Is small retail dead?

With the surge in popularity of internet shopping is this the death knell for small retail shops and also gigantic shopping centres?

Case in point, in the last week i have bought around $400 worth of clothes online. I am a fan of Henleys brand clothing, shirts retail in the shops for $60-$80 each, i have been getting them delivered to my door for $30. These clothes, retail, would have cost me around $800-$1000.
Louis Epstein shoes, normally $90, i bought them for $24 with free delivery.
Cigars, normally around $20ea, online for $10, delivered. A small humidor would cost upwards of $200, purchased online for $70, delivered.

What is the financial incentive to go to shopping centres anymore? No doubt there is the social experience and some will go for that.

I was privy to a conversation that there are plans to expand the Carousel Shopping Centre, in Cannington, and possibly add a second story to it. Are they mad? Retailers are shutting down, not opening up.

Apparently the biggest winners out of the age of internet shopping are the courier services, they have never been so busy. I don't see internet shopping lagging anytime soon and there is basically nothing out there you can't buy online, even a wife.

springhill said:

With the surge in popularity of internet shopping is this the death knell for small retail shops and also gigantic shopping centres?

Case in point, in the last week i have bought around $400 worth of clothes online. I am a fan of Henleys brand clothing, shirts retail in the shops for $60-$80 each, i have been getting them delivered to my door for $30. These clothes, retail, would have cost me around $800-$1000.
Louis Epstein shoes, normally $90, i bought them for $24 with free delivery.
Cigars, normally around $20ea, online for $10 delivered.

What is the financial incentive to go to shopping centres anymore? No doubt there is the social experience and some will go for that.

I was privy to a conversation that there are plans to expand the Carousel Shopping Centre, in Cannington, and possibly add a second story to it. Are they mad? Retailers are shutting down, not opening up.

Apparently the biggest winners out of the age of internet shopping are the courier services, they have never been so busy. I don't see internet shopping lagging anytime soon and there is basically nothing out there you can't buy online, even a wife.

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I don't think you will ever be able to replace the 'sense of place' a well laid out and promoted shopping centre with the right tenancy mix can achieve.

As mentioned in the SGP thread, retail rental growth will more than likely slow as pressures on retail margins are realised. Shopping centre expansions will be more strategic, focusing on changing the tenancy mix to those that are somewhat shielded from the trending internet movement, including those which products are not available online. For example, having retail outlets located near a Woolworths or Coles (although potentially derogatory for your image), the passing traffic flows will be maintained. Additionally, as some retail outlets do reduce, those well run centres will be able to capitalise on a slight increase in market share - even though some of those shoppers from the other store will now favor the internet, their will always be that need for some.

If businesses want to survive, they need to tap both markets for what they are worth. Small and large businesses need to be thinking more entrepreneurial and creating innovative means to attract people back into centres and then back to their stores.

The retail game is more dynamic and I personally think that their is opportunity if a well established online marketing campaign is developed.

JB Hi-Fi is a good example - with its cult like following, it has continued to grow its market share.

Apple is another good example - with its well laid out store and exclusive positioning near other upmarket retail chains (e.g. Louis Vuitton and Zara) the stores remain full and are willing to pay a premium just to be seen purchasing a product in an exclusive, more upmarket centre.

I'm waiting to see a store that is used primarily as a display shop, with free internet access so customers can jump on that company's online store and purchase the product to get the discount. Thus ensuring customers get the best of both worlds (seeing the product and getting the discount). At least this may somewhat protect market share of the company. This is really no different to what everyone already does in Harvey Norman. You get the 'best quote' you can, then while you are in the store, ring every other Harvey Norman store to see which one can offer you a better deal.

Just my opinion.

-Liar-

I think there is a place for both,

As you said there is a real social aspect to shopping centres, ie, movies restruants, coffee shops and food courts,

Also the benefit of being able to go and by stuff today, and compare quality etc against other products, nothing beats going and holding the product you want, and being able to return it today if it is faluty.

Also watching most of the women in my family shop, I think the like to be able to go and try on dresses, shoes and jewellery before they make the purchase, and the like that they can buy a few options to bring home and show us men for an opinion and beable to return the item we don't like the next day.

I might be old fashioned but I think they are here to stay, It funny but at my local westfield an online bank rented space for a few months to try and help sign up customers,

Both make valid points, small retail may not be dead, but does it have a terminal illness? Have we seen the peak of buying at retail locations, and a bigger trend to online shopping, while still seing retail remain viable, albeit with heavily reduced profits?

To address your point TB, it was reported on the radio last week people are still going to shopping centres, trying on all the clothes they want to get the right size and fit, and then going home and purchasing the exact same goods online. Effectively using the shop as a fitting room. They still get the thrill of finding the right clothes in a social environment, but with the savings of buying on the net. This is where LP's idea of net based shopping in a retail location is genius.
Some shops have resorted to charging shoppers a 'fitting fee' just to try on clothes, therefore still recouping some costs when consumers do the above mentioned.

I would actually say the opposite; that large retail is dying off.

I manage accounts across a range of industries and i have found those wholesalers that supply to the big chains are the ones who seem to be struggling the most. Small wholesalers/retailers who have found a decent niche, provide excellent service and follow-up/warranty servicing, are well known in their industry etc, seem to still be doing OK.

Big retailers seem reluctant to drop their margins, whereas smaller ones have more flexibilty, especially if they are not located in an overpriced shopping centre.

springhill said:

To address your point TB, it was reported on the radio last week people are still going to shopping centres, trying on all the clothes they want to get the right size and fit, and then going home and purchasing the exact same goods online. Effectively using the shop as a fitting room.

