coronavirus hit.
Edutainment destination for kids, DreamCity, opened at DFO Such Wharf in December, and a $450 million three-tower luxury residential tower, Sky Garden, has been created on top of The Glen in Melbourne’s south east.
What might struggle to survive?
Mr Bate says cafes and restaurants are likely to the be among the hardest hit due to government restrictions.
“Although restrictions are likely to be eased, it is excepted there will still be some restrictions on numbers which will impact trade,” he says.
That’s in stark contrast to fresh food stores, supermarkets and pharmacies, which have seen substantial growth during the COVID-19 crisis.
“All supermarkets operators have seen a very rapid change and have had to innovate quickly over this crisis. We expect that the expansion of online (both click and collect and delivery) options will strengthen the supermarket sector. Hardware has also proved to be a very resilient sector in this crisis,” Mr Bate says.
Fashion and footwear have been one of the hardest hit categories, as are department stores such as Myer and David Jones.
“Our analysis suggests that the fashion and footwear sector has seen the largest amount of voluntary shutdowns as a result of the social distance measures. We expect that this is the sector expected to see store consolidations and some brands may not survive this shock,” Mr Bate says.
“Department stores have seen declining sales prior to COVID-19, with Myer opting to sell online only and David Jones continuing to trade for the time being. We expect that this crisis will accelerate decisions regarding their store network and how they service their online business.”
What’s the good news?
But it’s not all doom and gloom. Mr Bate says the outlook longer term for retail is still positive as there are sectors such as supermarkets and pharmacy which have performed exceptionally well over this period.
“While there are some categories that lend themselves to online retailing there is still a place for bricks and mortar stores. Retail is not just about buying. There is an element of recreation and experience that comes with retail which cannot be replicated online,” he says.
“Consumers still want to touch and feel some products and browse. Retailers with bricks and mortar stores will look to create experiences for their consumers which can’t be replicated in other channels but complimented with online platforms.”
Mr Stavros says many shopping centres are likely to prove resilient provided the coronavirus shutdowns are not overly lengthy or become any more onerous.
“Many of their tenants are major ‘name’ brands who have anchored their ongoing success to the experience a shopping centre provides and simply cannot move elsewhere with any ease,” he says.
“Shopping centres like Chadstone are modern and magnetic, with the space and amenity to maintain and create attraction. Other centres though might find it harder to bounce back as their mix of retailers might be different, with less drawcard offerings, and more reliance on brands who may not have weathered the downturn as well.
“In those cases, centre managers are going to need to be patient and work hard at finding reasons to entice shoppers in.”
A GPT Group spokesperson, which manages 12 centres including Melbourne Central, says shopping centres across Australia have a long and successful history of evolving to meet market changes and stay relevant to consumers.
“The current situation does not change our culture of being nimble, adaptable and resilient,” they say.
“The retail landscape is constantly evolving, and shopping centres will continue to adapt swiftly by driving innovation and market leading communications strategies to engage all parts of our retailer and consumer communities.”
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