Scentre Group is a new entity; there’s far more here than a simple shedding of the Westfield name. Scentre Group has new ideas, new visions and new goals.
When SCN met with senior executives at Scentre Group, we talked at length with CEO Peter Allen and came away totally impressed by the new spirit. Although only just over one year old, the Group has embarked on the largest development pipeline ever seen in the shopping centre industry in Australia and New Zealand.
Scentre Group isn’t Westfield. The connections are as strong as they could be: most of the people are the same, the portfolio hasn’t changed and the Westfield brand still dominates. But the mood is different. The spirit is new, and the culture is of the future.
Scentre Group isn’t Westfield. This is no continuation in a different form; it’s a genesis.
Corporations change in many different ways. They get bigger or smaller in terms of assets, they enter new fields of activity, they restructure or merge with competitors… the list goes on. But sometimes, although rarely, the change is more esoteric; fundamental principles, quintessential elements and even basic strategies are altered, and what emerges is a total rebirth. Such is the case with Scentre Group.
In general terms, throughout its history, Westfield has been ‘product orientated’. In the early days, when shopping centres were new, the focus was on the centre itself: finding sites, developing dominant entities and providing the public with first-class retail facilities. As the market matured, still focusing on the product, Westfield expanded its centres to the super-prime level. The growth through the 1980s and into the 90s saw it dominate the field, with the Westfield ‘brand’ becoming synonymous with the term ‘shopping centre’.
As the new millennium dawned, the brand was taken to a global scale, with the Westfield San Francisco development leading the way for its US dominance and ultimately opening the door for European expansion and the massive London centres, which changed the very nature of British shopping.
So, in less than a quarter of a century, Westfield had transformed itself from being the major player in Australia to become the most powerful shopping centre developer and manager in the world. In 2014, primarily as a result of its sheer size, its relationships with the international funds and the spread of its assets across the globe, it was decided to split the portfolio into two separate entities: the International Assets, and those centres in Australian and New Zealand. Scentre Group was born.
But this ‘rebirth’ is far more than a commercial structural change, and it’s far more than a complex share restructure. It’s far more than a division of its asset base, too; this rebirth has resulted in a different orientation. Scentre Group is no longer primarily product orientated – it’s now ‘people orientated’.
At Scentre Group, the new orientation has meaning. It’s not just some ‘feel-good’ or warm and fuzzy inclusion that looks good in the brochure. Instead, it’s an exhaustive, well-defined and detailed strategy that will fundamentally drive the business into the future. There’s no lip service here; this is a value at Scentre Group’s core, and its new mission statement says it all.
Scentre Group’s aim is: “creating extraordinary places and connecting and enriching communities”. That’s all about people and, to pursue this aim, the company has begun with its employees.
It has issued a document, Scentre Group Sustainability Report 2015, that sets out six operating principles it calls its ‘DNA’ which, in turn, captures the core behaviours that every person in the Group is expected to demonstrate. The document states, “Drawing from the best of the Westfield Group culture and with a nod to the future of Scentre Group, the DNA provides a ‘cultural blueprint’ for our organisational behaviour”.
These six operating principles or elements of the Scentre Group’s DNA are:
• We act with integrity
• We work together
• We push the limits
• We act as an owner
• We never give up
• We leave a positive legacy.
The first six months of Scentre Group’s existence was a period of stabilising the workforce in their transition to the new entity. Intensive communications to all employees, shared by CEO Peter Allen, provided clarity on the change, the new organisation and its direction. The aim was to ensure employees understood the goals and felt confident in becoming part of Scentre Group.
It’s a balanced workforce; Scentre Group employs around 2700 people, with an almost exact 50–50 male and female split and, in Australian terms, some of the work conditions are leading edge. Staff are offered up to eight weeks annual leave and 18 weeks paid parental leave as part of flexible work policies aimed at men.
There is a link here with the trade area! Peter Allen believes that Scentre Group employees should be representing the community with whom they work. Earlier in the year, Allen said that to attract and retain the best workforce, Scentre needed to offer more than monetary rewards, because people want non-financial benefits such as flexibility, and that varied from individual to individual.
At the time, Allen cited his own, personal experience: “When I look at my career, some of the things that I didn’t do for fear of potentially negatively affecting my career path are probably not the right things I believe society should accept”.
