How shopping centres are changing to fight online shopping

Even before the arrival of Amazon, online shopping is devastating Australian retail. In the past year, sales in physical stores grew only 3% while online shopping grew almost 10%. Foot traffic in physical stores has fallen by almost 5% this year alone.

Both retailers and shopping centre operators have to work together to create compelling reasons for customers to leave their homes and go shopping in physical stores. This has already resulted in a lot of experimentation, from VIP shopping nights to pop-up stores and events.

As the likes of Amazon enter Australia, shopping centres and retailers are going to need to be extra creative.

The decline in foot traffic is reflected in the retail industry’s profit margins, which have consistently declined since 2008-09. Physical stores have seen their profit margins hover around 5% since 2008-09, while online retailers’ have grown. Profit margins for online retailers are now roughly double that of bricks-and-mortar stores.

All of this is causing tensions between retailers and shopping centres as customers increasingly shop online. Read more

Jason Pallant and Sean Sands – The Conversation – 4 Sep 2017