newsletter

Stocktake
our take on Australia’s retail landscape
The outlook for retail in 2015
While Australian retailers are under pressure from globalisation of price, digital disruption and a steady influx of international retailers,
Citi analyst Craig Woolford remains positive on retail spending this year. Craig shares his thoughts on where the retail environment is
headed, the top retail trends for the next 12 months and the opportunities for retailers to innovate and connect with the consumer.
With consumer confidence bouncing back
largely due to crashing petrol prices and a fall in
unemployment in December, it’s likely that the
retail environment will remain healthy in 2015.
“Last year we saw above average growth
overall and all the ingredients are there for
continued growth this year – lower petrol
prices, lower living costs and less leakage
to online retail – which will certainly help
discretionary spending. There’s reason to
be optimistic,” says Craig.
Growth areas
“One thing we know is that consumers are ready
and willing to spend but they are selective about
how they spend their money. Consumers continue
spending up on food and eating out - the doubledigit sales growth in cafes and restaurants is
clear evidence of that – as well as cosmetics and
recreation,” he said.
Household goods retailing and hardware were
also winners in 2014 supported by a lift in housing
activity and rising house prices, with high-value
home appliances and furniture and bedding sales
very healthy and this will more than likely continue
this year.
Active wear is another growth category. As one
of the fastest growing categories in fashion, it’s
definitely an area with lots of opportunities.
Global eyes on Australia
The globalisation of the Australian retail market
will continue this year with a number of big
international retailers expected to set up shop in
Australia. There are rumours that British retail giant
Marks & Spencer is eyeing off the Australian
market and US furniture store Ashley Furniture is
now open in Adelaide.
With global players continuing to enter the
market, and existing international retailers such as
Sephora, H&M and Uniqlo looking to increase
their footprint, Australian retailers will continue to
face stiffer competition.
“The continued globalisation of the Australian retail
market really shows no sign of slowing down,
which means that to remain competitive Australian
retailers will need to respond with innovations of
their own,” says Craig.
He believes Australian retailers can do one of two
things – lower their price points or differentiate
themselves.
“Historically we have seen Australian retailers
leverage the fact that they have a better
understanding of the market and a broader
reach into regional areas. With indications that
consumers are only responding to very deep
discounts, Australian retailers need to shift
towards innovation and exceptional service to
compete with new global players.”
The good news is that there is still likely to be an
appetite for Australian brands, particularly unique
Australian design that offers an alternative to the
mainstream global brands.
“It’s worth remembering that the entrance of
international retailers forces local retailers to
respond. Shoppers clearly like them and they
encourage more awareness of retail, which is
positive for the retail sector in general,”
says Craig.
Major motivators for consumers
As consumer expectations change, brand
experience and destination shopping will be
important considerations for retailers.
Right now, Craig says, the retail industry is about
adaptation and embracing change. He expects
more retailers to “be innovators and to invest in
technology and to use it creatively”.
“As physical stores and virtual stores
merge, retailers who provide an interactive
and immersive retail experience will be the
winners.”
He says there is increasing pressure on retailers to
offer new services, to get creative with how they
fulfil orders and to enrich the shopping experience.
“As consumers become more experience-driven
they expect retailers to keep up. Speed and
convenience will become more important so
retailers will need to think about better and faster
ways to get their products to their customers.
That means forward-thinking retailers will need
to offer better fulfilment systems such as same-
day delivery and click-and-collect and fast and
exceptional customer service.
“We’ll start to see retailers exploring ondemand retailing to connect with consumers in
a personalised way. It’s all about making every
customer’s experience unique and memorable.”
Investment areas
This is likely to be the year that retailers further
adopt and experiment with technology as they
continue to improve their customer’s shopping
experience.
“We’re likely to see retailers trying to find ways
to bridge the gap between offline and digital
channels. Technology will be a key driver of the
evolution of the bricks and mortar store.
“Retailers will be investing in IT, particularly
updating existing online channels to provide a
seamless customer purchasing journey. There will
also be an emphasis on making it more secure
and protecting consumer data.”
What about wearables?
While the wearable technology market has taken
off in the health sector, with consumers embracing
brands such as FitBit, Craig thinks “it’s unlikely
we’ll see broad scale adaptation of this technology
as an in-store retail technology any time soon”.
However, he says, retail technology is moving
forward at a rapid pace. Australia’s high adoption
of smartphones makes mobile commerce an
important initiative in 2015. In addition, the
integration of the range of systems used by
retailers will make a seamless experience easier
for shoppers in store and online”.
Retail in 2015 really boils down to one thing –
improving the customer experience.
Top five opportunities for 2015
• Continued spend on food and eating out
• Differentiate your brand and offering
from global players
• Invest in technology and use it creatively
• Fulfilment systems, same-day delivery
and click-and-collect
• Consumer engagement
Stocktake – Summer 2015
Positive transformation
The Australian retail industry is in for an exciting year.