Allen has four children. “I look at things like missing my kids’ school events, birthdays and even births,” he said. “To me that’s not acceptable. We’re trying to facilitate that there’s no stigma attached to people requesting to work flexibly or taking time off to be with their families. If it can be a win-win situation, then we are both going to get the benefit of that”.
By some, it may be seen as just a nuance, a subtle shift, but Allen constantly returns to the theme of community and people. In SCN’s view, the most poignant feature of his dialogue is the relationship he sees with Scentre’s people and the communities in the various trade areas. “What we should be doing as a workforce is representing the community we work with. From a diversity point of view, we should be representing society. I think that, given we are a big part of society, given the scale of Scentre Group in Australia and New Zealand, it’s important our staffing reflects that.”
SCN spent time with Peter Allen. He’s confident, astute, positive and, more to the point, he’s excited about the future of Scentre Group. It’s a pity that the word ‘passionate’ is so overused in today’s business parlance, because it can lose impact when used correctly.
Allen is passionate about the new direction of Scentre Group – and we’re using the word correctly! He told SCN that, during the first months of Scentre Group’s inception, his focus was on informing the staff of the challenges that lay ahead and about the opportunities the new company afforded them. “They had, in one fell swoop, been transposed from a global corporate conglomerate with flagship developments in major cities and an expanding international growth potential, into a highly localised entity, completely focused on Australia and New Zealand, and, they were losing the Westfield name.”
“To many,” he said, “that must have been somewhat disconcerting. I understood their concerns and felt it was important to re-group, to enunciate the new goals, the new challenges and, most of all, the new opportunities it afforded Scentre Group.” The message has been conveyed!
When you ask Allen about the new opportunities, the explanations are uncomplicated, succinct and well defined. “Previously, shareholders in Westfield covered a wide scope in their investment. For one, they had this massive portfolio in Australia and New Zealand, but then they had additional investments in London, Europe, the USA and even South America.
Many investors like to focus. For example, many like to invest in Australia; as a country economy we’re solid, secure and, as a nation, we’re attractive to certain funds. A portfolio such as ours (in Australia and New Zealand) is reflective of the nation as a whole, and that feature significantly influences their thinking. This nation is growing, its population is expanding, the systems – legal, property ownership, education and health, infrastructure and the like – are all well defined, sophisticated and proven. Investors in Scentre Group therefore can have a ‘geographical focus’ as part of their strategy and that’s really attractive.”
We spoke to other senior executives at Scentre and there’s a common thread: people, and new ideas. What stands out is that the lid is off, the canvas has been wiped clean and Scentre Group, leveraging off its Westfield heritage, is about to break new ground.
Peter Leslie, Scentre Group’s Director of Leasing, told SCN that the company had Australia’s largest car parking operation. “The fact is, we probably have more car parks than anyone else! The same can be said for the cleaning end of the operation, the security component and others. How we view these businesses, how we relate to them, how we manage them are all important issues for us to come to terms with and how the community sees them, what the community expects of them is fundamental to achieving that aim of creating extraordinary places, connecting with and enriching communities.”
Leslie says that the mission statement is real. In meetings we’re asking, “is this an extraordinary place? The whole team,” he says, “has the permission to ask the qualitative stuff, not just the quantitative. We believe already that we’re the best but we’ve got to move up, as distinct from simply maintaining our position. When you walk into Galleries Lafayette in Paris, you just want to be there – it’s an extraordinary place!”
This ‘extraordinary place’, according to the senior Scentre Group team, does not just apply to the centres, but the company itself ought to be an extraordinary place in which to work. There is a deliberate strategy adopted to make Scentre Group the employer of choice of the Australian and New Zealand shopping centre industry, with company benefits, working conditions and work flexibility at leading edge status.
Leveraging off the Westfield heritage has very definite advantages.
Scentre Group is an investor in Westfield Labs in San Francisco and so tap into the innovative digital work being conducted there. At Scentre Group, the integration of digital with physical is a top priority. It’s seen no more clearly than in their recent initiative to completely take over, as an ‘in-house’ function, the whole operation of their digital screens.
