On the death and rise of retail

This week the ABS released pre-christmas retail sales figures for November. Amazing that for all the effort made over the last few years to develop new indicators for the health and wellbeing of our cities, we still rely on the core metrics of interest rates and retail sales to extrapolate all else.

November sale figures were marginally down; apparently disappointing many. But not surprising some, perhaps.

So what do retail figures have to do with cities and how we use them?

Cities really started around the sale of goods. Market towns brought growers and buyers together for trade; expanding through the wealth created. Taxes and levvies were introduced around them; capitalising on the concentration of money. Markets were a chief source of wealth; underwriting early urban infrastructure. So lucrative were these markets that Lewis Mumford in ‘The Culture of Cities’, wrote that more powerful cities often sought to conquer their weaker neighbours, if for no better purpose than to suppress a rival market. The story of cities and commerce are fused. The form of cities has always been shaped by the forces at work within them. And with new forces now at play, the city will continue to evolve. We just don’t know how just yet.

Before we knew it as ‘retail’, we knew it as ‘commerce’. And along with it came a higher purpose. Around commerce sat a social and intellectual exchange as a pre-requisite for the sale of ‘stuff’.

Still today, commerce is premised on personal relationships and memorable experiences. Commerce also implies patronage; stewardship through good development of the physical place of exchange that allows the ‘licence to trade’ to be renewed.

Retail on the other hand, has come to mean something else. Still the powerful seek to conquer weaker neighbours. Look at the rise of the suburban big box retail – offering free parking and cheap goods over the established retailers who built a brand more on service and quality (I’m looking at you Myers and David Jones).

Package deal king

But something’s flawed in the retail we’re being offered. The death of the mall in middle ring suburbia has moved from the predicted to the observed. Empty shop fronts and a single minded focus on price devoid of dignity are a symptom of the increasing share online enjoys. And it’s shaking the traditional business model of mall owners.  The Atlantic Cities argues that “strong malls will stay strong for a while, as retailers are willing to pay for traffic and customers from failed malls seeking offline alternatives, but even they stand in the path of the shift of retail spending from offline to online”.

But not all is lost, and it won’t all go online. In fact, for all the histrionics of traditional retailers and the retail peak bodies calling for tariffs to be applied to online purchasers, the Productivity Commission puts the domestic online share of total retail sales in Australia at around 4% (with an important qualification; official ABS statistics are not produced for domestic and overseas online retail sales in Australia. Just another blindspot thanks to poor data). But we do know that total retail sales in Australia was valued at around $215bn in 2010.

So if the mall is dying, what might take its place? Do we have a place-based model that works? Probably Australia’s best model is the well known Rouse Hill Town Centre delivered by Lend Lease (with Civitas), Allen Jack & Cottier, Group GSA and Rice Daubney (landscape by Oculus) which has its origins in the award of the tender back in 2003 (which itself emerged as a result of the work by the Urban Design Advisory Service which called for a town centre master plan [thanks Siobhan Twohill for this]).

Oculus Rouse Hill

Rouse Hill inverted traditional thinking for large retail centres by re-connecting with street life, using architecture as a means of placemaking; set into a landscape connected to the the cultural past, present and future of Rouse Hill. A more extensive critique of Rouse Hill by Laura Harding for Architecture Australia is here.

The team recalled the origins of the market place in the project vision;

“In towns and cities, public space has always served as meeting place, market place and traffic way. The enjoyable towns and cities have been those that found a comfortable balance between these three demands, without forfeiting their links with the natural world. In the town centre at Rouse Hill, we will achieve this balance, we will create this harmony. Life will return to the streets and lanes. The comings and goings of the pedestrians will dominate that life, yet they will always feel connected to the unique Australian landscape. Interest in the town centre as meeting place will be renewed, the centre will become an attraction, people will stop and stay a while, participate, take pride in its look, its structure and its innovations. It will become their second home.”

Rouse Hill works on the premise that the street is a meeting place and that’s where commerce happens; something shared with the Mainstreet movement – another cause for hope in the rebirth of retail trade. Mainstreet retailers and precinct trader groups are organising; pooling resources and investing for themselves in the qualities of their own physical ‘place’; integrating urban upgrade with new precinct identities, marketing, events and promotional campaigns. This is not alway easy either. Business owners are not necessarily building owners so their capacity to invest in places long term can be limited.

