Profiting from migration patterns
Population growth isn’t just expanding our cities. Migration patterns and shifting generational influence are also changing the way we shop, says economic analyst Tony Dimasi.
As a micro-economist, Dimasi has spent the last 35 years working with shopping centre owners and developers, retailers, service providers and governments to zero in on the ever-changing needs and wants of the consumer. He says the 2016 census provides some revealing insights for the retail sector.
“Everyone knows that Australia has been growing, and that Melbourne and Sydney are to a large extent accommodating this growth. But what is less understood is how migration patterns are changing the shape of the retail industry,” he says.
The census reveals that more than a quarter of Australia’s population in 2016 was born overseas – 26.3 per cent, up from 24.6 per cent in 2011. Most overseas-born residents came from Asia, with China, India, the Philippines, Vietnam and Malaysia now accounting for more foreign-born residents than England, New Zealand and mainland Europe.
A larger proportion of overseas-born residents has a “significant impact on retail expenditure, both in terms of capacity and type,” he says.
“This means knowing what is happening in the catchment that is relevant to you, and knowing what those customers require – what pushes their buttons and what their expenditure is like,” he says.
Asian immigrants are typically much younger than European immigrants, which is slowing down the ageing of the population. It’s also injecting new life into our city centres, particularly in Melbourne and Sydney, Dimasi says.
“As you walk around Melbourne’s city, for example, you can see the range of Asian eateries forming concentrations – from Korean and Taiwanese to Malaysian-Chinese and Indian. These tend to be open late at night, because these customers don’t want to be sitting around in a small apartment after work. They want to be out on the street.
“This has created a new buzz and vitality in our streets, not to mention providing a tremendous range of smart casual eating options.”
Australians are also getting older. One in six Australians are now over 65, compared with one in seven in 2011 and only one in 25 in 1911.
But Dimasi warns the Baby Boomer influence is “starting to wane” in the retail space. “Change is afoot, and it will accelerate rapidly from here,” he says.
“In the past, retailing was determined, delivered and controlled by the Baby Boomer generation”; a group of customers who are “predictable and stable”.
“Once we found a brand we liked, we stayed with it as long as there was reasonable service and value for money.”
But over the last decade or so this has “started to come apart”, fuelled by social media, technology and younger customers that aren’t brand loyal, and have “different expectations and requirements” to their parents and grandparents.
Dimasi admits there is a level of generalisation required when unpacking census data, but when coupled with information from other sources, it paints a clear picture that can help retailers better respond to their customers.
And he has good news for the sector in general.
While he doesn’t dismiss the disruption that online retailing has caused, Dimasi says “people often forget that population growth itself creates an enormous increase in demand for all retailing, and primarily for bricks and mortar retailing”.
“If our population grows by 300,000 or 400,000 people a year, and we have 2.3 or 2.4 sqm of retail floor space per person, then that’s the equivalent of building five new Chadstones every year, just because of population growth.
“For all that disruption, online retailing only accounts for about seven per cent, and it’s one per cent or less of food and grocery retailing.
“I don’t want to downplay the impact of online retailing, because it has been disruptive, but we need to get the facts right as we gear up for the Amazon challenge,” he says.
“The real disruption is not that seven per cent of business has moved online. That’s been a bit of a nuisance, but three quarters of that has gone to traditional bricks and mortar retailers anyway.
“The real disruption has been that digital technology has transferred bargaining power from the retailer to the customer. It’s provided an instant platform for customers to share information, views and recommendations, which means the retailer is at the mercy of the consumer more now than ever before.”
Tony Dimasi, the director of Dimasi and Co, will be crunching the numbers at The Property Congress, when he shares his insights in the Retail Dollars and Census session. Limited places are available. Book your ticket today.