Amazon’s impending arrival means Australian shopping centres have to shape up or risk shutting down
AMAZON’S impending arrival has Australian shopping centres living “in fear” of the US giant. Experts say they’re right to worry.
Retail
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SHOPPING centre owners are in fear of the upcoming entry of Amazon to the Australian market — and with good reason.
In America the so-called “digital monster” has led to traditional suburban malls failing as they struggle to respond to the changing desires of shoppers.
US-based Katie Sprague, a brand strategist with shopping centre designers and architects Arcadis CallisonRTKL, spoke to news.com.au after a fact-finding mission to Australia
Her verdict? Amazon’s debut means our suburban shopping centres need to shape up or potentially shut down.
In the future, successful shopping centres may not actually allow you to physically buy products on the spot, and retail hubs could be centred around lifestyle interests, as malls evolved towards providing experiences instead.
“The traditional shopping mall has been in decline in the US. There are about 12,000 suburban shopping centres in America, about a third of those are in decline and about 200 are actually being taken out of commission,” said Ms Sprague.
One of the reasons for the mall malaise is the rise in online shopping and, in particular, retail behemoth Amazon. The company accounts for almost half of all online retail sales in its home market.
Analysts Morgan Stanley has dubbed Amazon a “digital monster” and “country killer’’ for the harm it has done to the profit margins of established retailers in the new markets it enters.
Last month, Amazon confirmed they were coming to Australia and were scouring Sydney and Melbourne for distribution centres.
“In America we’ve lived through the fear of Amazon. But when I was in Australia everyone was talking about their trepidation and fear of Amazon.
“Everyone was saying, ‘oh my gosh, no one will have a reason to go to bricks and mortar,” Ms Sprague said.
“But the shopping centre isn’t dead, it’s evolved. What Amazon has done has forced retailers to focus, to have more of a connection to the customer who, after all, has all the power.”
Arcadis CallisonRTKL has mapped the shape of the typical mall in the past, present and the future.
In the 1990s, several “anchor stores” — such as a Woolworths or Myer — would be at either end of a centre with a fast food dominated food court between and lots of parking around.
Today, this basic model has been supplemented with more upscale food offerings and green space.
But in the years to come, the shopping centre will be just one part of an integrated residential, tourism and business district.
“The mall of the future is not a mall. It’s an entirely new retail experience — one that will change throughout the day to keep people coming back for new, fresh experiences,” said the company.
Ms Sprague, who is currently working on an upgrade of the Lend Lease owned Sunshine Plaza in Queensland, said centres needed to be more integrated into communities and would rely on public transport far more.
“That big sea of car parking might be convenient for shoppers but it’s not great for neighbourhoods around it.
“Millennials want to live where they work and play and they’re anxious to be in an urban environment where they feel connected to their city.”
Overseas, Ms Sprague said the City Creek Centre in Salt Lake City and Westfield London were at the cutting edge of new mall design and technology use.
Closer to home, Chadstone’s new extension in Melbourne (which Ms Sprague worked on) and the innovative use of outdoor space at the Gold Coast’s Pacific Fair put them top of the domestic mall ladder.
But she said it was a shopping precinct built in the 19th century which could serve as a blueprint for 21st century centres.
“One of my favourite Australian experiences was the night markets at Melbourne’s Queen Victoria Markets. You waited in line for food being cooked in front of you and it was authentic and exciting.
“We’re going back to the future. In fact [future malls] might look a lot like the high streets of past.”
Shopping centres need to become destinations to enjoy the sensory experience of retail with a digital edge.
New York Menswear retailer Bonobos now has “guide shops” in malls across the US where no money changes hands.
“They will give you advice but there is no purchasing in store and Bonobos don’t care because they do both bricks and mortar and digital,” said Ms Sprague.
From the multi-level spaces they are today, department stores will shrink, she predicts. Taking a leaf from Bonobos book, they will become more like showrooms, with a limited take away range, and most orders delivered to people’s homes or offices in a matter of hours.
Myer is already reducing the size of many of its stores, including in Cairns and the Sydney suburbs of Blacktown and Castle Hill.
Another innovation is at Nike’s Soho shop in New York, where customers can actually play basketball on the in-store courts.
Ms Sprague is even working on a cannabis-themed shopping district in Colorado, a state where the drug has been legalised.
“Marijuana is a $2.4bn industry for Colorado so we are working on a retail destination where you can experience, learn about, buy, stay and do everything connected to a cannabis experience.”
But Ms Sprague said there were no short cuts to making malls relevant to the modern shopper.
“If what [centres understand] by experience is having a fashion show in the centre court and a pop up circus in the parking lot, then it’s a cop out.
“Smaller centres that don’t have a great food or greet community component may go away,” she said.
“It’s the great centres that act as a civic destination with top notch retailers and fresh experiences which will continue to be strong even with Amazon”.
Originally published as Amazon’s impending arrival means Australian shopping centres have to shape up or risk shutting down
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