On the back of the strong sales in the last quarter of
2014, there’s certainly a renewed sense of optimism in
many retail sectors. Last year we saw higher growth in
specialties with food catering and retail services trading
particularly well and these categories look likely to trend
positively in 2015. New findings from Inside Retail’s
annual survey suggest that around 50 per cent of
retailers expect conditions to improve, a sentiment that
we at Stockland share.
and seeing your businesses expand through our portfolio.
We’re particularly excited about the stage one openings
of Wetherill Park and Baldivis in mid-March. As part of
the $116 million redevelopment of Baldivis, Stockland
commissioned two Australian street artists to create
a distinctive public artwork on the eastern façade
of the building. In just six days Brad Eastman and
Kyle Hughes-Odgers created two bold and colourful
murals that really reflect the Baldivis community. It’s an
example of how Stockland strives to be the focal point
of the communities we are in. Inside the newsletter,
you’ll find an update on what’s happening at Wetherill
Park, where we are creating a new benchmark for fresh
food and entertainment.
I have had some great experiences and been part
of some great wins. One of my most satisfying
achievements was becoming equal number one
landlord for you to do business with.
On a personal note, after seven years as a General
Manager at Stockland, the last four years heading up
Retail Leasing, the time is right for me to hand on the
baton. I’d like to extend my thanks to all our hard working
retail partners. I have thoroughly enjoyed working with you
Tony Tsekouras Sarah Neilsen Dave Mylne Ashlee Hill
Greg Masterson
I’m incredibly proud of Stockland’s relationship with our
retailers. John Schroder will announce my successor
shortly. For now, you can contact your Regional
Leasing Manager: Tony Tsekouras, Sarah Neilsen,
Dave Mylne, Ashlee Hill or Greg Masterson.
All the very best,
Robyn Stubbs
Regional Leasing Managers
VIC/WA NSW North
NSW South
QLD
QLD
0434 609 304
0409 460 643
0417 460 755
0419 667 305
0417 602 672
What’s ahead
with a weakening
Australian dollar?
If there’s one thing that’s likely about the softer Australian
dollar is that it’s here to stay, says David Rumbens from
Deloitte Access Economics.
“Australian retailers will need to accept that a lower
Australian dollar will stick around. A quick return to parity
with the US dollar is not likely, which means that upward
cost pressures will eventually need to be passed on to the
consumer to maintain sustainable retail margins,” he says.
For retailers reliant on imports, the weaker dollar will
introduce new cost pressures.
While there are pricing challenges, David says
the lower Australian dollar should increase the
competitiveness of trade-exposed industries, which
will stimulate economic activity and deliver some
benefits to the retail sector.
As well, he says retailers in Australia’s tourist regions,
such as Cairns should enjoy some benefits from a lower
Australian dollar over time.
Retailers competing online for the shopper dollar against
international rivals will also be more competitive on price
and consumers are more likely to consider buying locally.
“International online retailers pricing in foreign currency
have instantly become less competitive against local
retailers who may have sourced stock at more favourable
exchange rates and might be applying some discretion as
to when cost increases will be passed on to consumers. But
with the Australian dollar set to remain low, this is not likely to
last for too long,” he says.
David expects the lower value of the Australian dollar
to further encourage foreign retailers to expand their
physical presence in Australia.
“2014 showed us that international retailers see value
in the Australian retail market, Deloitte’s Global Powers
of Retailing 2015 report noted that Australian retailers
will continue to face increasing competition from foreign
retailers with many of the top 250 global retailers yet to set
up operations in Australia but expected to do so over time.
However, there is still reason for optimism as the healthy
retail sales growth of 2014 is likely to extend into the
early part of this year.
Strategic partners for retail success
Leading fashion retailer The Sussan
Group and Australian owned and operated
footwear retailer Spend-less Shoes talk
to us about the strength in partnering with
Stockland to facilitate both retail store and
warehousing space for their operations.
Mary McKay, Leasing Manager of
The Sussan Group says that
Stockland is “a strategic partner
because they really understand
our business needs and property
requirements. They are interested in
building a long-term relationship with
us to identify solutions that will help
our business prosper and generate
ongoing productivity gains.”
The Sussan Group has a warehouse in
Yennora, Sydney and approximately 30
retail stores in the Stockland portfolio.
With a warehouse in Port Adelaide
Distribution Centre and 14 retail stores,
John Charlton, Managing Director of Spendless Shoes explains despite challenging
retail conditions, his operation in Adelaide is
continuing to expand its retail footprint.
“I am always able to work together with
Stockland to find solutions for the ongoing
changes and challenges the product and
distribution business creates.”