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I have heard this arguement too, and while it no doubt happens I can't see it as being mainstream.

Any way even if it was true, it then clearly points in the direction that the brands that have a presence in the "real world" a show room if you like, will do a better online trade than those that don't. It kind of reminds me of the banks closing down branches in the late 90's even with the massive take over of internet banking, most banks have reversed the trend and have started opening branches, and alot of the branchs are at shopping centres.

Internet shopping is here to stay, but so are the shopping centres,

The way I see it is there are too many shops per capita and every one who opens a shop wants to make a zillion dollars. Therefore the markups on product, in the past has been ludicrous.
With the advent of the internet and the price of computers dropping to a point that everyone has access to one, consumers can now check what the priceof a product is.
Retail is going to go through a rationalisation phase. Take springhill's example of Carousel in Cannington the amount of shops in and around that area is crazy, but I noticed Hayward's furniture and Pert furiture Co in that area have shut down.
Ithink there will be many more to follow.

Its stuffed.


Will only be in the form of small business supplying the owner a wage.
Mega stores and E-shopping are the future.

springhill said:

Case in point, in the last week i have bought around $400 worth of clothes online. I am a fan of Henleys brand clothing, shirts retail in the shops for $60-$80 each, i have been getting them delivered to my door for $30.

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I can't order from a catalogue - online or print - that is full of gen-Y metrosexuals. Turns me right off!

To get more balanced views we need a woman in this thread! I am sure they are more than half of the retail economy... or in my household more like 95%.

Liar's Poker said:

Apple is another good example - with its well laid out store and exclusive positioning near other upmarket retail chains (e.g. Louis Vuitton and Zara) the stores remain full and are willing to pay a premium just to be seen purchasing a product in an exclusive, more upmarket centre.

I'm waiting to see a store that is used primarily as a display shop, with free internet access so customers can jump on that company's online store and purchase the product to get the discount. Thus ensuring customers get the best of both worlds (seeing the product and getting the discount).

Click to expand...

They did have a store in Brisbane that does just that - a few displays and a few laptops. But it shut down not long after... Have to say I never went in there as it was just selling fluffy useless stuff.

Apple stores are in fact just marketing stores. It doesn't matter how much product gets sold in that store. Apple has far wider distribution than that. Sales don't even work on commission so there's little incentive to push the sales.
People go inside and play with the products, talk to those Apple guys and they become part of the cult and end up lining up for hours for ipad III...

Came across this the other day...anything can happen in China

http://birdabroad.wordpress.com/2011/07/20/are-you-listening-steve-jobs/

If I consider an item a generic product or commodity and I can do all the research I want on line then I buy it online.

If I need to go and receive personalised service / advice / fitting prior to purchase then I pay the extra and buy it from the shop providing the service. I do know of people who are quite comfortable researching in the the shop then buying online but I really don't think thats fair.

If I was looking to buy a retail business I would be looking for something that required an amount of customer service and loyalty rather than something that could easily be usurped by the net.

Imagine buying a bookstore franchise just prior to the Amazon Kindle attack?

IMHO the real problem in Australia is distributors adding a layer(s) of fat can be sidestepped online.

cheers
Surly

skc said:

To get more balanced views we need a woman in this thread!

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Ask and you shall receive, skc.

I'm happy to buy online what doesn't need to be seen to determine quality (e.g. food) and what doesn't need to be tried on (clothing/shoes).

I like the convenience and speed of placing the order and having it delivered to the door.
Have, however, had a problem with stupid Australia Post not adhering to standing written instruction which tells them to leave any parcel at the door if there's no one home.

Re shopping centres, I used to actually enjoy shopping, but these days regard it as a chore. Not quite sure why.

tech/a said:

Its stuffed.


Will only be in the form of small business supplying the owner a wage.
Mega stores and E-shopping are the future.

Click to expand...

Agree.

Saw the other day there is a Costco opening up in Sydney, correct? With plans to open in other capital cities too.

tinhat said:

I can't order from a catalogue - online or print - that is full of gen-Y metrosexuals. Turns me right off!

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You can order Hard Yakka online mate! Some nice working types for you on there

How bout that new IKEA mega-store, the size of 2 MCG's?

Must be a heck of a lot of people who like platicky, cheap, poorly designed ****! Hope it goes under.

Big retail is starting to match the internet prices though...

I bought a kettle from Harvey Normans, gave me 25% discount as I told him I could get it cheaper on the net. Beat the best price on the net by a few $.

Second was Microwave, game me 30% discount on already discounted price, again cheaper than I could find anywhere else on the net.

The retail guys are dropping prices - you just need to ask and push them and put them under pressure.

Salemans had a laugh when I told him Jerry would be impressed that he beat prices online. hahah lol

As dead as the Thylacine and the Raphus cucullatus.

Just had a walk around my local westfield, and i must say it did give me confidence that the Internet will not have a major negative effect on the format for the following reasons,

1, when you look at it there is a decent amount of businesses that don't suit theonline format. Ie, restaurants, entertainment, hairdressers, massage, beauty spas, a gym, high end jewelers etc etc.

2, as mentioned earlier, fashion retail can be suited to online but a large portion of people prefer the instore experience and ease of having so many retails in one local.

3, even the stores that would suffer competion from online retails will still get alot of business from people who don't like the online thing, impulse buys from passers bydrawn in by anchor tenants, last minute urgent things such as gifts etc

It's just my opinion but I think they are here to stay for decades to come.

People are talking about a downturn in retailing and nobody mentioned deleveraging yet? Hmm....