Earlier this year, Scentre Group announced the launch of the Westfield SmartScreen Network, a new digital advertising screen network, which is now live across 37 Westfield centres around Australia. Throughout the centres are some 1200 interconnected digital screens, incorporating cutting-edge advertising technologies to reach the Westfield shopper. The operation of these screens, the programming, the content, the sales representation has been completely internalised.
Bill Burton, General Manager of Scentre Group Brandspace, told SCN that the ‘SmartScreen Network’ will fundamentally change the way brands will maximise the Westfield retail-marketing environment. Burton and the rest of the senior team like to quote the numbers and, at Scentre Group, they’re impressive.
“We’ve got 550 million shopping visits a year,” he said. “Some 12,700 retail destinations, and we’ve given the brands a powerful new way to reach, engage and convert the shopper right at the point of sale.” The system is flexible; the brands can take a blanket cover by using the entire network or alternatively be selective by choosing specific locations.
When you reach those sorts of numbers, the stakes are high. Already many of the major brands including Optus, Disney, Foxtel, Samsung, Mazda and Bonds have come on board; the initiative is illustrative of Scentre Group’s commitment to invest in innovation and digital technologies that enhance the retail and customer experience and that, says the team, is another building block ‘creating extraordinary places and connecting with and enriching communities.’
Throughout this year, Scentre Group will continue to strengthen the digital performance of its centres by delivering new digital products with the roll-out of high-quality Wi-Fi, seamless shopping experiences such as new ticketless parking, digital mapping and wayfinding. In addition, together with CBA, there’s a pilot programme trialling mobile payment systems.
Many of these initiatives, for example the Wi-Fi in some 27 centres within the next few months, do not have an immediate or individually quantifiable profit margin. As Peter Leslie says, they simply add to the customer experience.
“This year there’s been significant capital expenditure across the portfolio to enhance customer experience by improving services both front and back of house,” he said. “We’re not waiting for the development to pay for everything; the fact is we can’t. Parramatta isn’t going to have another 100 shops tacked on – it’s already got 500, so we’re going to have to spend money without the traditional ‘development return’. It’s like the old sinking fund,” he said.
Yet, in development terms, the pipeline is massive. Scentre Group has 15 active projects, which accounts for half of the portfolio. The future development pipeline amounts to some $3 billion, with almost a billion of that having commenced in 2015.
In NSW, work has begun on Westfield Warringah Mall, a $310-million development that increases GLA from 125,000m2 to 134,000m2. It features a new two-level parallel mall, anchored by a reconfigured Myer and large-format major retailers across both levels, connecting through to Woolworths on level 1 and Big W on level 2.
Around 70 new retailers will be introduced and the existing fresh food precinct will be totally refurbished. A rooftop canopy will be installed in the outdoor area, providing ambience and protection, and a number of dedicated spaces will be created for hosting events and installations. The centre will have free Wi-Fi throughout.
In response to the mission of ‘creating extraordinary places’, Westfield Kotara will add a new rooftop dining and entertainment precinct set in an open-air landscaped garden space with nine restaurants and food outlets. In addition, there will be a new Event Cinema eight-screen complex with Gold Class and V-Max.
As we go to press, work commences at Westfield Hurstville. The Myer vacation has presented the opportunity to upgrade the whole centre. The former Myer space will be reconfigured into five new major tenancies, and you don’t get any brownie points for working out that the combined rental will be in excess of that previously paid by Myer!
The Westfield Hurstville development will see the introduction of a new Woolworths supermarket, Big W along with JB Hi-Fi Home, a Cotton On Mega Store and a new Rebel Sport.
Again, the leisure and entertainment component features strongly. A new rooftop, alfresco dining precinct will be added, providing a wide range of casual dining options, and the Event Cinema will be upgraded and a V-Max introduced.
There will be a comprehensive ambience upgrade at Hurstville, that will complement the introduction of a digital capability that includes a ticketless parking control system and free Wi-Fi. The project will be complete for Christmas this year.
The redevelopment of the five-level Westfield Chatswood sees the existing two-level Victoria Avenue mall being replaced with a new five-level mall linking into the rest of the centre. A flagship two-storey Topshop Topman faces Victoria Avenue, complemented by three new large-format tenancies.
There is a new Asian-inspired dining market, with late-night trading that will no doubt draw from the ever-increasing residential population in the Chatswood CBD.
