Pushing the boundaries
If you asked me to describe to you the future of retail, I would show you a Red Bean and Toasted Coconut KitKat. This KitKat will have been made at, and purchased from, the KitKat Chocolatory at Melbourne Central and is designed to mark Lunar New Year, reflecting the culturally diverse community that surrounds one of Australia’s busiest, most cosmopolitan assets.
You might try to tell me that it’s just a fancy KitKat. But it’s more than that. This KitKat and the KitKat Chocolatory are symbolic of our shoppers’ love of all things food, their desire to customise and individualise their purchases and the trend for a consumer brand, who would not traditionally own a shop-front, to now rent prime retail real estate and in KitKat’s case, to smash their sales forecasts. There is a lot to draw from the KitKat experience but I would like to start with just how productive this tenancy is, and why sales productivity will be more important in 2017 than it has ever been before.
2016 was another strong year for many retailers and shopping centre owners, which we saw reflected in rising specialty sales productivity. It has been a focus for the Group for a number of years, and it reflects the quality of the centres you own, the tenant mix and the quality of your management teams. At GPT we have seen a steady rise in sales productivity over the past five years, to now be at over $11,000/m2.
Understanding what shoppers want
It is ironic that online retail was initially thought to be the ‘beginning of the end’ for shopping centres. But today it is seen for what it really is; a complement to bricks-and-mortar retail, which broadens the offer and has the potential to make shopping centres more successful than ever before. As a shopping centre owner, we are achieving this not only by blending the physical and the digital experiences for shoppers, but also by capitalising on the huge amount of shopper data we are able to collect from our digital touch points, such as websites and Wi-Fi networks. Shoppers are also winning because their data is helping us to provide them with the tailor-made experiences that they value so much. Much of this is not new and we have been talking about it for a number of years now. But what makes 2017 different, is that we can now start to implement the insights we have identified to drive sales, centre productivity and profitability for our retailers.
Of course customer data is of little use unless we use the right data, find ways to analyse it, identify insights and respond with action. In 2017, we are sharing these valuable insights with a growing number of our retailers in order to drive the performance of their stores. Already we have seen the benefits of this, with retailers sharing more data with us. The end outcome is a clearer picture of the shopper journey from their interaction online through to them visiting our assets and their spend in-store. This data picture helps our retail partners determine the marketing activities that best drive sales and provides further opportunities for conversion, which is helping to deliver greater operational efficiency.
The blending of the physical and online shopping experience has made for richer engagement with shoppers. During 2016, social media was instrumental in driving the success of our ‘Shopper Day’ sales held across our GPT centres by allowing us to better measure what marketing efforts were translating into sales. This means it is no longer guess work gauging the success of a one day campaign or a retailer’s specific in-store activation. It helps when the number of people following our centres on social media increased more than 20% last year, and our website traffic has grown a massive 70%.
We are stronger together
We are more informed than ever before about consumers and their habits, which means we can work even closer with our retailers to support their success. We want to create an environment where our retailers thrive. We are doing this by forging closer working relationships with them in this brave new world of data sharing. It is a far cry from the traditional relationship model of centre owner and tenant, which was very transactional in the past. By sharing insights and opening up the data flow, the results are proving hugely beneficial for both parties.
Our focus in 2017 is to continue to deepen our understanding of how we and our retail tenants can better engage with their existing customers and by combining data for insights that will attract new customers.
The future is now
In 2017, the shopper experience will remain key, but what continues to evolve is our understanding of what shoppers want that experience to be. In recent years we have seen food play a larger role in centres in response to consumer demands for more casual dining and more interesting culinary experiences, well beyond the traditional food court.
We identified the growth opportunity in this market, an example of this is at Highpoint Shopping Centre we remixed a section of the Lower Ground that was previously made up of a general mix of retail and replaced them with a careful selection of food retailers to create an Asian inspired, slow dining experience, with Korean, Vietnamese and Japanese food.
This remixing is just one of the reasons behind the growth in our sales productivity at GPT.
Beyond specific shopper trends there is a broadening in the mix of tenants, driven by consumer brands, that have traditionally not had their own bricks-and-mortar presence, which are starting to emerge in shopping centres. This brings me back to the Red Bean and Toasted Coconut KitKat.
Last year, GPT’s Melbourne Central welcomed an ‘Australian first’, with the chocolate brand setting up a permanent store.
The KitKat Chocolatory allows customers to create their own personalised KitKats, and experiment with a wide range of different flavours. Apart from tapping into the shoppers desire to create their own product, the Chocolatory provides Nestle a direct insight into the taste preferences of their consumers. It has become an experimentation ground, where they can get direct feedback from customers about what makes up the best flavour mix for a KitKat. It takes the testing out of the lab and puts it on the street, in the hands of the people who buy their product.
The brand’s storefront allows it to build a deeper connection with its consumers. A great example of this was during Lunar New Year, when the store created two KitKat Special Editions including Red Bean and Toasted Coconut, and Citrus Creme Brulee. Consumers could purchase these specialty flavours in a custom-made KitKat Chocolatory red satin bag or encased in a Year of the Rooster bespoke bamboo box.
What is also great about our experience with this retailer, is that they started as a pop-up store. No longer is casual mall leasing reserved for mobile phone retailers and sunglass sellers, it has become the breeding ground for retailers at the beginning of their journey. It is a testing ground, a way to trial a concept that might just become one of the most productive stores in your centre. If you ever needed proof that retail is a dynamic environment, that is a perfect example.