Property Australia: Retail reimagined

This article was originally published by our cousins across the ditch, Property Council Australia, and is being republished with permission.

Retail’s reimagining continues at pace. Property Council Australia asked four leaders with a laser focus on the future for their top trends to watch in 2021.

Australian retailers are preparing for a robust Christmas, as overall retail grew by 7.3 per cent year-on-year in October, and as CBRE’s Retail Flash survey finds 96 percent of retailers across the region have reopened their stores.

As close to half of CBRE’s survey respondents expect to proceed with store openings and expansion plans in 2021, what are the top trends to watch?

 

Experience is everything

Prime Build has delivered more than 150 major projects for ALDI, 100 refurbishments for Kmart and is now delivering Coles and Woolworths projects nationally. The firm’s national tendering and retail manager Peter Berg says the pandemic may have provided the “perfect storm and the biggest tailwind for online retailers”, but it also underscored the enduring appeal of bricks and mortar. “Customer still want to feel and smell products and have real-life experiences,” Berg says.

Demand for experiential retail has been “amplified”, adds Mainbrace’s interiors manager Daniel Morelli. A retail construction specialist, Mainbrace has completed more than 1,500 projects nationally, including supermarket upgrades, bulky goods rollouts, national rebrands and refurbishments, and major retail infrastructure on greenfield sites. Morelli has observed a “renewed enthusiasm” for in-person experiences after periods of lockdown and restricted trade. “Upgrades of common zones and food precincts have delivered more interesting and unique experiences and have been welcomed by customers,” he says.

Tim Starling, CBRE’s head of retail tenant advisory for Australia and New Zealand, expects to see “increasing allocation of space for next-generation fitting rooms, product testing zones and click-and-collect counters”. Space for in-store inventory storage and check-out counters, on the other hand, will shrink “since these have a minimal positive impact on consumer satisfaction”.

Sandra. M. Kairl, chief executive officer of Jen Retail Properties, oversees seven retail centres in Australia. She expects online shopping to grow, “but there will always be a place for the instore experience –so long as it is a good one”.

“It is up to the retail teams to ensure the customer leaves the shop feeling it was a great experience, satisfied with the product, price and service and – now due to Covid-19 – safe in their outing.”

 

Focus on flexibility

As customers expect more in-store experiences – cooking lessons or cocktail parties for example – retail design must respond with flexible, modular components.

“Exhibition designs can be pulled up and down in days inside massive halls, so why can’t a small retail space have that flexibility?” Prime Build’s Berg asks.

“Gone are the days of building a static store,” Berg adds. Instead, retailers are looking for flexible spaces that “can expand and contract, and be more adaptable like a stage in a theatre”. Berg points to flexible tracking systems for walls and lighting, counters and dressing rooms as examples of the evolution ahead.

“The onus is on us to help retailers provide mini experiences within more modular-style shops, so that the overall retail experience can become more like a temporary exhibition,” Berg adds.

“Smarter supply chains mean there will be less stock on show and deliveries will be more customised. There will also be less stock in the back of house and retailers won’t need to stockpile, with more agile supply chains and back-end processes,” Berg adds.

Prime Build recently delivered a smart ‘store of the future’ for Woolworths, Berg explains, “which had its whole fitout based around technology”.

 

Take technology to the next level

Technology is undoubtedly driving a transformation of retail, but CBRE’s Starling expects technology to shift from a disruptor to an enabler. Consumer analytics, in store automation and mobile, contactless payments are the technologies to watch. Around 71 per cent of occupiers surveyed by CBRE in October ranked in-store automation among the technologies they expect to have the biggest impact on the retail sector in 2030.

Mainbrace’s Morelli points to the “increasing preference” among retailers to use technology to “create an interchangeable offer that is consistently refreshed”. He points to Rebel Sport’s new RCX store concept as an example. “There are virtual gaming zones, customers can try exercise equipment, shoot virtual hoops, style their own clothes and more. Consumers are ready to re-engage with retail and leading operators have prepared engaging and often interactive offers to greet them.”

 

Humans are the heartbeat

Our experiences in 2020 have demonstrated that humans are hardwired to connect. Technology plays a role in helping people, but it can’t replace face-to-face connection says Kairl.

“We need to continue to ensure that shops are a great experience to enter and we leave feeling good about ourselves, which really, only people can do”. Retailers that get it right will harness technology to “get to know their customers better”. The “standouts” in the retail space, Kairl adds, will be those with “a strong brand image and personalised, caring customer service in store, linking with their brand. There are many retailers doing this at present and unfortunately still many who are not.”

It’s been a challenging year, but retail is a resilient sector and Mainbrace’s Morelli remains confident in its future. “Retail has a knack for re-imagination. I think this year has shown us that the retailers that get it right will be rewarded.”