Mirvac Retail has just gone through an interesting stage. In line with the other Mirvac divisions it has come up with a brand. In doing so it has had to define itself, analyse what it is that distinguishes it from its peers and determine its core values, vision and aspirations.

Some of the confusion encountered when the subject of ‘branding’ or ‘brand positioning’ is discussed, is due to the fact many people don’t understand what it is!

Ask the question ‘what’s a brand?’ and the answers are likely to be vague – “It’s like a name, like Coca Cola or Apple or LV” – but these are examples as opposed to definitions; examples are not answers. Others might get closer – “It’s the image of a famous product; it’s what it stands for”… and so on and so on.

One of the world’s leading authorities on branding, Professor Kevin Lane Keller who’s worked on branding with Accenture, American Express, Disney, Ford, Intel and Levi Strauss amongst others, tells us:

“Brand positioning sets the direction of marketing activities and programmes – what the brand should and should not do with its marketing. Brand positioning involves establishing key brand associations in the minds of customers and other important constituents to differentiate the brand and establish competitive superiority.”

At Mirvac they understand branding and, of the three divisions in the company – Residential, Office & Industrial and Retail, two have already established their brand positioning. Mirvac Retail is about to complete the picture.

What’s interesting when you look at brand positioning is that, in order to establish it, an organisation has to define what it is they do better than others. It’s like the man said: “…. to differentiate the brand and establish competitive superiority.” Mirvac Retail has established its brand positioning, so they’ve already defined what their competitive superiority is!

Susan MacDonald, Mirvac’s Head of Retail, started in the shopping centre business straight out of university. With Lendlease she went through the ranks and then spent six years in London with them. She returned to Sydney as MD, AMP Capital Shopping Centres before running the Galileo Shopping Centre America Trust. She’s done it all and knows the business on a global scale.

The team at Mirvac is impressive too. They’re a group who’ve gained experience at Westfield, Lendlease, Stockland, AMP, QIC and the like, with people of the ilk of Justine Hughes, who was with Schroders during the time they owned Chatswood Chase; she’s also worked with AMP and Lendlease. Joe Antonios is Mirvac’s GM Leasing; he was with both QIC and Westfield. Other guns on the Mirvac team include Theo van Veenendaal, who ran some of Lendlease’s biggest projects; Paul Pozzobon, formerly the top marketing executive at Lendlease Retail; Rod Moynahan, heads up Development Delivery, and the list goes on. These people are representative of Mirvac; there is both a depth of knowledge, experience and a wide variety of expertise among them. Now they’re together with a new set of principles, a vastly different vision and a well-defined core strategy.

So how is it different?

For a start, they’ve got a portfolio that doesn’t seem to fit into any specific category or sector in the shopping centre arena. You could be forgiven for thinking that it didn’t conform to any specific acquisition criteria and it was just a complete juxtaposition of retail properties. You might well be forgiven, but you’d also be very wrong!

The fact is that, since 2014, Mirvac has acquired over $1.0 billion of retail properties according to an acquisition criteria so well defined that, if you look at all retail property sales over $50 million since the GFC in 2008, at a total of $25.6 billion, there has only been $3.6 billion, or less than 15%, that fitted the bill. So out of the $3.6 billion that conformed, they got $1.0 billion, or 28% of the total; not bad, eh?

So what is it that links the likes of Birkenhead Point, Broadway, Rhodes, Harbourside at Darling Harbour, Greenwood Plaza and the rest of the Mirvac portfolio? And when the link is revealed, what is it that gives Mirvac Retail a ‘competitive superiority’? To answer those questions, it’s necessary to go back to 2013.

It was in 2013 that the Mirvac Group undertook a full strategic review and determined that retail had important diversification benefits in a portfolio and was a critical part in the future of urban planning. It became clear that the best centres were those located in key urban and metropolitan markets in eastern seaboard cities, whilst the poor performers were regionally located; they also took up a disproportionate amount of management time. Unsurprisingly therefore, the Group decided to concentrate on key urban and metropolitan markets where they could maximise their whole-of-group expertise.

They looked for properties where there were high barriers to entry – where it was significantly harder to develop new competition, and town-planning controls were tighter than they are in rural or regional locations.