Stockland has grown its Logistics and
Business Parks (formerly known as
industrial) portfolio to 21 properties with
over one million square metres of leased
space valued at $1.6 billion. General
Manager, Logistics and Business Parks,
Tony D’Addona says “the recent acquisition
of over $200 million of assets and land for
new developments shows Stockland’s
commitment to building strong tenant
relationships that add value to their
businesses.”
Looking ahead, Stockland will continue to
expand its portfolio to offer warehousing and
land opportunities in strategic metropolitan
locations with over 200,000 square metres
of planned developments in Warwick Farm,
Ingleburn and Penrith in NSW; Port Adelaide
in South Australia; and Yatala in Queensland.
To find out how we can help you with your
property needs contact Robert MacKay,
National Development Manager via
[email protected]
or 02 9035 3412.
In conversation
with Basil Artemides, CEO and
Carol Skoufis, Creative Director Bardot
Launched in 1996, Australia-owned Bardot has become a
major player in the Australian retail fashion sector and is
now recognised in key international markets. The company
consists of two brands; Bardot and Bardot Junior. Much
of Bardot’s success can be linked to its willingness to
experiment and be creative.
Today, Bardot has five stores in the Stockland portfolio and
is soon to add another with the upcoming redevelopment
of Stockland Wetherill Park. While there is no doubt that
online shopping and competition from international brands
has changed the retail landscape, Basil and Carol believe it
is possible for bricks and mortar stores to stay relevant and
to inspire customers. Basil and Carol share their thoughts on
the importance of understanding your customers, creating
a unique brand experience and the key growth areas for
retailers. Or, how to turn browsers into buyers.
Have you made any changes
to your business structure to
adapt to the current climate?
A substantial and important change
to Bardot’s day-to-day business
operations has been the recent
introduction of company intranet.
It is now the main portal for all
company communication and
training and development. While its
capabilities are wide ranging, it has
played a key role in generating a
two way dialogue between Bardot
HQ and in store teams, employee
induction and initiatives, delivering
ongoing product knowledge and in
capturing customer compliments
and complaints. Also, the ability for
Bardot employees to access the
intranet via a mobile platform has
had notable benefits.
How has the digital era
affected the way in which you
market to your customers or
gather customer insights?
The current digital era has
provided Bardot with a real
opportunity to instantly connect
with our customers. Blog
posts and electronic direct mail
provide platforms for immediate
communication and social media
provides us with direct consumer
engagement – something
that traditional above the line
Tap
into your
customers’
thinking
platforms have never been able
to achieve. More so, advances in
CRM software allow us to better
understand our customers, their
behaviours and their wants and
needs. These insights have helped
Bardot develop a new ecommerce
site launching in March 2015. The
new site will deliver a more intuitive
and seamless user experience,
greater agility allowing us to deliver
more relevant content, worldwide
delivery and, in the not too distant
future, multi-channel distribution.
What do you think consumers
want from retailers these days
and how has your business
responded to their changing
desires?
We believe that, fundamentally,
customers still enjoy the pleasure
of purchasing. For Bardot, the
customer always comes first. This
has underpinned our decision to
improve the customer experience.
In short, continuing to deliver great
styling combined with great quality,
keeping pace with fast deliveries,
significantly investing in new store
design, expanding the average
retail foot print and delivering a
more intuitive and user friendly
ecommerce site.
Stockland Exchange is an online
customer research community,
which allows us to gain valuable
insight from Stockland customers
to anticipate trends and create
shopping destinations that are
relevant, significant and sustainable.
As well as providing insight
into retail trends and customer
Basil Artemides - CEO
Carol Skoufis - Creative
Director, Bardot
How will the movement in
the Australian dollar affect
the retail landscape and will
it play a part in your business
strategy over the next year?
Bardot has enjoyed the benefits of
the exchange rate over the past
two years. It genuinely assisted
us during difficult retail conditions
and, for many of our retailing
counterparts, afforded them the
luxury of discounting. Moving
forward, with a weaker Australian
dollar, margins will be squeezed
and the traditional manufacturing
variables such as sourcing and
production will come to the fore.
Hence, the ability of retailers to
discount during competitive periods
will be challenged.
Where do you see the key
growth areas for retailers?
The key growth areas for retailers
are product and/or category
extensions, new concepts that
push the limits and, without doubt,
omni-channel distribution. Omnichannel distribution is the way of
the future however the challenge
for retailers will be to redefine their
supply chain strategies to match
the paradigm shift in consumer
demand.
What was appealing about
growing your portfolio with
Stockland?
Stockland has an astute awareness
of local communities and a terrific
understanding of our consumer.
This has led to opportunities for
growth in areas where Bardot did
not previously have retail coverage,
in particular key development
areas. Successes have included
Merrylands and Shellharbour and
soon, we look forward to opening a
new store at Wetherill Park.
sentiments and expectations,
Stockland Exchange is also a
valuable forum for testing new
ideas. We regularly conduct short
surveys and host discussions
to gather information that helps
predict opportunities for retailers.
