Neighbourhood retail...it's your time to shine
As we continue to ponder what the post pandemic world will look like, many property sectors have been caught off guard, the neighbourhood retail product being one of them. In general the regional and sub regional retail centres have had to continue to evolve in order to remain relevant. It is one of the most competitive property types in trying to gain market share and increase the catchment size, often at the expense of another centre.
And then there is the typical urban neighbourhood shopping centre. It’s greatest claim to fame often being that it keeps the masses fed, either through Woolworths, Coles, Aldi, Drakes or the like with a few specialty stores that are literally a baker, barber/hairdresser, chemist and two or three takeaway shops. Hardly the recipe in its current form for excitement or entertainment, unless watching an 80 year old granny reverse into a yuppy’s leased Mercedes and drive off floats your boat.
The concept of working from home, even if for two days a week will change how we view our suburbs and how the money spent within and on them is dispersed. One of the current planning doctrines being discussed is almost village like in nature with a greater reliance on walkability and cycling. However the question has to be asked, cycle or walk to where? The neighbourhood retail centre needs to evolve as a destination of entertainment, rather than one of necessity. Most suburban neighbourhood centres are currently unable to fulfill this role. Those that can have taken the best of the innercity suburbs and tried to transform them into desirable places to spend time…these are few and far between.
The out of sync spike in food retailing is the panic buying that occurred around the announcement of the pandemic with customers starting to stockpile goods with concerns surrounding what may or may not be available should there be a complete breakdown in society. April’s data is likely to show that this has softened, but will still be above the normal spend as people started working from home. Working from home two days a week is potentially a 40% uplift for some shops in the local community and a 40% drop for some of the businesses around the workplace. There will be winners and losers from people working from home and these will be locational and sub-sector specific.
Source : ABS
The red numbers denote under-performance against the Total Average for the particular timeframe specified.
The food sector is the only cohort to consistently beat the total year on year average growth rate across all retail sectors demonstrating that the market for this product has expanded as Australian’s spending habits change. The next best sector has been the Cafes, restaurants and takeaway businesses that also demonstrate that the nation is eating out more. The closure of this sector of the economy has had a large effect on the lifestyle of the community significantly impacting how many socialise, as well as the direct employment downside contributing to the 600,000 jobs lost in May.
As society considers the structure of its economy to a more village oriented system that places greater emphasis on the suburbs as places of production and entertainment, neighbourhood retail centres will become important meeting places. At present, most are generally low engagement for the simple fact they are built around the premise of high functionality, single purpose destinations with a large parking apron. These are often soulless built form outcomes designed in the 1970’s and 1980’s with minimal capex to lift the profile. Economists might be impressed with their returns and simplicity, the end user will have a significantly different opinion.
So what should these revised centres consider. They need a greater loiter time. They should offer the opportunity and space for mothers groups and other social activities to take place. A derivative of the eat street experience works across most demographic cohorts. Small office and computer spaces work well for travelling business people or provide an alternative to meeting at someone’s home. MacDonalds realised this opportunity years ago by adding free wifi to their restaurants.
Neighbourhood retail centres are the missing link in the potentially emerging trend of working from home. It is time that these centres were re-thought as to how they become a focal point, a place that people relate to rather than simply pass through doing their weekly shopping. Somewhere over the past four decades, small shopping playgrounds have been lost, the “retail experience” was passed onto the regional and subregional centres and neighbourhood centres became formula driven boxes. If we really want to make our suburbs great again and places that meet the needs of its residents, one of the first places to start will be the humble local shopping centre.
Matthew Gross | Director