Online retail will become more integrated into the Australian shopping experience but it won’t mean the demise of the physical shopping centre.
Urbis associate director, Princess Ventura, says a large proportion of retail spending is immune to online.
She points out that food and services account for 59 percent of retail spend in Australia, and future online sales will also be transacted by the same retailers who currently occupy space in shopping centres.
“The actual outcome is to blunt the share of growth of retail centres as opposed to resulting in their ultimate demise,” Ventura says.
Urbis’ report Online retailing in Australia found online accounts for around 3.9 percent of retail sales, or 3.6 percent of retail spending.
The report outlines the influence of retailer ‘clawback’, which refers to Australian retailers rolling out multi-channel approaches to sales and delivery. Urbis says in many cases online sales will be delivered through physical shops.
“Our estimate is that over 40 percent of online spending right now involves the physical store, so about 40 percent of online sales are actually ‘clawed back’. The idea is that as Australian retailers increase their physical presence or their share of online sales that this ‘clawback’ is actually going to increase even further in future,” Ventura says.
Jon Bird, IdeaWorks CEO, says there is still no better way to tell a brand’s story than in a physical space, which give a visibility that doesn’t exist online.
“I don’t think physical retail stores are going anywhere but I think that their size and concentration will change,” Bird says.
While the physical shopping centre will still exist, the online retailing phenomenon might see the physical centre change in terms of floor size, direction and purpose.
Bird says the future of retail means store networks will consist of smaller and fewer stores than is current practice.
Retailers may concentrate on one, or several, large flagship stores to communicate a brand, while blurring the boundaries between physical store and online marketing.
Brian Walker, managing director of Retail Doctor Group, says increasingly physical and online retail will serve different purposes to the consumer.
“[The] physical retail store is a lot more around experience, online is a lot more around product, process, and efficiency,” Walker says.
“I think the norm in 10 years’ time will be online sales, physical sales, I think retail will be a mix of channels. It will be physical store networks, it will be online. I think you’ll see an amalgamation of all the various channels, you’ll see different formats for physical retail stores, you’ll see different sizes,” he says.
“I think centres themselves will change, it will be more like ‘Centre America’ where there’s hotels and entertainment. Physical shopping will continue to move towards being a lot more experiential, theatrical and entertaining.”
Campbell Aitken, retail leasing agent and Walker Corp business development manager, says the bricks and mortar aspect of retailing will always exist.
“The retail environment tends to change every 50 years almost,” Aitken says.
“… Department stores sprang up when cities were evolving, then the car came along and all of a sudden you’ve got suburban shopping centres; the big box retailers and discounters such as Target, Kmart, Big W and what have you came along.”
“All those things I just mentioned are still around and still working fine. The strongest retailers and the best that adapt their product and their offering to the environment will ultimately flourish.”
“I think online is just another, (or) the next era,” Aitken says.