Right now there are over 3300
community members aged between
18 and 86 years and around 2800
of these regularly shop in our
centres.
We’d like to share this research and
insight with you. If you think we can
help you with your research needs,
feel free to get in touch with
Claire Macleod, National Research
Manager – Customer Insights at
[email protected]
Getting a slice of the action with Stockland
Stockland is committed to supporting
and growing businesses and
franchise operations within its
portfolio. Franchise financing is a
major challenge, especially in regional
markets, and Stockland is working on
partnering with major banks to find a
solution for the financial challenges that
face any franchisee.
Crust Gourmet Pizza is an example
of a fast-growing franchise network
that is reporting excellent growth at
Stockland Merrylands, Point Cook
Town Centre, Shellharbour, Jesmond,
and Baldivis.
Nishant Bhatt, Crust Gourmet Pizza
franchisee at Stockland Merrylands
says they were drawn to Stockland’s
commitment to customer service and
initiatives to support their business
in the community. “We try to align
with Stockland community values by
sponsoring local schools and the NSW
Street Smart programs in our local
area.
“We feel like we made the right
decision in choosing Stockland
Merrylands because it’s the perfect
platform to support our business.
The recent redevelopment of the
centre has created a really unique
shopping experience, which
means lots of foot traffic and
great exposure for us. We’ve had
tremendous support from Stockland
from day one and we’re trading
really well,” said Bhatt.
Stockland works hard to meet the
expectations of its retailers explains
Vanessa Knight, National Kiosk
and Franchise Leasing Manager.
“We’re delighted to spend time
understanding the nuances of our
retailers’ businesses so we can really
drive business for them. Our shopping
centres are highly productive, with
strong franchise value and that makes
it easier for new franchisees to hit the
ground running knowing that they
have chosen the right site for their
business”.
Talk to Stockland about finding a place
for your franchise.
Contact Vanessa Knight
on 0414 338 044 or email:
[email protected]
Wetherill Park cooks up a storm
Stockland is about to serve up the first stage of its $222 million
redevelopment and expansion of Stockland Wetherill Park shopping centre.
A number of restaurants are already open and cooking up a storm along
the new alfresco dining precinct Kinchin Lane – Mad Mex, Grill’d, Viaggi
and Rashay’s Pizza, Pasta & Grill are complete. The first Jamie Oliver’s
Ministry of Food in NSW has also opened its doors and in January
commenced hands-on classes teaching basic cooking skills. Customers are
digging into the first real taste of the transformed centre, and are eager to
see what’s on the menu in Stage Two.
Stockland’s Development Manager, Justin Travlos, said “We’ve made great
progress on the transformation of the centre over the past 18 months and
we’re looking forward to delivering our vision for a vibrant new shopping,
fresh food and entertainment destination in the heart of Western Sydney.
Our new 500 space, multi-storey car park also opened in time for Christmas,
making it easy and convenient for customers rediscovering our new and
improved centre.”
Customers are embracing the more sophisticated and authentic casual
dining precinct.
Romi Trad, Franchisee Owner, Rashay’s Pizza says, “Since opening
our doors in the new Kinchin Lane at Stockland Wetherill Park, the
response from the community has been even better then we could
have dreamed. It is definitely an area that loves food and loves
enjoying it with great company.”
Grill’d founder Simon Crowe agrees and says “We’re excited to be
opening in Kinchin Lane, given the significant transformation the centre is
undergoing, it’s sure to be a popular lunch and dinner destination amongst
locals.”
“We expect that our restaurant will be a welcome new dining experience,
and a healthy lunch and dinner alternative for locals,” said Simon.
On completion in March 2016, the centre will have expanded by 15,000
square metres to create a shopping centre with a gross lettable area (GLA)
of more than 70,000 square metres.
Wetherill Park facts:
• Two full-line supermarkets, (Woolworths and a new Coles)
• Two full-line discount department stores, (Big W and Target)
• A refurbished 12-screen Hoyts cinema supported by an expanded external
restaurant, entertainment and leisure precinct
• A new, separate 800-seat indoor-outdoor food court and an expanded
fresh food precinct
• 10 Mini Majors
• 200 specialties, comprising 175 in-line shops and 25 kiosk sites, and 8
pad sites
• 2700 car parking spaces
For Leasing enquiries, please contact Steven Ellis on 0406 533 551 or
visit www.wetherillparkleasing.com.au
Stockland Corporation Ltd
ACN 000 181 733
Head Office
Level 25
133 Castlereagh Street
Sydney NSW 2000
Your Say
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hear about in future editions,
or if you have feedback or wish
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email, please contact the Editor.
The Editor
[email protected]
Leasing Enquiries
[email protected]
Ph: 02 9035 2000 | stockland.com.au