Customised sports equipment retailer, DisruptSports, Kini (a customised swimwear brand) and a sporting VR company are among the first companies confirmed for use of the space, which will run for three months.
Gary Elphick, Disrupt Sports CEO, told Inside Retail Weekly that he had been in discussions with Westfield about the concept for some time, with the property landlord keen to make use of the tenant-less space before the mall opened pre-Christmas rush.
Scentre was left with the predicament of having no-one to occupy a significant portion of space at the $310 million redeveloped mall leading into festive trading. The mall is home to Australia’s first ‘new look’ Myer department store, a collection of Australian designer and premium fashion brands and the only Sephora and H&M stores on Sydney’s lower north shore.
According to Elphick, Scentre’s significant investment in updating the Warringah Mall with urgency to open in time for the Christmas shopping spree meant that a small number of units were yet to be rented out.
“As a start-up, our advantage is in being super nimble and exciting. We have a pop-up in a box that fits onto two pallets and can be bumped in and out in four hours,” he explained.
“Westfield invited us to activate the space as it was prime, unused and a great way to show local retail tech to the big retailers and customers in the centre.”
The space covers 200sqm and sits in a prime location opposite Myer and H&M in the recently refurbished mall. Disrupt Sports is using the space to display the raw materials that feature in its customised sports equipment range and to showcase how their gear is made.
The retailer has also finished products on display and an interactive design studio that allows people to design their own products in-store, either through self-serve or with the help of a store representative. Customers can submit designs directly to DisruptSport’s closest production line that has the most capacity, so work can begin on the equipment before the customer has even left the shop.
“It’s pretty much a blank space to see what works for DisruptSports and for Westfield. We’re both treating it a bit like a start-up – go fast and see what works, cut what doesn’t and build upon it,” said Elphick.
Westfield and and Disrupt have discussed the future of shopping centres being less focused on selling and more on “retail as an experience”, where people can touch and feel products and shops can have “endless SKUs while manufacturing onsite and delivering to customers on the same day”.
“We recognise that it doesn’t quite fit [Westfield’s] current model but that one day it will,” said Elphick.
Elphick believes the concept can be extended to other Westfield centres and allow other start-ups to showcase what the Australian tech scene has to offer, with the future of retail potentially informed by collaborative uses of retail space.
“Customisation and on-demand manufacturing are the future or real-time updating of products, reduction in working capital, custom choice, logistics and overall customer satisfaction,” he said. “For Westfield, this helps them show customers how they are investing in retail technology that will change their lives. It also helps them show their corporate customers new technology that will disrupt their business models in the future.”
Data from IBISWorld shows Scentre Group’s retail centres are currently operating at close to full occupancy. According to the market research firm’s August report on shopping centre operators, Australian landlords are changing their tenancy mix to compete against online retailers.
The significant capital outlaid by Scentre in updating its portfolio – including the $400 million redevelopment of Westfield Garden City in Mt Gravatt; $435 million redevelopment of Westfield Miranda; and commencing $830 million of developments on Westfield Chatswood, Hurstville, North Lakes, Kotara, Casey and Warringah means the retail landlord has in excess of $3 billion of developments planned.
According to IBISWorld’s August report, the performance of Scentre Group’s retail portfolio has been constrained by sluggish conditions in property markets and its inability to pass on rent increases to tenants due to the competition between centre operators attracting tenants.
Scentre Group’s industry-related revenue is projected to grow by an annualised 3.2 per cent over the five years through December 2017 to total $2.3 billion. This growth falls behind the nominal revenue growth for the industry over the period (4.6 per cent annualised), which reflects weaker rental prices as tenants have faced poor sales growth.
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