They looked for densely populated catchment areas – locations with deep employment markets. Urban markets have a diverse range of employment bases so there is less volatility in discretionary spending. It’s the opposite of regional markets, which tend to be driven off one or two main industries so any failure can have a dramatic, negative effect on retail spending.

The focus on these urban and metropolitan markets began in 2013, and simultaneously they began selling out of markets such as Orange, Gippsland, Rockhampton and Taree.

Mirvac bought into Darling Harbour (Harbourside), Drummoyne (Birkenhead Point), Zetland (East Village), and Nundah (Toombul): all urban and metropolitan centres with a heavy weighting on Sydney. The team had the product, so the strategy now was to unlock the value, and this would become their core principle. It would define their modus operandi, differentiate them from their peers and, ultimately, it would dictate the theme of their brand positioning.

Susan MacDonald is on record for asking the questions: “Why does a centre have to be big in order to be successful? What has size, or the GLA of a centre, got to do with its appeal to consumers, its ultimate performance and its ROI?” These are rhetorical questions of course; in terms of performance and yield, size is irrelevant. MacDonald explains: “Our portfolio is focused on key eastern seaboard urban markets. It comprises centres with a wide range of GLAs; our centres have differing trade-area characteristics in terms of both demographics and how they are serving the various places in the shopping hierarchy. Consequently,” she says, “we need to treat each centre separately. We need to look at each centre individually and have a number of ‘micro’ views as distinct from a single ‘macro’ approach.”

When you look at the portfolio, it’s easy to see her point. At Darling Harbour, for example, there’s a distinct tourist and visitor market, while in Orion, it’s about as different from that as you can get, with young families and first homebuyers. At Rhodes, an established, traditional residential suburb, the last 10 to 15 years have brought enormous growth on its western side, creating one of the most densely populated areas outside the CBD, as well as housing a massive commercial office population on its doorstep. Birkenhead Point is destinational – a premium outlet centre, yet it’s also used for everyday shopping by those who live nearby. Broadway could be described as the most powerful centre in the country; it’s not a ‘city shopping centre’ although it’s located on the city fringe. Its trade area demographics include a huge student component along with an upwardly mobile professional contingent, as well as a significant, somewhat wealthy group alongside a housing-commission sector. The list goes on and as it does, the variants get wider!

According to Susan MacDonald, East Village, a recent joint venture partnership with PAYCE, is really well developed but there are still opportunities for creating value in the future given the incredible growth in the trade area. Birkenhead Point is a similar asset inasmuch as it was a great centre, but was ready to be taken to the next stage. Size of the asset is not part of the acquisition criteria, however specific trade-area demographics are; so is the belief in the ability to create further value to any asset acquired.

They are looking for centres in urban areas that have the potential for future growth in newly created suburbs, or centres that may have been undermanaged, unloved, or even centres that have begun a ‘turnaround’ process as a result of changing demographics. In summation, they look for centres where the performance doesn’t match the potential.

They also see opportunity to create value in their existing portfolio, illustrated by its best-performing asset Broadway Sydney. In terms of its trade area and demographic it’s a very puzzling centre. Although it’s on the fringe of the CBD, it doesn’t really position itself as a CBD centre. It’s on the border of the inner-western suburb of Glebe, yet it doesn’t present as your typical suburban regional or sub-regional. It’s close enough to knock on the door of Sydney University, so the student factor is huge in terms of its trading. The suburbs surrounding the centre – Glebe, Forest Lodge, Pyrmont, Chippendale and Ultimo – collectively have some of the widest variations in trade-area demographics and socio-economic compositions in the whole of Australia.

Within walking distance of Broadway are multi-million dollar houses, exclusive waterfront apartments as well as low-cost rental housing, along with housing commission homes and high-density student accommodation. It’s all there and so is everything in between.

