‘Casual’ Leasing in Australia
Innovative new specialty retail concepts and a whole range of high-end kiosks are a blockbuster combination in Australia. We take a closer look at specialty leasing in the country down under.
Westfield Sydney is one of Australia’s largest sustainable mixed-use developments, it incorporates an office tower and three shopping centers. It fronts three streets, including the Pitt Street Mall, one of the world’s most expensive shopping streets, by rent; Castlereagh Street, arguably Australia’s most exclusive luxury shopping street; and Market Street.
Australia, the world’s sixth largest country by gross area, is blazing new trails in specialty retail. Here’s a look at how one mall developer, Westfield, is shaping the Australian retail landscape.
The Sydney city skyline is beautiful. Equally impressive is the impossible-to-miss golden Westfield tower. After talking to locals about Westfield’s shopping centers and spotting Westfield on the front page of the newspaper regularly during a three-week time span, it is clear that the mall developer is one of the country’s proud assets. It is perhaps fitting that Westfield’s striking corporate building occupies such a prominent space in the downtown landscape and that the prominent Westfield logo can be seen from virtually every location downtown.
First stop: Westfield Sydney Centre
In 2010, Westfield spent $1.2 billion redeveloping Westfield Sydney Centre, a commercial complex in the city’s central business district. Phase one of the redevelopment opened with 130 stores and one year later the second and final phase opened with 120 additional stores.
Just prior to the center’s grand opening, Robert Jordan, Westfield Group’s Managing Director, Australia & New Zealand, was quoted as saying: “Westfield Sydney will become the benchmark for downtown shopping malls in Australia. We’re developing a global centre that will offer the very best in retail, design, and services and we believe the centre will position Sydney as an international shopping destination.”
Immediately upon entering Westfield Sydney Centre, it is clear that Westfield has achieved this mission. The high-end design of the shopping centre is notable, with an eclectic mix of diverse tenants, an innovative food court with food representation from around the world, innovative visual merchandising and sleek cutting-edge kiosk designs.
A different kind of strategy
Peter Littleboy, General Manager BrandSpace Retail for Westfield Group, points out that in Australia, specialty retail is referred to as both “Casual Leasing” and “PopUp Retail.” “Casual leasing is the terminology used to describe the retail entrepreneurs and brands that set-up pop-up stores in our malls,” he said. Similar to the United States, the tenants’ duration of stay can range from one week to a year.
An important difference between specialty retail in the United States and Australia, is that the Australian government regulates all leasing efforts—casual leasing included. For the last twenty years, the government has stepped in to protect the rights of small tenants, making sure they were on a fair footing with the landlords. In addition, the government also ensures that in a given retail market there is no oversaturation of a particular product or store concept. While one can expect this to be a bit challenging from the mall developer’s perspective, Littleboy said they seem to have no trouble attracting new retailers.
Littleboy added that unlike in the U.S., where mall foot traffic is driven by fashion, it is food that is the primary driver in Australia. Westfield has been very successful in creating a wide-range of innovative food concepts along with top-notch fashion retailers. Also interesting to note: While U.S. shopping centers do not typically have a grocery anchor, multiple grocery stores are common throughout malls in Australia.
When discussing the various types of pop-up tenants, George Tsoukalas, National Sales Manager, PopUp Brand & Retail said: “In Australia, the pop-up model is not necessarily all about sales. It really depends on the company’s objectives.” Westfield’s casual leasing program caters to retailers’ three main marketing objectives: incubation, customer acquisition and experiential media. Littleboy described incubation as, ”major companies looking to create increased brand awareness.” Brands can achieve this through opening a pop-up kiosk or store (in fact pop-up retail is being increasingly used in the United States with this objective). Tsoukalas pointed out that Clinique, the makeup company owned by Estee Lauder, recently opened a kiosk to create heightened brand awareness.
Customer acquisition is another potential goal. Both American Express and Citibank opened short-term kiosks to generate new customer leads. As for experiential marketing, Coca-Cola recently opened a short-term location to distribute cans of Coca-Cola personalized with the customer’s name. Shoppers waited in line for over an hour to buy a personalized can of Coke. In another example, Uncle Ben opened a kiosk in front of one of their grocery anchors to hand out samples of their 3-minute rice.
Tsoukalas said that the leasing program has room for retail entrepreneurs who are folded into casual leasing through a concept called, “emerging designers.” Westfield has identified a few key third-party companies who rent common area space from Westfield. The third-party management company finds local emerging clothing, jewelry, and product designers to sublease space within the common area. The store is run as a common area co-op. Littleboy mentioned that there have been many examples of designers who start in the co-op, and graduate to a kiosk space of their own.
High-end kiosk design
A notable difference between specialty retail in the U.S. and casual leasing in Australia is the complete absence of (retail merchandising units) RMUs. The kiosk designs are incredibly high-end and very innovative.
Each kiosk looks and feels very different from one another and effectively showcases the products or services being offered. The designs included very creative uses of construction materials such as glass, laminates and wood surfaces. The flooring is also very innovative. One kiosk used faux grass while another used a very modern laminate.
Sophie Glanfield, Retail Operations executive, BrandSpace Retail, said: “Westfield pays close attention to how the kiosks tie into the overall mall design and how they look in front of a particular permanent retail store.” Glanfield explained that they recently applied a new laminate surface to one of the candle kiosks, Ecoya, to match the laminate used in the Mac cosmetic store that was directly behind the kiosk. She said that the goal was to create a cohesive kiosk design so that the shopper’s eye easily flows from the kiosk to the store and all design elements tie together.
The future of Australian retail
Westfield recently launched a new division of the company called, “Westfield Labs” to explore the role that the company can play in the online shopping market. This new division, based in San Francisco, will work on developing the online business model.
“Seventy percent of Australians have a smartphone. Shoppers want to be able to buy what they want, when then want it,” Littleboy pointed out. “Westfield is in the process of creating a digital mall.” Littleboy added, “Part of Westfield’s online strategy will also include Wi-Fi access for all customers within every shopping center and special offers that will literally pop-up on a customer’s phone depending on the store that they’re in, in the mall, along with an integrated email marketing and social media component.”
This melding of new marketing strategies and cutting-edge concepts promises to keep casual leasing strong in the country down under.