This CEO Outlook contribution was first published in SCN Vol. 39 No. 1, Big Guns 2021
We operate a business and brand that are important to our customers, essential to the community and unparalleled in terms of scale and proximity to where people live and work. Our customers regard what we offer as being an integral part of their lives.
Our team heads into 2021 more focused than ever on our customers.
What we learnt from last year is that regardless of the economic cycle, we must keep moving and innovating to deliver the most efficient platform for our retail and brand partners to connect with customers.
We have a number of strategic initiatives underway that will drive our customer strategy in 2021, delivering on Our Plan to create the places more people choose to come, more often, for longer.
Each of these initiatives is based on the principle that we compete for the time and attention of customers. Finding more reasons for customers to engage with us, more often and for longer, is how we add more value to our business.
Our platform continues to attract customer visits at scale with more than 450 million customer visits in 2020, including an average of 46 million per month for the last quarter. This is on par with the comparative period in 2019. In 2020, customers spent more than $22 billion with our retail partners and enjoyed close to one and half hours of their time with us each visit.
We’re evolving the Westfield ecosystem – creating more opportunities for interaction between Scentre Group, our customers, retailers and brands.
During 2020, we trialled a contactless, drive-through aggregated Click & Collect platform called Westfield Direct. We made this happen in two weeks, providing a safe and efficient way for our customers to connect with our retail partners during a period of government restrictions. More than 14,000 products were available from 590 retailers across every Westfield Living Centre. We learned a lot from this trial and these insights form the basis for some other strategic initiatives we are pursuing.
Another example of how we are continuing to find ways to engage with our customer is our membership program called Westfield Plus. We successfully introduced it across the full portfolio in 2020 and have more than 1.2 million members so far. What’s exciting is the customer engagement we are seeing. We’ve had more than 7.3 million visits to the Westfield Plus App – with approximately half of all usage occurring in centre. This provides us with unique insights into what our customers want and need, enabling us to curate the best mix of products, services and experiences for each Westfield Living Centre. Already we’ve offered a range of membership-only benefits to our customers and this will expand throughout the year.
It is more evident than ever that physical retail stores are important for customer engagement. The most successful retailers are multichannel retailers with strong store networks.
Demand for space in our Westfield Living Centres is strong. During the year, we completed 2,625 leasing deals including 848 new merchants, with 98.5% of the portfolio leased. We introduced 217 new retail brands to Westfield in 2020. We saw an increase in leasing momentum in the second half with more than 2,000 leasing deals.
The year finished with more new lease deals being agreed in the last quarter than in the last quarter of 2019. We’re expecting demand to remain strong as consumer confidence continues to rise and the economic recovery picks up pace. Whilst there has been some industry discussion about the structure of leases, we have not changed ours. Our leases are based on the mutual agreement to pay a fixed base rent.
Looking forward, we expect to see a heightened focus on data and analytics as we work with our retail partners to better understand how they can maximise their store network with us.
When we look at the value of our space, we look at it not just in terms of sales performance, but also the franchise created in that location. In effect, brand and retail partners facilitate Click & Collect and last mile of delivery out of the store. This year we will continue to see more of our retail and brand partners optimising their stores and store network. Our Leasing and Retail Solutions team (LARS) has a dedicated data and analytics team that provides tailored insights to help our retail partners to optimise their store and space with us.
Human beings are social beings and we continue to see opportunities to meet the needs for more interaction and connection in places like our Westfield Living Centre. Each of our centres is different, catering to the unique needs of its community. Over the last decade, we have seen a shift towards consume on-site or experiential based retail with our portfolio more than 43% experience-based. We think this will continue to evolve as centres keep adapting to changing customer needs and expectations. This is exciting for our team because it means our skills and capabilities to curate that ideal mix keeps improving.
An example of how we keep evolving our team’s capabilities is the accelerated partnerships program approach within LARS where we focus on identifying activities, places and categories where customers spend their time when they are not at Westfield. We connect with relevant retailers and brands within those categories to leverage that opportunity to engage our Westfield customers, in turn attracting more customers to our centres. The first of these partnerships was FREAK Entertainment at Westfield Bondi Junction where we worked together to bring their unique free-roam virtual reality (VR) experience to life. FREAK covers 211m2 and includes VR game facilities such as escape rooms and racing simulators. We are looking forward to sharing more details about other successful partners throughout the year.
We aspire to be a third place for our customers after their home and workplace, a place where they want to spend time. We think about our Westfield Living Centres as social infrastructure and the space within our centres is flexible. By listening to the needs of customers and our communities, we can adapt and create opportunities for new uses.
For example, we see a future where more education and childcare, co-working and health and wellness offerings are available in our centres and our team are actively exploring opportunities with brands and retailers in these sectors.
In 2020, we were appointed as the third-party builder for Cbus Property’s residential and commercial tower project on the site of the former David Jones Menswear Store on the corner of Market and Castlereagh Streets in Sydney’s CBD. Our team was thrilled to be appointed as the Design & Construction contractor for the development, showcasing our diverse design and construction capabilities. We expect to start the retail component of this development later this year.
We have a number of other special projects we expect to start in 2021 including a restaurant and leisure precinct at Westfield Mount Druitt. In the CBDs of Liverpool and Parramatta, we have planning underway to improve and optimise our customer offer at our local centres.
Our team continue to work successfully in partnership with department stores and larger retailers to optimise their store networks, sometimes this includes supporting them on strategies to ‘right size’ their stores. We see this as a positive outcome and an opportunity for us to continue curating the best retail, product and services mix for the local customer. For example, at Westfield Belconnen, we worked with Myer to transform their store from three-levels into a two-level experience specifically curated for the Canberran customer. At Westfield Hurstville, we refurbished a tenancy vacated by Target to bring in two new brands, Uniqlo, TK Maxx as well as a number of specialty stores to elevate the centre’s fashion and lifestyle mix.
Throughout the year we will continue our focus on responsible business, delivering against the four pillars of our Sustainable Business Framework – our community, people, environment and economic performance.
In 2020, we announced our target to achieve Net Zero Carbon Emissions by 2030 and committed to the Task Force for Climate-Related Financial Disclosures (TCFD). We have a roadmap to achieve our target which has three key areas of focus – optimising asset efficiency, renewable generation sources and residual emissions. Some of the initiatives to optimise asset efficiency includes implementing LED lighting across the portfolio and implementing energy analytics as part of our building management systems.
One of our flagship responsible business initiatives is our Westfield Local Heroes community grants and recognition program which is now in its fourth year. Each year we award $10,000 to three deserving individuals and their organisations at each Westfield Living Centre, a total of $1.26 million. The program continues to engage our communities and we have seen a 40% increase in the number of community members voting for finalists. We launched the 2021 program in February.
Looking to 2021, we’re feeling confident about the year ahead and through our latest customer research, we know our customers are feeling optimistic about the current environment and their own personal situation. They’re looking forward to enjoying more social and retail experiences with their friends and family.
Our team remains customer obsessed and focused on delivering what our customers want, fulfilling our purpose – creating extraordinary places, connecting and enriching communities.