With a Kmart, Target, Coles and Aldi, along with Harris Farm Markets, Peters Meats, Harvey Norman, JB Hi-Fi, Priceline et al, you’d be forgiven for thinking it’s a normal suburban regional but, for a start, it only just makes Big Gun status (by a few square metres) and has no department store (under PCA definitions, it’s classed as a regional, even though it’s spread over four and a half levels). Then you might think, OK, so it’s a large sub-regional. That being the case, you might expect it to have a powerfully trading Peter Alexander, the full range of Cotton On, Lorna Jane, Sussan, Michael Hill, Portmans along with the whole range of lower to middle fashion. It’s got all those but, as well, it packs in L’Occitane, Marcs, Mimco, Sportsgirl and, when the present refurbishment and conversion of some of the adjacent car park is completed, it will house a full-size H&M, a 230m2 Seed and a 400m2 Sephora and a MAC Cosmetics store. Add to that, one of the highest trading full-line Apple Stores in the country and you can see that this might become the exception to the rule ‘you can’t be all things to all people’.

The redevelopment and refurbishment of Level 2 – food and fashion – has thrown up some very interesting innovations. Eat Istanbul joins Bun Me, Pepperseeds Thai, the latest Din Tai Fung along with Zeus Street Greek and Sushi Hon, all lining up with a host of the usual suspects on one side of the mall with the seating in the middle but flanking on the other side is Sephora, Napoleon Perdis, Victoria’s Secret, Calvin Klein and General Pants, to name but a few!

They’re all packed in but this is no hotchpotch of a collection; this is an extremely well thought-out mix that responds to the whole range of market demand. This latest redevelopment is the topping off of the work they’ve been doing since they acquired the centre in 2007.

There were frowns when Mirvac purchased it. It was ‘locked in’: expansion was not an option, the trade area was dense and established, and population growth wasn’t a consideration. But there were more opportunities to be leveraged.

It was a centre where they could ‘create value’, and they did to the extent that, for four years running now, in terms of centre MAT/m2 (often regarded as the main performance indicator of a centre) Broadway, at a staggering $13,798, is the number one centre in the country. Furthermore, that’s over 12% better than its nearest rival.

Broadway is about as different to Birkenhead Point as you could get, but the same strategies of ‘creating value’ apply. In 2014, to the surprise of many in the industry, Mirvac acquired Birkenhead Point from The Abacus Group that had held it since 2010, and had done some great work in commencing its repositioning. It didn’t seem to be a Mirvac holding – it was somewhat disjointed and was an outlet centre.

But to those in the know, and especially the team at Mirvac, Birkenhead Point was exactly the type of retail they were looking for. Here was potential to be exploited; here was a prime opportunity to ‘create value’ and, as well, to develop a broader tourism strategy with Harbourside.

Almost immediately the team set about remixing existing tenancies, placing an emphasis on the premium designer brands, gradually positioning the centre to produce a mix more befitting the affluent local catchment and its glamorous waterfront location. Since acquisition they’ve added Armani Outlet, Lindt, L’Occitane, Tommy Bahama, Anna Thomas, Bed Bath N’ Table (large-format concept), Brooks Brothers, TopShop, Glue, Aquila, Peter Jackson, and Puma. In less than two years they’ve completed 64 deals.

The next stage for Birkenhead Point is to take the premium offer to the next level. DA approval has been granted for the rework of Flinders Gallery into a boutique, premium precinct boasting top international designer brands and boosting the centre’s destinational appeal. There has been significant work done to entice the lucrative tourist customer through the ‘Hello Sydney’ program, partnering with Harbourside, with the introduction of Union Pay terminals throughout the centre along with the appointment of a Tourism Manager. A dedicated shopper hopper service from Circular Quay is to commence this spring.

It’s still early days so the work is ongoing, yet already the performance of the centre has improved dramatically. Specialty MAT/m2 on acquisition was $7,820, and now it’s jumped 20% to $9,341. Apparel specialty MAT/m2 has jumped a massive 24% from $8,082 to $10,000/m2/p.a. They’ve achieved double-digit leasing spreads since acquisition!

A very recent acquisition is illustrative of Mirvac’s approach and it’s interesting because, as yet, they haven’t really started! Toombul was originally developed by Westfield back in the 1960s; in 2003 it was acquired by Centro who produced a two-stage plan for its expansion. The second stage never eventuated and Toombul has languished somewhat since that time. Mirvac acquired it earlier this year as it filled all their requirements for a centre with a potential to ‘create value’. Susan MacDonald says, “It’s a fantastic repositioning opportunity. The demographic has changed dramatically since it was first developed and nothing much has been done to make it more relevant to its market.”

