Why it’s now all about ‘experience shopping’

Retailers are investing in an “experience” for shoppers, transforming major centres into “destination locations” that offer far more than traditional offerings as they fight back against online shopping and big hits endured during the COVID-19 pandemic.

The virus permanently changed the way we shop. Lockdowns and fears of mixing with large crowds meant millions jumped on the online shopping bandwagon.

Now, with the worst of the virus seemingly behind us, shoppers are returning to bricks and mortar retail – but there’s a catch.

Cityfields is a grand new restaurant at Chadstone Shopping Centre.Credit: Bonnie Savage

Retailers now need to do far more to attract foot traffic than simply display their wares in traditional shops at cut-rate prices. Those that go the extra mile by adding to the shopping experience are being rewarded.

Recent retail sales figures show consumer spending remains resilient despite the fastest rise in official interest rates in four decades and a surging cost of living.

Retail turnover climbed 0.6 per cent in August for its eighth consecutive rise, and follows a 1.3 per cent jump in July and a 0.2 per cent rise in June.

Retailers that combine both recreation with shopping are reaping the benefits.

While households continue to spend, non-food industry results were mixed, with cutbacks seen in categories such as fashion and home goods.

However, CommBank Household Spending Insights data for August, which tracks spending data from seven million consumers, shows that recreation spending remains strong, with a gain of 1.9 per cent in August and up 8.4 per cent in the previous year.

Retailers that combine both recreation with shopping are reaping the benefits.

The September Knight Frank Australian retail review shows retail owners are shifting their offerings to draw in more people. Knight Frank head of retail investment Chris Maher said they were focusing on making retailing an “experience”, to enable shopping centres to become “destination locations”.

ASX-listed shopping mall owner Vicinity Centres has spent more than $70 million building 10,350 square metres of new space in its Social Quarter area at Chadstone shopping centre to accommodate 17 entertainment and dining experiences, including a Holey Moley mini-golf course.

New dining retailers include Cityfields, Piccolina Gelateria, White + Wong’s, with its rooftop Sardine Bar, and UA Brewing, which produces craft beer exclusively for Social Quarter onsite.

Vicinity says the moves resulted in a valuation uplift for the centre. In its latest earnings report, the group beat market expectations with strong rental growth and new leasing deals to post a 14.5 per cent jump in full-year profit.

“Other centres now have basketball courts, bowling alleys and sports bars, as well as improved food malls, cinemas and evening entertainment to make the whole experience more of an outing,” Knight Frank’s Maher said. “This repositioning, and where needed, repurposing, is re-asserting bricks and mortar retail offerings after a period of significant online and e-tailing focus”.

Maher said even the COVID-hit Melbourne and Sydney CBDs were seeing the green shoots of a retail recovery.

“In Melbourne, Thursday footfall is now at 85 per cent of pre-pandemic levels, but more importantly, weekend and evening numbers are higher than in 2019 as the CBD comes to life outside of working hours,” he said.

Streetwear clothing company Up There co-owner James Barrett, along with partners Jason Paparoulas and Brendan Mitchell, recently moved to a new store at 69 Flinders Lane from former digs in McKillop Street when they needed to expand.

The new shop fitout included a design brief to create an experience that entices shoppers to explore. “It was about creating the right environment for our clientele as much as the international labels we stock,” Barrett said.

Paparoulas said the owners wanted to inject a sense of playfulness in the design.

Among the changes are a series of booths that offer collaborations with the designer products that Up There stocks, and a main counter which extends almost the full length of the store to allow shoppers time and space to look at accessories. The fitout also includes a separate area for sneaker buffs as well as a cafe at the rear.

Streetwear clothing company Up There’s new store.

Bricks and mortar shopping strips are also staging a recovery.

The 2023 edition of Fitzroys’ Walk the Strip report found vacancies across Melbourne’s shopping strips fell 0.5 percentages points to an average of 6.2 per cent in the year to August, after peaking at 10.3 per cent in 2021.

For yet another year, Church Street, Brighton, claims the lowest vacancy rate among the shopping strips at 1.1 per cent, but High Street, Armadale – which has a wide range of high-end boutiques and specialty food offerings that enhance the shopping experience – is fast closing the gap, with a vacancy rate of 2.3 per cent.

High Street, Armadale is thriving with its wide range of high-end boutiques and specialty food offerings.Credit: Joe Armao

Fitzroys division director James Lockwood said hyper-locality has offset some impact of the consumer spending slowdown.

“Spending is slowing but working from home is here to stay, which means that a great deal of spending will still be concentrated on shopping strips,” he says.

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