That’s how Amazon in Australia was described on Nine.com.au recently. After a lacklustre launch last December, the company’s operations are gathering momentum. A Fitbit which costs $249.95 at Myer was recently listed on Amazon for $199. The anticipated launch of its Amazon Prime service over the next year will guarantee free and faster delivery for Amazon members.
Amazon’s entry underscores the threat to retail outlets and shopping centres from online shopping.
Until now, online’s impact has not been as large as anticipated. At $24.2 billion, the value of retail goods and services which the National Australia Bank estimates was purchased online throughout calendar 2017 amounted to around 7.8 per cent of the $311 billion spent at traditional bricks and mortar stores – a portion which falls short of previous analyst expectations.
Now with Amazon, however, most expect this to rise. For architects, this raises questions about how design strategies can respond to entice shoppers back into stores.
Hassell principal Carrie Ho, who is based in Hong Kong and leads the design practice’s retail team for the Greater China region – a part of the world that is charging ahead in terms of retail shifts, offered some insights.
Ho says individual stores are increasingly being used for brand awareness and experience as well as sales. With Apple retail outlets, for example, the stores are not only for immediate selling but to enable people to use and feel the product. Thus their stores have a lesser footprint compared with traditional retail overall but a greater requirement for table space and for flexibility to alter displays.
That desire for flexibility, Ho said, is increasingly widespread as retailers seek to alter signage and spaces to run promotions around different product categories. Design firms, she says, are responding.
“In store environments, we reconsider the whole mechanism of stocking systems and displays, combined with the rest of the circulation spaces and dwell points. Wherever we can, we look to increase the amount of social space integrated within the flexible display areas.” Ho said.
This is inextricably linked to retailers placing greater emphasis upon in-store ‘experience’ and moving toward atmospheres which incorporate elements of being at home or in a restaurant. Accordingly, where traditional stores may have been geared entirely toward product display, Ho says that up to 35 per cent of floor space in modern shops might be geared toward spaces where shoppers can relax or socialise.
Shopping centres are also changing and are expanding entertainment and food and beverage offerings to deliver enticing experiences and opportunities to connect with others. The newly redeveloped Chadstone Shopping Centre in Melbourne’s east, for example, includes a new dine-in restaurant precinct, an up-market movie theatre and a Lego Discovery Centre.
More space within centres is also being rented out for special or seasonal promotions. Often, this space is rented to online retailers seeking to promote an interactive on and offline presence. Other times, these will be seasonal or themed promotions where management adopts a theme and invites retailers (mainly online) to display their product.
Some landlords are also turning to aesthetics. In Shanghai, for example, the K11 Art Mall opened in 2013 by Hassell client, innovative retail operator K11, adopts an integrated art concept which blends changing exhibitions with the traditional retail atmosphere.
Another strategy is data collection and analysis. Several companies use systems which track in-store movement to learn how people interact with the space and where they stay longer. Also, retailers and shopping centre landlords are using loyalty programs and smartphone apps to tailor promotions to individual consumers.
Amazon’s arrival has come at a difficult time for retail, which is being impacted by sluggish conditions and the closure of stores. Foot Locker recently announced its intention to close 100 stores this year whilst outdoor adventure company Mountain Designs is closing one third of its outlets. And of course, troubled retailer Myer says it intends to close or reduce the size of 19 of its 59 stores and reduce its occupancy space by 20 per cent. In the second half of last year, retail prices fell for the first time since 2012, CBRE says.
Increasingly, retailers want shopping centre owners to engage in innovative marketing campaigns, a Monash Business School survey released last year suggested. Chadstone Shopping Centre in Melbourne, for example, has started hosting VIP Shopping Parties with live performances, complementary wine, children’s activities, complimentary transport from the city and exclusive in-store offers.
Amazon and more intense online competition are now a reality.
To respond, retailers, shopping centre owners and their design strategies will have to adapt.