If you live in Melbourne and don’t spend your life with your head submerged in sand, you may have seen one of the recent multi-billion dollar shopping centre upgrades. Despite weak retail conditions billions of dollars are being thrown at the future of bricks and mortar retail.
So what’s with all the expansions? Are we on the verge of a boom in retail? Should I invest all my money into Westfield-type stocks, fly to the Bahamas and wait for my investment to pay off?
It may be worth putting down your pineapple daiquiri for a minute to ask the question of whether a weakening retail sector and the overall muted business confidence could lead to a vast oversupply of retail space… or future shopping ghost towns?
While some of these upgraded centres are pulling in profits each year increasing their turnover by 5 per cent or more, the market is still sluggish.
What are they thinking?
A consumer sentiment survey was recently conducted (and reported in the media) globally with over 22,000 participants. The survey took a snapshot of buyer behaviours, recent shifts and the implications of these. The findings of the survey, showed that in a number of markets consumers remained fearful of losing their jobs (more than 50%) and highlighted money as being a constant worry (with ¼ living from pay check to pay check) in them making purchase decisions.
The survey also highlighted the recent trend in the “frugal” or “coupon-savvy” shopper, with a large proportion of consumers (44%) now choosing to shop around for the best deals. However, the “savvy” shopper seems more than happy to splurge (at sales or in limited proportions) on a high end product; on brands they can trust…
The results also showed that there was a shift amongst consumers towards using multiple channels when shopping. This trend can be seen with the 35% growth in eWAY, an online payment system used by over 23,000 Australian merchants.
The survey concluded that there are behavioural shifts amongst consumers worldwide – purchasers now seem savvier and smarter with how they spend their money. They are also becoming more aware of the benefits of online shopping.
So…. no daiquiri?
As highlighted in the recent survey, consumers are becoming savvier and more decisive with how they make decisions; with access to global online stores and access to year round sales in most bricks and mortar stores brands must give consumers solid reasons to buy their products. The benefits need to match the price.
Billions of dollars are being spent upgrading shopping centres creating an experience for the shopper, a place where companies “dazzle” and influence even the smartest shopper into purchasing their wares.
Modern shopping centres have in store cafes, music, lights and colours all trying to seduce you into loosing yourself in the moment… to whip out that plastic and start swiping it like a mad person. These centres also have movie theatres, hip cafes, free Wi-Fi internet and lounges for partners who might rather be elsewhere (see above).
The modern shopping centre is selling itself as an experience, with every effort made to “tingle” every one of your senses as you walk into each store.
Winning the “evolving” consumer over in this day and age is a challenge for consumer companies, but with these challenges, comes opportunities for new companies to flourish, those who move quickly and are more responsive to consumers’ evolving needs.
So head to the bar at your local Lux movie cinema, conveniently located in one of many Westfield cinemas and order that drink… take out your phone, connect to the free Wi-Fi and perhaps even throw that money at some WFD shares… they are up today… but I would watch them closely, they may fluctuate in the near future…
By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu
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