This article is a slightly amended transcript of the first YouTube video I put up. If you prefer to watch rather than read, go here…

https://www.youtube.com/watch?v=s_YNyLn4G0g

(video length ~12 minutes)

CONTENTS

• Why have things got tougher for bricks and mortar retailers and smaller retail precincts?
• The Internet
• The Rise of the Major Shopping Centres…

What makes these large shopping centres so appealing?
The Hidden Advantage

• My personal perspective
• Retail Precinct Realities

Why have things got tougher for bricks and mortar retailers and smaller retail precincts?

For the past 10 years or so I’ve been working for retailers, particularly those retailers in retail precincts.

What I mean by retail precincts doesn’t really include the large shopping centres – the Westfields and those sorts of places – I’m referring to high street or main street locations where there are maybe 30-40 (or maybe up to 100 or more) in a central ‘old-fashioned’ retail precinct.

The work that I’ve done with those retail precincts over the past 10 years has been all about helping them to prosper when things have been on a bit of a downer (and I think that downer for bricks and mortar retailers applies to some shopping centres as well).

What I wanted to do in what I hope will be a series of six videos is talk a little bit about some of the things that you can do to improve business if you are a retailer in one of these retail precincts.

In this video I’m just going to run through some of the reasons behind why things have got tougher and also run through some of the details about what those things are and why certain approaches are more appealing to people who are looking to shop.

So the truth of the matter is that the decline in bricks and mortar retail isn’t a new thing – it’s been going on for at least 20 years, and I became involved in one retail precinct just over 10 years ago to see if there was anything we could do to increase business for all the retailers in that precinct.

This gradual erosion is a little bit like the analogy about frogs – you may have come across this and I don’t even know if this is true, but it’s a good analogy…

They say that if you place a frog into cold water in a pot and then boil that water, the increase in temperature will happen so gradually that the frog won’t actually think to jump out (and so dies), but if you put a frog straight into boiling water, it will jump out immediately.

That’s exactly what we’ve had with a lot of these trends which have been coming for a long time but that are now pretty much with us in the way that many people predicted. It’s just taken a while to get here.

The Internet

So the internet is probably the most obvious threat to retail precincts and bricks and mortar shops.

The whole internet thing has been going on for a long time and today it is at a point – helped by COVID – where people are a lot more willing to shop online across a range of goods (even when it comes to fresh food shopping) than they used to be.

So think about the advantages of internet shopping as against bricks and mortar shopping…

• 24 hour convenience. You can shop at 3 o’clock in the morning if you want to.
• Huge range of products. There’s an absolutely massive range of all sorts of goods online.
• No questions asked money back/credit return policies. Many of the smart online retailers, especially fashion and clothing retailers offer a ‘no questions asked’ return. You just return clothes or shoes that that don’t look good or they don’t fit you as long as you do it within a reasonable timeframe.
• Easiest way to shop? In people’s busy lives sometimes internet shopping is just the easiest way to do things (and COVID accelerated that).

What’s interesting is that over 30 years ago, an American futurist called Faith Popcorn (https://en.wikipedia.org/wiki/Faith_Popcorn) wrote a book called ‘The Popcorn Report’ in which she coined the term ‘cocooning’, which pretty much predicted what we’re doing now, ie people conducting most of their affairs online from home and everything being delivered to the doorstep.

If we look and see what’s happening with Australia Post, they’re basically not delivering anything like as many letters as they used to, but they’re doing a heck of a lot of parcel deliveries!

They have changed to suit what people want. So, that’s the first major issue that bricks and mortar retailers face.

The rise of the major shopping centres

The second of course is the rise of the major shopping centres – the Westfields of this world.

What makes these large shopping centres so appealing?

In a funny way it’s some of the same things that encourage people to do internet shopping and discourage them from visiting smaller shopping precincts. Here are a few of them…

• Parking. In reality parking may not actually be easier at major shopping centre than in smaller precincts, but it’s perceived to be because they’ve got huge parking lots. And by and large, at most of these large centres you’ve got free parking for 3-4 hours which is enough for most people to do the shopping they want to do. So parking is perceived to be a big plus.
• Comfort. You don’t have to keep on going in and out of lots of shops on a hot summer day (or when it’s cold and/or raining) – there’s aircon throughout the entire centre and that’s got to be a big plus.
• Range. There’s a huge range of shops in major shopping centres which means you can get a lot of stuff done in one hit.
• Entertainment. Often they put on some form of entertainment and many shopping centres have cinemas in them.
• Food courts. Enough said.
• Opening hours. Most of them (no, all of them) are open seven days a week and long enough opening hours so that you can get done what you need to get done.