Toombul is situated in an upwardly moving demographic area with a forecast retail spending growth of 4.7% per annum. The centre sits in a fast-growing metropolitan area with a population growth forecast at over 2%. “We’ll improve the car park in the first instance,” says MacDonald, “and enhance the retail offer to better align with the changing trade-area demographic. In the longer term we’ll look to deliver a new entertainment offer as well as a dining precinct.”

You can see the rationale. Toombul sits in the suburb of Nundah which, over the last few years, has changed its character somewhat dramatically. It’s transformed itself from a previously working-class suburb into a white-collar area targeted by upwardly mobile professionals and the like who were looking for inexpensive homes close to the city. Over the last few years, house prices have skyrocketed and the suburb has become what’s often termed as ‘gentrified’.

However since Westfield left in 2003, not much has happened to or in the centre. Centro had problems and ultimately it fell into Vicinity’s hands, which offloaded it to Mirvac recently. It’s classic Mirvac stuff – high-density urban retail, undermanaged with a huge potential as yet to be exploited. As Susan MacDonald says, “It’s sitting there, waiting for its value to be unlocked!”

At Rhodes, the centre was totally repositioned within its existing envelope. Mirvac saw the potential, when IKEA opened their second store in Sydney, to remix the centre and move away from its homeware-dominated mix. The changing, younger and diversified demographic and the almost captive commercial office population presented the opportunity to activate an urban night-time economy. They more than doubled the restaurant offer within the existing GLA, remixed and upgraded the food court as well as the fresh food offer. On completion, they extended the trading hours of the restaurant precinct and improved the car park efficiency.

The result was that specialty sales grew 9% from a previous year downturn of -2%. Annual customer foot traffic, which had dropped -2% the previous year, now grew by 7% and the food catering business achieved a trading level some 30% above the Urbis benchmark!

Rhodes fits the bill. It is an inner-urban asset with strong demographics and high barriers to entry. Mirvac’s management platform created value and, through collaboration with new retailers, fresh strategic relationships were formed.

The centre at Darling Harbour could well prove to be the jewel in the crown of the Mirvac Retail portfolio. If ever a centre failed to exploit its potential, it was Harbourside at Darling Harbour. Originally developed by the Hayson Group, the Darling Harbour development converted the old NSW Railway shunting and marshalling yards into prime harbourside land on which was built the shopping centre. But although it was a big hit with both tourists and Sydney residents, they never really got it quite right.

You’d always find one or two good restaurants there and a collection of half-decent tourist shops, but there was never any consistency in the tenancy mix, never a strong theme and adjacencies followed no discernable pattern. After changing hands it never really defined itself and, to the expert onlooker, it appeared that solutions were not much more than an attempt to fill vacancies, irrespective of what the new tenants brought to the table.

Mirvac’s acquisition has had the most perfect timing. It comes at a point at which the whole area is being redeveloped. The new Convention Centre will be totally redeveloped along with hotels, residential towers and state-of-the-art retail, and it all ends right on Harbourside’s doorstep.

This latest development activity is not just confined to the western side of Darling Harbour, but extends to the surrounds in Chippendale, Ultimo and Pyrmont. In the close vicinity of Harbourside, some $4 billion of development work is being undertaken. Harbourside sits in the midst of it all and will no doubt benefit immensely from the redeveloped region. Again, it’s a rapidly changing area with magnificent potential to create value at Harbourside, with masterplanning already well advanced.

The terms ‘creating value’ and ‘unlocking value’ came as a result of Mirvac Retail’s analysis of their strategies in pursuit of their brand positioning. When they tell you how they went about it at Mirvac Retail, what impresses is the fact that this wasn’t just some ‘feel good’ procedure; it wasn’t some slick marketing exercise to come up with a snappy slogan, nor was it some ‘in vogue’ PR campaign to raise Mirvac Retail’s profile in the marketplace. It was an exercise to determine and define the vision of the company, it’s core values and its very essence.

