Enter the entertainment ecosystem

How do shopping centres survive the digital age? By evolving into places of exploration and experience, says Mainbrace’s managing director Rob Doust.

Crumbling columns, dismembered mannequins, escalators choked with weeds and dried up fountains are just some of the images of dead malls in the United States, where around a quarter of the country’s shopping centres are thought to be “dead or dying”.

Credit Suisse estimates that a quarter of the 1,100 malls in the US today are at risk of closing over the next five years.

Does this foretell the future of Australia’s shopping scene?

Doust (pictured) doesn’t think so. Leading Australia’s largest specialist retail construction company, Doust has been at the helm of Mainbrace since 2012. He joined the construction company fresh out of university in 1993, learning the business from the ground up and overseeing close to 1,000 retail projects along the way.

“The experience economy and evolution in retail are undoubtedly changing the way we shop. Some Australian shopping centres won’t survive, but they will be the exception,” he says.

Many of the dead malls in the United States are the result of oversaturation of regional shopping centres focused on fast fashion, and the proliferation of big box retailers. Some of these malls are starting second lives as learning labs and libraries, medical centres and auditoriums, but others remain abandoned.

Retailing in Australia, however, is an entirely different landscape. For a start, Australia has around 94 square metres of gross lettable area per 100 people in Australia – less than half the United States’ 219.

Doust says the secret to success in Australia will be to give people a gathering place and a purpose beyond filling shopping bags.

 

Presenting a premium experience

“Today, people expect a premium experience from the moment of their arrival. And that is driving demand for exceptional spaces that are entertaining, inspiring and encourage exploration.”

At the heart of the entertainment ecosystem is food, but F&B offerings are no longer “about a quick snack at lunch time,” Doust says.

According to the latest retail figures from the Australian Bureau of Statistics, retail spending rose by 0.4 per cent to $26.6 billion in April, driven by demand for groceries, household goods and dining out. But meeting the market means more than upscaling a food court.

“A few years ago, everyone was investing in F&B spaces, but F&B is just one piece of the puzzle. There must be more reasons why people will visit a shopping centre. It’s about creating places to meet, catch up with friends, work and conduct business, visit the doctor, drop your kids at child care – you name it.”

Doust points to Frasers Property Australia’s Burwood Brickworks in Melbourne, which is currently under construction. The 12,700 sqm shopping centre will service some 100,000 people with a cinema, child care centre, medical centre and fitness club in the proposed tenant mix. With a rooftop urban farm, Frasers Property hopes it will be far more than a quick shopping stop.

Doust says projects like this intrigue him, “because it’s not only about sustainability, but how people use the space. The design encourages people to explore and experience”.

He also likes Mirvac’s food precinct at Sydney’s Broadway Shopping Centre, recently repurposed by Mainbrace. “It’s far more than a food court. There’s an interesting mix of restaurants with an urban street feel that creates a great space to eat in.”

Doust says there is no doubt Amazon is gaining traction in Australia, but the traditional retail store won’t disappear. Ninety per cent of all sales still involve a physical store, and even as online spending climbs to a predicted 12 per cent by 2022 shop fronts will still be central to the customer experience.

But retail stores will evolve into display spaces, show rooms or “experience destinations” that support the shopper’s decision-making before finalising the transaction online.

Other business models are also breaking new ground. “Companies like Hello Fresh and Marley Spoon have been reasonably successful so far and I think we can expect this trend to continue.”

Mainbrace’s specialist supermarket refurbishment division is powering ahead as more niche players emerge, with a host of projects on the go for Coles and Woolworths, among others.

“Retailers need to adapt to a changing world, and we help them do that.”

 

Change brings opportunity

As a company that not only builds shopping centres, but upgrades existing assets, sweeping changes to the retail landscape “aren’t the end of the world”, Doust adds, “particularly as change creates volume”.

Mainbrace takes on everything from minor works and refurbishments to new builds and major extensions. Typical project sizes range from half a million dollars to $200 million and can take anywhere from a few weeks to a few years.

Doust says one of his team’s biggest challenges is working with existing shopping centres.

“People often underestimate how incredibly difficult and noisy it can be to upgrade a shopping centre. There are a lot more stakeholders in an existing centre than there are in a paddock.

“We spend a lot of time working with our clients to understand what they want to achieve and show them a range of options that get the best outcome with the least amount of disruption.”

With his eye on the horizon, what does Doust expect over the next five years?

“While there is population growth and new housing estates on the city fringes, we’ll see new shopping centres constructed. But they will be typically smaller, neighbourhood centres.

“I think we’ll see fewer major centres built, but lots of consolidation and repurposing to get the mix right.”

And that means reimagining the shopping centre as an interactive, digitally-connected and personalised physical shopping experience.