So those are all of the ‘obvious’ advantages.

The Hidden Advantage

There’s one other big hidden advantage which is that large shopping centres are managed. There are two parts to this:

1. Retailer Mix. The owners of the centre are able to control the marketing mix. They know what works and what works together and what isn’t going to work. So, unlike many retail precincts where it’s the individual shop owners that decide what goes in, you’re unlikely to go to a major shopping centre and find 15 nail salons, for example. They manage that mix so it’s the right mix for what people want in that shopping centre, and they spend a lot of time working that out.
2. Centre Promotion. The other thing is that large shopping centres realise that they need to publicise the centre, not just the individual shops. So they have a budget for marketing that centre in a way that most retail precincts (ie the High Street Main Street locations) just do not.

So these two points are actually very important and I’ll touch on these again below.

One last point about the large shopping centres is that they actually charge a fee on top of the leasing payments from the tenants, which covers the promotion they need to do for the centre. So every shop is contributing to that.

The other thing is they impose minimum standards both in terms of opening hours and in terms of the way that the retailers in their shopping centre look. So they don’t tolerate places starting to look a little bit ‘down at heel’ and they insist on a regular revamp of every shop in there. I don’t know what the timeframe is, it probably varies, but I’m thinking maybe 5 years is what they do.

So all of this means that the shopping centre continues to look good and continues to remain fairly full.

Retail precincts have a tough time getting this stuff all happening.

My personal perspective

From a personal perspective, I’ve run business to business (B2B) businesses (and still do) and I’ve also been involved in running several business to consumer (B2C) businesses – including your typical retailer outlet, and so I know that there are challenges particularly for smaller businesses.

So there are a couple of things I do get!

What to do?

Some options…

• Get An Online Presence. To counter the influence of online you might want to consider setting up an online shop but by the same token that can be hard and take a long time to do. It can be expensive. All these sorts of things might be going against you for that and I get that that can be an issue.
• Move To A Large Shopping Centre Location. The second thing is perhaps to take a lease in a large shopping centre, but again it’s very expensive in the main and it is restrictive for all of the reasons outlined above.

So the next question is then well why not just set up shop in a regular shopping precinct …and this is what we’re talking about – the high street/main street type location.

Retail Precinct Realities

The main issues are…

1. Precinct Vacancy Rate. You’re at the mercy of the overall performance of the strip itself, and that can be impacted by empty shops. Empty tenancies in big shopping centres are boarded up and in some cases ‘disguised’ with notices or artwork or whatever. So, you can’t tell that there’s an empty shop in there (unless you look hard). In contrast most empty shops in precincts just look very empty and unappealing with large ‘for lease’ signs, and these do affect the rest of the centre, particularly if you get a few vacancies at any one time.
2. Parking. The perception – which is often not reality – is that it’s often hard getting parking in high high street/main street type strips and precincts. That is often not the case. If you measure the amount of time it takes or the distance it takes for you to walk from your car to whichever shop you want to go to, I bet you 9 out of 10 times the major shopping centres are the longer walk, even though you might be going up some travelators!
3. Opening Hours. So the other thing is that each shop in an independent retail precinct is – of course – independent! Which means that each shop can set its own opening hours, which in turn presents shoppers with a dilemma if they don’t know who is open when. This is especially the case at weekends.
4. Variability of Retail Outlet Presentation. In contrast to large shopping centres, landlords in independent retail precincts very rarely actually specify that you must revamp your store every so many years. As with the precinct vacancy rate, this impacts the shopper perception of the precinct.

None of these issues can be addressed by business owners individually. This is why you can only solve these issues by working together as a collective of retail business owners.

Some issues will take longer to ‘fix’ than others!

BTW there are three videos up at the moment – the next one to watch is ‘How to bring people into your precinct’ and the third is ‘How to make it happen’.