Performance anxiety in Melbourne’s retail hubs

Melbourne_Central_Coops_Shot_TowerA spate of major shopping centre redevelopments highlights the challenges faced by High Street and CBD retailers in Melbourne.

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The last two years have seen a spate of shopping centre investment in metropolitan Melbourne, not least of which is Chadstone Shopping Centre’s $660 million expansion, which opened last week.

As shopping centres not only add square footage but also entertainment and lifestyle offerings in a race to leave no consumer dollar behind, traditional retail hubs in Melbourne’s CBD and High Streets are being forced to reconsider their roles in the retail landscape.

Ex-CEO of clothing wholesaler Pacific Brands, Sue Morphet, has made revitalising the Melbourne CBD’s retail offering a core part of her campaign for deputy lord mayor of Melbourne City Council.

According to Morphet, the CBD hasn’t fully capitalised on the qualities that set it apart from suburban shopping centres.

“The fresh air, the mix of interesting cafes, bars and restaurants, the art and universities, as well as the retail destinations, make for a really eclectic offering,” she said.

The appeal of these features can be seen in the fact that shopping centres including Chadstone and Eastland have tried to recreate that same downtown feel through more varied dining and drinking options and even, in the case of Eastland, mimicking the look of laneway storefronts.

At the same time, however, the city has failed to keep up with the amenities and conveniences that shoppers have grown to expect.

“When you come into the city, where do you take your children to go to the bathroom? It’s the easiest thing to do in a shopping centre, but it’s the hardest thing to do in the city of Melbourne.”

H&M Melbourne_Grand Opening_Exterior copySpeaking to Inside Retail Weekly, Morphet suggested that more bathrooms, better lighting in laneways, awnings to protect pedestrians from inclement weather and digital kiosks on corners to direct people to relevant shops would help retailers in Melbourne’s CBD go head to head with their competitors in shopping centres.

“The city needs to behave as a shopping centre in the way it looks after both shoppers and retailers,” she said.

This includes providing retailers with the kind of data around consumer behaviour and emerging trends that shopping centres have access to. “Retailers in cities are left to themselves and they don’t get that backup.”

But while Morphet expects to see the CBD slowly bleed retailers and shoppers if such changes aren’t made, Justin Ganly, managing director of Deep End Services, says the Melbourne CBD is already well-sourced to fend off competition from expanding shopping centres.

“My take is that the Melbourne CBD is in very healthy shape. Emporium has been a tear away success; the Myer redevelopment has gone well; St. Collins Lane – there’s a lot going on in the CBD. I don’t see them being threatened by Chadstone or Eastland,” Ganly said. “The CBD is going to need continued investment, but that’s taking place.”

Rather, it’s the retail hubs that are neither in the CBD nor in shopping centres that are struggling. Ganly pointed to Chapel St and Toorak Rd in Melbourne’s South Yarra neighbourhood in particular as having to reinvent themselves now.

From Chapel St to struggle street

Speaking to Fairfax Media in July, retail industry specialist, Martin Ginnane, said Chapel St has suffered from its own success, with independent retailers no longer able to afford the rising rents. Ginnane, who lives in the area, counted around 25 empty storefronts on Chapel St between Toorak and Malvern roads.

To be sure, this is not simply a story of retailer exodus. Country Road has operated its flagship store from the corner of Chapel St and Toorak Rd since 1993, and sister company Witchery recently also established its flagship store in South Yarra. In fact, the bigger problem remains getting individual retailers to coalesce behind a common goal.

“The challenge is that there’s no single ownership and no single operator to promote it, so it’s difficult to counter the shopping centres. [Retailers] rely on the City of Stonnington to do street works and that’s really difficult,” he said. “The way I see it playing out is larger scale centres being either revamped or newly built.”

Boutique funds manager, Newmark Capital, recently acquired two iconic South Yarra retail properties – The Jam Factory in 2015 for $165 million, and Como in 2016 for $236.5 million. Meanwhile, Melbourne developer Larry Kestelman’s 50-storey residential and retail complex, Capitol Grand, is set to open in the area in 2018.

“What’s happening now is that you’ve got larger owners emerging within the space and their investment will be a catalyst to the fight back against the CBD and Chadstone,” Ganly said.



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