Convenience and innovation are emerging as the key drivers shaping Australia’s retail landscape, as brands look to more sophisticated strategies to secure their share of consumer wallets.
CBRE’s Q1, 2017 Retail MarketView report highlighted the growing emphasis on providing a retail offering that exceeds customer expectations with a seamless and experience-rich buying experience.
CBRE head of Australian retail leasing Leif Olson said as the e-commerce market continued to grow, retailers were looking to enhance services in a myriad of ways to capture both online and bricks and mortar sales.
“Innovation is key in winning the war for consumer wallets. Consumers, particularly millennials, are seeking more than just a means to an end, they are looking to malls and retail outlets that offer an experience,” Mr Olson said.
“Shoppers are now more informed than ever, so the physical experience of retail needs to surpass the fundamental elements of buying – capturing and helping inform customers through innovation, convenience and service.”
Evidencing the growing trend of experiential concepts is House of Hoops by Foot Locker on George Street in the Sydney CBD. Opening earlier this year, the flagship store is the go-to destination for basketball and sneaker fans.
“Made to measure tailoring services are also on the rise, with the likes of MJ Bale, Institchu and H&Co Menswear offering customers a personalised VIP experience,” Mr Olson said.
Click and Collect services also continue to grow momentum, with the ability to offer seamless purchasing options integral to bricks and mortar retailers remaining competitive.
“In addition to ‘click and collect’ services, there is growing demand for more convenience - services that promise to deliver goods to customers within hours,” Mr Olson said.
“Retailers need to keep up with the innovation curve in an environment where retail experience is driving foot traffic and sales.”
The report showed CBD markets remain the out-performer of Australian retail, with strong leasing demand from both international brands and food & beverage operators in the first quarter of 2017.
In Q1, rental growth was centred on Australia’s eastern seaboard, with Sydney CBD prime rents growing 3.3% and Melbourne 1.1%.
CBRE Senior Research Manager Danny Lee said offshore retailers would continue to drive growth in CBD markets.
“Sales from international brands continue to be robust, with H & M and Sephora’s stores performing in the top 2% of their global platform,” Mr Lee said.
“Although clothing and footwear’s performance in Q1 was softer, it has been strong over the past year and is only one of two categories in 2016 that outperformed their long term average performance – bucking the trend of other sectors.”