Rouse Hill
Pic credit: Brett Boardman

When thinking about retail models, we’re often invited to make an artificial choice; between online or bricks and mortar. But of course, it’s both. And more than anything it’s about the human experience. Experience matters. Of the 10 factors identified by the Productivity Commission that are driving online retail, at least half are related to the experience, including the convenience and availability of online shopping; great web interface technology that makes online ordering, inventory stocktake and delivery easy; confidence in secure payment options and offers communicated via social media (Foursquare etc). And we choose to use online for different things.

70% of us go online for bank transactions and paying bills. Less than 10% of us buy fresh food. Like everything; reality is lumpy.

Use of internet e-commerce in last 6 months by household users (2010)

We use online to make the physical more informed, or the perfunctory painless. Sometimes we’re driven to it out of frustration, like in this piece by Petra Starke.  Online research, personal endorsements and greater confidence in secure payment via mobile devices are just some of the emerging influences on our choice to purchase. Smart retailers know you can leverage an online following to help select products to stock, or give users the tools to ‘build your own’ products by assembling the components themselves – like BMW. So it’s a serious worry that the Productivity Commission found that only 28 per cent of Australian retailers perceived benefits from internet commerce.

Commerce has always been premised on personal relationships and memorable experiences. Offline or online. In the case of Adelaide-based food truckers, Burger Theory, an online following is a zealous, mobile customer base, a social network and instant city activation. Burger Theory has more followers on Twitter than either Coles or Woolworths (and Coles’ advertising budget can top $1m per week) and uses this network to alert followers of its location on the day. To date, Burger Theory hasn’t placed a paid ad, but can sell 200 burgers during lunch trade (a burger every 2 minutes).

Burger Theory

Understanding the intersection between technology, user behaviour and place/product is an emerging field in design called User Experience. Australian retail needs to massively invest in this rising capability. Meld Studios, Pure & Applied and NAB’s own in-house user experience team (shout to Harriet Wakelam) have been my introduction to a truly multi-disciplinary practice that starts from the user’s experience and harnesses this as the lens to design the products, processes and services on offer.

Combined with great place making, businesses that allow the user experience to shape how they operate are more likely to innovate. A better user experience and a more engaged online following is at the heart of virtually every ‘trend’ being forecast in retail. Take the great work from US based consultancy PSFK on the future of retail.

Technology will continue to play a big part in the future of retail. Intel’s show at the National Retail Federation Expo 2012  is really a series of touch screen aids to shopping. IBM’s patents include one to track behaviours as you move around the store; tailoring offerings to what seems to interest you. But these technologies alone could just lead to more intelligent clutter; vending machines with interactive screens offering the unendingly familiar.

We can’t separate retail and commerce from a city’s form. But few retailers today would see themselves taking a patrons role in the city. As tenants now themselves, retailers have shifted from stewards of a place in which they’re given licence to trade, to bystanders. In such a fluid environment, the real hope is that we integrate the coming technologies into our urban fabric without losing the primary function of streets as places to meet, interact and trade. Rouse Hill is a great model, but it continues to be an exception and not the rule. Better designed, more inviting, exhilarating town centres are needed; where architecture is used as a means of placemaking and which in turn, might just help revive Australian commerce.

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1 Comment

  1. Hi Tim,
    Really interesting insights – thanks for bringing it all together. I have been thinking about retail a lot, as have our clients of both main streets and malls. We recognise shifts between physical and virtual shopping but surely there are a number of other factors that would be worth bringing into the mix when considering a solution?

    Some of the factors we are thinking about are:
    1. the obvious slump post 2008 in general, non-necessity spending and increases in cost of living
    2. the increase in competition based on the amount of additional retail floor space being produced – especially in mixed use developments that mean people don’t have to travel to traditional retail centres (be they mall or main st – not just the competition between these)
    3. the reduction in non franchise retail, the moms & pops, emerging designers etc and the aging/retiring of these retailers especially last gen migrants whose children do not want to take over the shop
    4. retail rents not falling (or fast enough) to reflect changes in retailer turnover/increased competition – think Oxford St Paddington
    5. conscious consumerism – younger people buying less but more expensive items – often from overseas luxury brands (this is a personal theory – I could never buy a $400 pair of jeans when I was 20 but probably bought 10 $40 tops over many weekends of browsing shops along Oxford St with my friends – spreading the spend)

    It would be good to hear what you think about these ideas

    Cheers

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