2017 CEO Outlook

Peter Allen, Scentre Group

It’s with great excitement that we face the year ahead.

The nexus of consumers, retailers and shopping centre owners continues to be a dynamic place where retail truly comes alive. This is a cyclical intersection whose success depends on productive engagement: one where owners and operators can meet the needs of their retailers; where retailers can anticipate what consumers want; and where consumers can share their preferences with both retailers and shopping centre owners to help inform the ever-evolving product.

At Scentre Group we see our role as that of a placemaker, and indeed our purpose is to create extraordinary places, connecting and enriching communities. We have a unique part to play as a major developer, designer and builder, with our ability to provide what is in effect civic space that more often than not connects to urban infrastructure.

Since our establishment in 2014 we have implemented that most literally through our development pipeline, with more than $3 billion worth of projects completed in two and a half years. In the coming year we’ll do more of the same, with $605 million worth of projects started in 2016 and a further $665 million completed in the same period.

Speaker: Greg Miles, COO, Scentre Group

In recent years, much has been made of the impact of technology on retail, and it rightly continues to be a significant consideration for us all: shopping centre owners, retailers and consumers alike. We’ve focused on innovation over the years, seeking to use technology to the best of our ability to bring our retailers and consumers together – inside our malls and beyond.

And while we’ll keep up the momentum with technology and how we apply it, one element remains constant to us – and that is the importance of place.

The success of our most recent projects has stemmed from the sum of the whole, rather than just the parts. The total offer that’s available to consumers holds the appeal – and we strongly believe that revolves around providing extraordinary space where people just want to be.

And there is desire on both sides of the equation.

Consumers, for their part, often want a sensory experience when they shop – to interact not only with that product and its seller, but also with each other, and that’s something that can best happen in a physical space that comes with all the trappings that make it enjoyable.

And more than just the physical space we provide is the excitement and experience we want to give to our customers. In 2016 we articulated a new focus for our business and accordingly established a new division, Customer Experience. This will have accountability for every customer touch-point – from the entry/exit experience, to the front of house service and in-centre operations, to the personalised physical and digital engagement before, during and after a centre visit, through to the data we capture and analyse.

We believe if we can excel in the delivery of customer experience, we can bring so much more to the experience of shopping, benefitting both customers and retailers.

That experience will come in many forms. Our buildings will continue to feature dedicated event and performance spaces that come to life with live music performances, shows and other activations which will create an unrivalled ambience, especially in a landscaped setting surrounded by dining options.

Premium customer services are another element critical for a positive consumer experience, and high quality amenities, valet parking, concierge and other services will all come into sharper focus as we seek to meet ever-discerning expectations.

Digital activations too, will play more of a role in our centres as we’ll look to connect customers with exciting and entertaining technology in the heart of the retail environment.

But what we believe is the most exciting element of all is the retail itself.

Retailers want to provide the opportunity for their products to be seen or touched in a living environment. So while their online presence is increasingly important, they know there’s no substitute for the customer experience in store.

We’ll work closely with our retailer partners as they look to reach out to consumers in new ways, and energise their customer base by bringing retail to life.

As we move into the future, some brands and categories will straddle this spectrum by giving their customers a perfect combination of the two, while some will continue to move further into the online world. And others yet, will realise as they venture down that path that there’s room – and demand in fact – to further boost their physical presence, albeit in a new form.

Our role as a creator of these environments is to work closely with our retail partners to help shape that space and promote that connection with the customer.

One category where this collaboration has been a success is food and dining.

Each of our projects in 2016, and those into 2017 and beyond has had at its foundation key food and dining elements.

At Westfield Marion we created an artisanal fresh food market, the likes of which had never been seen before in suburban Adelaide. In Westfield Whitford City in Perth a project is halfway to completion, which will deliver a new dining, leisure and entertainment precinct. Eleven restaurants set around a piazza, with adjacent cinemas, a bowling alley and other entertainment will provide Perth’s northern beaches with a unique family destination the local community has long needed.

Key projects already underway in 2017 at Westfield Chermside and Westfield Carousel both centre around leisure and entertainment, with the former set to deliver the largest precinct of this kind in Australia. Capitalising on the Queensland weather and outdoor lifestyle, the new rooftop precinct at Westfield Chermside will comprise a landscaped pool and outdoor recreation space, interspersed with a comprehensive range of dining options.

Our future projects will provide similar offers to their local trade area as they come to life.

Other categories that we expect to see continue growing are indeed those offerings which simply can’t be replicated online, or those where the brands deliberately seek a physical execution to complement their online offer. Health, beauty and services like banking are all expanding in the physical world as they provide consumers with a real-world solution that can’t be substituted. Even traditionally online retailers like Amazon are expanding their offer with a physical presence, and their imminent arrival into Australia is something our industry will of course watch with interest.

The Australian consumer has long moved between physical and digital retail worlds and we expect that to continue. And as always, it will be the consumer tastes that shape the product we deliver and it’s our responsibility to be ahead of the game and bring the best operators and brands into the best settings possible.

In recognising our unique ability to create this civic space, we must also acknowledge our role in the community. Our responsibility is to create more than just a place where communities gather, but we must enrich those communities as much as possible. That means constant engagement to understand that we are delivering something of value to a local trade area that genuinely meets their needs. It means providing employment opportunities not only through our construction projects but in retail jobs beyond. And it also means connecting in other ways, whether that be through partnerships we develop with various community groups or by supporting others in reaching their specific goals.

All of this work requires a great deal of collaboration with our retail partners to ensure their vision of how they’d like to grow their brand aligns with our own. In the year ahead we’ll be working closer than ever with the many brands we’ve known for years, and with those with whom our relationship is just beginning.

We believe our forays into the world of advanced data analytics can progress these partnerships, as we move toward our shared ultimate goal of giving the customer exactly what they want. And here technology plays a key role in further enabling us to do what we’ve always sought to do – connect the retailer and shopper. This is a journey we’ve only recently begun. Our connected malls, with their high speed Wi-Fi networks and digital smart screen network have limitless opportunities for the brands we partner with in-centre.

And by sharing our learnings with retailers in a way that is meaningful for them, we can both move towards our ultimate goal of fostering that emotional and commercial connection between retailers and consumers.

Through greater collaboration with our retailers and consumers we can also better comprehend the most desirable product we can provide. The continued arrival of international brands has not meant the demise of our local brands, but has provided an impetus for those most nimble to evolve.

Administrations and potential closures in 2016 and early 2017 have attracted much consternation about the state of retail, but we’re confident about our dynamic industry. This activity reflects the cyclical nature of retail as some brands are born, evolve and in some instances, cease to operate. 2017 will be no different in that these cycles will continue.

The macroeconomic environment for the year remains healthy for the retail environment, with all the key indicators providing a solid basis for continued strong performance. We expect to see continued strength in specialty retail sales, which have sustained an upwards trajectory in our portfolio in the past 12 months.

The impact of these external factors of course, is always in relation to the strength of our own business and the quality of our portfolio.

Underpinning what we do as a business is our people, and in 2017 we’ll be continuing a journey that started with the creation of Scentre Group – and that is to make our organisation a place where talent can truly thrive. We’ve established a work place culture in the past couple of years that is already deeply embedded, providing our people with a framework of success that articulates our strategic objectives and the path we’ll take together, to reach our goals.

And so, as we move well into the New Year, we’re more excited than ever to bring to life our purpose of creating extraordinary places that connect and enrich our communities around Australia and New Zealand.

About the author

Peter Allen

Peter Allen
CEO
Scentre Group

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