- Landlords ‘setting up retailers for failure’
- How the online shopping revolution is actually helping bricks-and-mortar retailers
The launch of online shopping giant Amazon in Australia is likely to have only a low to moderate effect on WA’s 16 biggest shopping centres, an independent commercial property report has found.
The study titled the Thought Leadership Report – Visiting the Shops, by Y Research, analysed the vulnerability of shopping centres to the e-commerce behemoth, based on the tenancy mixes of each centre against a risk matrix to determine their ‘Amazon risk score’.
Y Research principal Damian Stone began the comprehensive study in September and said the scoring system was partly based on online shopping data for Australia and America.
Grouped by retail category, stores were given a score between one and 10 depending on their “Amazon risk”, with 10 representing the most at risk. The research found all of the largest WA malls had a score of less than 5.
Shops selling books and music were considered at most risk, while service providers were deemed the least under threat from online shopping.
“It really comes back to, ‘How do shopping centres compete when you have so much choice?’” Mr Stone said.
“It’s really about creating those things that people can’t get online.
“So optometrists, and hairdressers, and watch repairers, and more massage places that you can poke a stick at… these are the things you can’t get online.”
Warwick Grove, in Perth’s northern suburbs, was considered the least at risk, with a score of 3.53 out of 10.
The study found that due to its tenancy mix, the centre was 13.9 per cent less at risk to increased online shopping than the average centre.
A Vicinity Centre spokesperson, who manage the shopping centre, said customer feedback told them they wanted Warwick Grove to be a hub for the people who live, work and shop in the community.
“We know 93 per cent of retail purchases in Australia are done in bricks and mortar stores because people want the unique, physical experience that they get when visiting a shopping centre,” the spokesperson said.
Due to high tenancy mixes of services, including hairdressers, skin and nail care professionals, and drycleaners, Belmont Forum came a close second with a 3.6 Amazon risk score, followed by Mirrabooka Square (3.72) and Cockburn Gateway (3.8).
Perron Group property investment general manager Andrew Byars said when the Perron Group invested more than $100 million in the redevelopment of Cockburn Gateway, the goal was to better meet the needs of local shoppers and the local community.
He said the redevelopment not only delivered many fashion and food firsts for Perth shoppers, but also a new community piazza area with eight restaurants, alfresco dining, a playground, water feature and stage area.
“We believe brick-and-mortar retail will remain a strong and necessary way to engage shoppers. People still enjoy, and will continue to enjoy, visiting shopping centres,” he said.
AMP Capital’s Karrinyup Shopping Centre and Garden City in Booragoon, recorded the highest Amazon risk scores of 4.59 and 4.56 respectively, due to tenancy mixes focusing on fashion.
Online clothes shopping is one of the fastest growing sectors for online retail in Australia, Mr Stone said.
“There is increasing anecdotal evidence that consumers are visiting stores to determine fit and how clothes look on them and then heading online to order,” he said.
“The focus on high-end fashion may limit the impact of Amazon in the short term. The Amazon risk scores for these centres, due to their tenancy mix, make them 12 per cent and 11.2 per cent more at risk to increased online shopping than the average centre.
“Shopping today can be done at home, on the go or in store. Armed with a smart phone, most consumer goods could be ordered online and delivered to your door.
“Online retail continues to erode the market share of bricks-and-mortar retailers as consumers seek the best possible price.
“The launch of Amazon is expected to further increase competition for scarce consumer dollars and impact the bottom line of Australian retailers.”
Keep up with Commercial Real Estate news.
Keep up with Commercial Real Estate news.