There’s an old and valued engineering maxim: “if you haven’t written it down, you haven’t really thought about it.” When they began writing it all down at Mirvac, they really had to think. They began to define exactly what it was they did and how it differed from others in their field. The acronym BASIC was developed as it accurately described their vision – Bold, Agile, Smart, Innovative and Collaborative.

Bold is described as having courage and commitment, which are needed when you take on such diverse projects and, in many cases, assets that are underperforming. Agile refers to thought processes; you need to focus and be adaptable. Smart is defined as having the ability to continually learn. As Adeline Chin, Mirvac Retail’s National Manager – Brand and Communications points out, “Retail is constantly changing. The only constant is change! This offers us a platform to learn; to evolve, not to stand still and become irrelevant to our customers.” Innovative is defined as having the ability to produce creative solutions and the acronym finishes with the word Collaborative, referring to both retailers and the shoppers, forming supportive relationships across the board. So BASIC defines their values, their vision and their essence, which in turn leads to the core idea behind them – to unlock and create value.

The resultant mission statement is very clear and succinct. “We aspire to be the market leader in creating value for our customers. We will do this by working collaboratively to deliver bold and innovative retail experiences across our portfolio of bespoke urban assets.”

The statement says it all: ‘creating value’, ‘bold’, ‘innovative’, ‘collaboratively’, and then a masterful description of the product – ‘bespoke urban assets’. But the real brilliance in the mission statement is that it doesn’t apply to the product, but rather to the experience gained inside it!

It’s a mission statement about producing an emotion, a feeling, an ‘experience’ and it’s exactly that analysis that has given Mirvac Retail its brand positioning: “Experience Retail”.

As we go to press, the brand is being launched, so when you next see a Mirvac project you’ll see ‘Experience Retail – by Mirvac.’

It’s interesting too that the term ‘bespoke’ was used to describe Mirvac’s retail assets. ‘Made to order’ is the usual definition for the word and it fits the Mirvac strategy of tailoring each asset to respond to its market and the nuances of both the centre and the trade-area demographics.

What you see at Mirvac is that they’ve begun a journey and are already a long way down the road. It’s a departure from the norm in our business; certainly they develop retail, lease shops, manage centres and market them, but what they aspire to is far more. They’ve all been in the business for a long time and, as individuals, they’ve all got experience, track record and a demonstrable success. But although the principles are the same – the commercialism and the need to show a return on investment – at Mirvac they’re coming at it from a different angle.

‘Experience retail’ isn’t a gimmick. At Mirvac they perceive retail as an experience and, by focusing on the experience, they believe they will create value. Perhaps it is a bit esoteric and could be described as coming from left field, but then it was only a few years back when ‘community focal point’, ‘a sense of place’ or ‘working together with retailers’ were viewed in the same light. There’s a mood at Mirvac that is almost tangible; they’re aspiring to something and they’ve defined it well.

They’re aspiring to create value by focusing on the retail experience.

The latest Mirvac development comes on stream later this year and it perfectly illustrates the accuracy and indeed the reality of the BASIC acronym as well as their aspirations. It’s very bold and they really have been agile, smart, innovative and collaborative to the extreme!

Tramsheds is a 7,000m2 retail development at the Harold Park site of a huge Mirvac Residential development in Forest Lodge, in inner-western Sydney. It’s the site of the old tramsheds and the building, a heritage-protected structure, is being converted into a shopping centre with predominance in food and beverage.

They’ve done some way-out deals with the retailers there, encouraging them to think left field with the result that the innovations are staggering. The baker doesn’t just show you how to make and bake the bread but has his own grinder to mill flour from the wheat, right there in the centre! Now that’s got to be a first. Everyone’s doing ‘pop-ups’ these days but in the middle of Tramsheds there’s Artisan Lane, a flexible space with its own kitchen! They’re using it for short-term food activations, functions, pop-up dining concepts, special events by the tenants and a venue for guest appearances by celebrity chefs. There’s so much innovation at Tramsheds that SCN will publish a separate article on this development in a future issue.

So ‘experience retail’ is the new brand. It’s clever. ‘Experience’ is used both as a noun and a verb. Its definition is very close to the whole of the Mirvac strategy, their values, their vision and indeed, their aspirations; all of which leaves a powerful impression.

Experience retail – by Mirvac. Clever. SCN