2020 CEO Survey: Grant Kelley, Vicinity Centres

Recovery of our CBDs should be prioritised by state and local governments as a critical area, says Vicinity Centres chief Grant Kelley.

What are the three enduring lessons or changes to flow from COVID-19?

First and foremost, while our business has faced multiple challenges associated with the pandemic, we’ve reaped the benefit of Vicinity’s industry-leading data capabilities and new technologies to exceed government standards for safe public spaces.

In specific terms, across our portfolio, we’ve rolled out new innovations including Australia’s first heat-mapping to monitor social distancing, digital queuing and a new interactive tool on our centre websites showing real-time traffic data to help customers plan their trip.

We also launched a digital, contactless click and collect service, Parcel Concierge, which we’ve expanded at key centres across Melbourne, Sydney and Brisbane. We anticipate these innovations, along with our safety and hygiene measures, will continue to be part of life for the foreseeable future.

How would you rate the shape of the Australian economy as we head into the new year?

The recent economic data highlights Australia’s strong position with our economy rebounding, thanks to outstanding government leadership, and renewed consumer confidence.

Critically, the federal and state governments’ record levels of fiscal support have protected lives and livelihoods and the recent budgetary cycle focused, correctly in our opinion, on driving Australia’s economic and jobs recovery.

That being said, with JobKeeper and JobSeeker support winding back for approximately four million people in March 2021, retail conditions can be expected to remain challenging with some caution over employment and the flow-on effect to consumer spending.

What three reforms are needed to sustainably grow the economy?

The recovery of our CBDs should be prioritised by state and local governments as a critical area, with a strong multiplying effect on the overall economy. Encouraging workers to return to the office, and perceptions of safe public transport and low infection rates will be key to the revival of our CBDs.

There is also an opportunity to cut planning restrictions to stimulate private investment and drive economic growth and jobs. Together, construction and retail are two of Australia’s biggest employers, and as such an acceleration of planning timelines would help fast track the approval and commencement of key projects.

We should also leverage Australia’s world-leading management of COVID-19 to attract influential and skilled workers in key sectors including energy, tech and financial services.

What are the three best growth opportunities for your company in 2021?

Given the growing consumer preference to live, work and be entertained close to home, we believe our destinational centres will continue to play a key role in the lives of Australians. With international travel off the agenda, we have the chance to capture some of the discretionary spend which occurs when Australians travel overseas.

With more than 300 million visitors a year, and close to 80 per cent of Australia’s population living within a 30-minute drive of our centres and a database of more than one million customers, we have a clear opportunity to grow new income and leverage our vast physical and digital assets.

We continue to remain focused on our mixed-use strategy, which offers tremendous opportunity given our strong assets in key markets with connection to transport hubs. For example, as part of our first residential mixed-use project, more than 1,500 new residents will, early next year, move in above The Glen to Golden Age’s Sky Garden, a $450m, three-tower luxury apartment development — Australia’s biggest residential project built above a retail destination.

Using Wi-Fi and consumer insights, along with our data science capability, we will continue to evolve and optimise our retail mix to focus on key trends including food retail, athleisure and the further penetration of global luxury brands, including expansion into our DFO portfolio, where we are seeing significant growth.

What impact will digital transformation have on your company?

Shopping centres have been evolving for more than 70 years so we’re adapting constantly as an industry and we’re advancing our business with the use of technology and rich data and analytics capabilities.

COVID-19 has accelerated digital transformation trends which were already underway. That being said, physical stores will remain the dominant sales channel for the foreseeable future. We’re seeing customer visitation bounce back strongly which illustrates that physical retail remains an important part of our community and social experience, which online cannot fully replace.

We know proximity to physical stores can boost a brand’s market share by an average of 130 per cent, including a 40 per cent increase in online. We understand that thriving retailers will need physical stores to enhance their multi or omnichannel aspirations and we’re focused on supporting their strategies.

How would you rate business, state and federal government performance this year?

From a macro perspective, the federal government was at the forefront globally by responding quickly and proactively with a highly effective fiscal and public health response. Australia is in a very strong position when compared with other countries around the world.

Now, for our recovery, and to get Australians back to work, we need governments across the country to continue to manage the ongoing health challenge successfully with effective controls in place, to drive business and consumer confidence.

In our industry, we’ve sought no further extensions to the government-mandated SME code of conduct of commercial leases. Property remains one of the few industries that has provided waivers of rent, not only deferrals, to impacted businesses, notwithstanding the legal obligations of tenants under existing leases. To date, the shopping centre industry has provided approximately $2bn of short-term rental relief to all retailers impacted by the pandemic, regardless of whether they are covered by the code or not.