Ironically, with the technology revolution, e-commerce, industry globalisation, and indifferent consumer fundamentals, it isn’t the shopping centre industry that’s lost the plot – it’s the people in the business media who are supposed to be covering it.
Sometimes you open the business pages of national newspapers and the quality just floors you. Not in a good way, unfortunately.
Retail property in Australia desperately needs serious coverage, including some thoughtful analysis. Or even just analysis of any kind would be a start.
Perhaps I’m expecting too much. How about just a basic command of fundamental economic concepts?
Here’s an example of the kind of thing I mean. On September 19 last year, the commercial property editor of one of the two national newspapers published an article about Stockland’s plan to redevelop Wetherill Park Shopping Centre, west of Sydney.
The writer seemed blissfully unaware of the difference between a shopping centre’s rental income and the turnover generated by its tenants, a distinction that many property industry professionals occasionally find useful.
Specifically, it was stated in the article that the centre’s rent was $11,150 per sqm. Assuming it was a typo, I wrote a quick email to the writer to make her aware of the mistake so it could be corrected without causing embarrassment.
For my troubles I was not thanked; instead I received a haughty reply referring me to a page in Stockland’s end of financial year investor presentation. I went to that page and as expected the $11,150 figure was a reference to moving annual turnover (MAT) per sqm, not rent.
In all fairness to the author of the Wetherill Park article, this kind of economic illiteracy and editorial sloppiness – I say ‘and’ because supposedly someone is meant to be proofreading the writer’s stories – has become pervasive. Journalists are ignorant of basic industry concepts and their editors are not reading the stuff.
Another dismal example is the small business section of the same national news outlet. Once respected as a serious resource for small businesses of all kinds, including mum and pop retailers, small business now just provides theatre for the intellectually challenged.
For a period of several years I contributed a weekly column on retail and shopping centre issues to the small business section. Eventually a new associate editor arrived who all but ceased accepting stories that contained any serious analysis.
In one memorable email, this individual exhorted contributors to submit articles that contained ‘anything [with which] I can use a pic of a semi-naked man or woman’ or ‘anything with a vaguely risqué angle’. Forget shopping centres, forget retail.
That newspaper section went from being a serious resource for entrepreneurs to a lurid cesspit of Gen Y angst in the space of a few short months. I was forced to sever my relations with it.
With such a vacuum of serious analysis about shopping centres in the mass business media it gets harder and harder for the interested public and investors to know what is really going on in the industry.
On the one hand, companies can potentially get away with murder by manipulating lazy journalists; on the other hand they may not be able to get the word out on perfectly good strategy.
To make matters worse, journalists are now increasingly blinded by a sandstorm of what I call ‘junk research’ that has enveloped them during the internet age, courtesy partly of cheap and easy to use online survey software.
Junk research comes in a variety of flavours. One flavour is the consumer survey that is designed by the sponsor of the research not to uncover the truth, but rather to elicit a result that the sponsors wants.
You know the kind of thing I’m talking about. There’s the consumer survey that finds unequivocally that hardly anyone wants their online grocery order delivered to the doorstep, but rather to a refrigerated locker at a post office or petrol station. Sponsored by, oh, now this is a surprise, a manufacturer of refrigerated lockers teaming up with an e-commerce delivery platform.
Or the many surveys that find consumers have absolutely no limit to their tolerance of receiving marketing messages on their mobile phones. Sponsored, of course, by technology companies that provide platforms for mobile marketing. (By the way, a PriceWaterhouseCoopers study just released found that the majority of people absolutely do not want marketing messages on their mobile phones under any circumstances. “Just more junk research!” you say. Hopefully not in this instance.)
Another form of junk research serves little useful purpose other than to get the sponsor’s name in the media. Classic examples of this are A.T. Kearney’s annual Global Retail Development Index and CBRE’s annual How Global is the Business of Retail? (The very title of the latter should be a giveaway that not a lot of deep thinking goes into this particular publication.)
The A.T. Kearney publication purports to rank developing countries on their desirability for retail investment. This is presumably so retailers can prioritise their international store expansions. Brazil, Chile, Uruguay, and China topped last years’ list.
Of course, no retailer in his right mind would use a tool like this for support on international expansion. Retail store location involves a host of different variables, some of which are particular to the retailer, some particular to the retailer’s category, some to the retailer’s market position, investment profile, risk appetite, brand exposure, cultural affinity, and so on. More often than not it just depends on where the retailer is domiciled – ceteris parabus a retailer is much more likely to expand into a nearby country than a distant one.
It’s not all doom and gloom. Serious professional organisations such as the International Council of Shopping Centers and Urban Land Institute produce valuable research and insights.
But much of the retail property writing in Australia – we’ll stop short of calling it ‘analysis’ – is just click-bait.
There, I’ve done it, I’ve ranted. But for the sake of the retail property industry, it needs to be said.
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