This article by Scott Meehan, Head of Asset Management – Lendlease, forms part of SCN’s annual CEO Outlook feature published in Big Guns 2024. Premium members can view the full digital magazine here.
Reflecting on the past year, Australian consumers and retailers have been navigating a period of adjustment. The anticipated ‘new normal’ of 2023 was shaped by a confluence of factors: from cost of living pressures, catalysed by high inflation and rapid interest rate hikes, to the ripple effects of geopolitical tensions and the aftermath of a consumption surge in 2022.
Despite these pressures, spending remains above pre-COVID levels and our assets have demonstrated resilience because of consistently high occupancy levels and strategic diversification into growth categories such as leisure, technology and beauty.
Through active asset management and data-driven customer insights, we’ve been better able to navigate the shifting economic landscape.
Entering 2024, the retail outlook is defined by cautious optimism with a consumer emphasis remaining on value. As economic conditions stabilise, we’ll expect to see a gradual return to ‘normal’ spending habits, with shopping centre asset growth also being supported from limited retail development and strong migration.
Wonka activation at Darling Square
Brand incubation and growth: omnichannel remains favourable
E-commerce has undoubtedly solidified its role in the retail ecosystem, however there is a renewed appreciation for the in-person shopping experience. Trust in technology is being closely scrutinised and at the same time we are seeing a growing consumer desire for experience, connection and community, which will continue to drive visitation.
The increasing adoption of Artificial Intelligence (AI) and the digital transformation of retail with a push towards social commerce is also fostering a demand for more personalised, seamless and integrated shopping experiences.
Providing online brands with opportunities to establish physical touchpoints not only enables these brands to connect with its customers in new and meaningful ways, but also adds to the vibrancy, diversity and relevance of our retail destinations.
In 2023, Lakeside Joondalup in WA invited online jewellery business Ashlyn’s Diy Drip to a pop-up activation. Its TikTok post of the one-day pop up went viral with 37.6K views. Returning for a second four-day stint the following month, another TikTok post amassed nearly 90K views. The centre welcomed large crowds of TikTok followers waiting for the pop-up to open and 2,765 pieces were sold in four days.
Enriching the retail mix, these initiatives provide a platform for emerging businesses to test, refine and grow their concepts within a supportive and dynamic environment ahead of committing to a permanent space and the ongoing benefit this brings.
Research shows that having a physical presence is integral to online spending growth, with retailer online sales often doubling in catchments where a physical store is present and decreasing when stores close. A strong physical network alongside an engaging digital presence is the key to creating a ‘halo effect’ whereby retailers can increase customer acquisition, drive brand loyalty and benefit from efficient fulfilment.
SmartSpace
SmartSpace
At Macarthur Square in NSW, we are taking this incubator approach one step further with the introduction of SmartSpace – a specialised and dedicated environment for emerging and growing brands to trial a tech-based physical space in centre. This combination of traditional retail and smart technology enables brands to better understand its customers and trading performance. The space identifies popular areas, integrates live social feeds and audience recognition technology, capturing valuable customer data.
In late 2023, the centre welcomed our launch partner, Dans Hype House, an online operator keen to take the next step into a physical space and work with us through this expansion.
A community for the conscious consumer
The consumer of 2024 is marked by a more heightened sense of caution, driven by cost of living pressures and a desire for value and sustainability. This cautiousness is also leading to a resurgence in ‘recommerce’ – ‘Repair, Recycle, Re-use’ – and a continued reliance on e-commerce, albeit with a growing preference for a seamless omnichannel experience.
Sustainability has evolved from a niche concern to a central expectation among consumers and investors. It’s a cornerstone of our strategy, and our business remains committed to achieving our absolute zero carbon emissions target by 2040. Initiatives across our retail portfolio are designed not only to minimise our environmental footprint but also to empower our retailers and consumers to engage in more sustainable practices.
This year, we’re evolving our SCCA award-winning marketing campaign – The Good Day Collective. The campaign helps create authentic connections and experiences for our customers, working alongside community organisations and retailers to create positive social and environmental impact. The campaign resonated with conscious shoppers while positively impacting retailer performance, driving notable growth in centre traffic, sales and digital metrics.
Good Day Collective campaign
Retail curation and management also remains a driver of creating successful urban precincts and communities. Investment in creating unique and engaging experiences will continue, stemming from local community partnerships through to major brand campaigns that appeal to locals and visitors alike, such as the Wonka activation, delivered in partnership with Warner Bros at Darling Square in Sydney, driving visitation to the precinct and a sales uplift when compared to the prior year.
This year will also see the opening of the first retailers in our Victoria Cross precinct development and a number of iconic Sydney names in the food and beverage scene expand their footprint into the heart of the vibrant and growing North Sydney community including Mary’s, Marrickville Pork Roll and Only Coffee Project.
Looking ahead
The strategic use of data will continue to underpin our asset management strategies, with data analytics enabling us to better understand our customers, optimise the tenant mix, enhance customer engagement and improve operational efficiencies.
By harnessing technology, prioritising sustainability, and remaining customer and community orientated, we aim to ensure that our assets remain resilient, adaptable and capable of delivering sustainable returns in the face of changing market dynamics. Our goal is to ensure that our retail centres and precincts not only survive but thrive, contributing to the vitality of our cities and regions, delivering value to our consumers, communities, and investors.