Those of us who’ve seen the completed Westfield Miranda will lay testimony to the fact that it’s truly ‘an extraordinary place’. This is one of the new breed of centres in the Scentre Group portfolio and, as we said in a former issue in a story on Westfield Garden City in Brisbane, they compete directly with the city. If you look at Miranda, the retail range is as comprehensive as the Sydney CBD and the new component of casual dining options, in many ways, provides a better option to making the journey to Sydney’s city centre.
Fronting Kingsway, the richly landscaped four-level restaurant precinct comprises a full range of eating and drinking, from Din Tai Fung to the South American Braza Churrascaria, along with traditional Thai, sushi and a whole lot more. It’s a vibrant, buzzy precinct full of activity so, with ease of parking, and for those who don’t want to drive, a walk home or a short taxi ride, why would you want to go into the city?
In Victoria, Scentre Group owns a small neighbourhood centre in Casey which occupies a huge 10-hectare (25 acre) site in the southeast growth corridor of Melbourne. Casey Central has no Westfield identity, although it’s been owned by the Group since 2005. GLA is 6,500m2, which comprises a strongly performing Coles supermarket and 23 specialties.
The redevelopment produces a Little Gun of 28,700m2, comprising northern and southern pavilions linked by a retail mall, new full-line Coles and Woolworths supermarkets and an adjacent fresh food precinct, and an Aldi along with a new-format Target.
On completion in 2016, Casey Central will include large-format mini-major outlets, around 78 specialties, an expanded Liquorland on a site adjacent to the centre and a new Shell service station. And how’s this for a point of difference in a Little Gun centre: at opening around April next year, Casey Central will have a casual dining precinct and a 350-seat food court which, in turn, adjoins an external children’s playground and seating area.
The leisure and entertainment precincts championed by Scentre Group will ultimately become a feature in all their centres. Pre-development work is already underway at Westfield Knox City for an ‘internationalisation’ of its Lifestyle, Food, Leisure and Entertainment components. Westfield Plenty Valley will soon have a cinema, plus a casual dining, restaurant and entertainment component added.
All WA centres owned by the Group – Innaloo, Carousel and Whitford City – will be redeveloped. At Westfield Innaloo, a $450-million development has been approved, taking the centre from 51,300m2 to close to 100,000m2. It’s a high-income demographic, some 10% higher than the Perth average, and the redevelopment will see a new department store or DDS, and an additional supermarket along with a new provedore fresh food market.
A second level of retail will be added and a rooftop entertainment and leisure precinct with casual dining, restaurants and cinema will be incorporated. The street frontage will be activated with restaurants, cafés and community-focused retail.
At Westfield Carousel, approval has been granted for an increase in GLA to a massive 130,000m2, making it the largest in the state. Canning City Centre will have some 24,400 new residents and around 10,400 new workers within 1km of Westfield Carousel. It’s the third-largest trade area in the Scentre Group portfolio with a total trade area retail spend (2016) of $9.5 billion! Car parking will be expanded to some 5800 spaces and around 90 new retailers will be added.
Westfield Whitford City will grow to approximately 100,000m2 in an already DA-approved redevelopment. Incomes here are even higher than Innaloo with household incomes 15.5% above the Perth average. A further DA will soon be lodged for a food and lifestyle offer including 8–10 food retailers as well as a cinema expansion.
In Queensland, Westfield North Lakes will open its outdoor dining precinct later this year and, for the first time in Australia, an Ikea store will be part of the centre’s mall. The next ‘global/international’ dining precinct will be developed at Westfield Chermside; it will be twice the size of that in Westfield Garden City.
In New Zealand, Westfield Albany, Westfield Newmarket and Westfield St Lukes are all undergoing pre-development planning.
In South Australia, both Westfield Marion and Westfield Tea Tree Plaza are earmarked for redevelopment.
All in all it’s a development pipeline, the size and sheer scope of which has never been seen in Australia before. As mentioned earlier, Scentre Group will carry out works over the next few years to the tune of more than $3 billion and, when you look at that sort of number and the geographical spread of the portfolio across the continent and New Zealand, it’s obvious that the need to focus on this part of the world is both real and fundamental to success.
Scentre Group is doing exactly that: focusing on the Westfield core portfolio. As we write this story, it has been announced that Frank Lowy will step down as Scentre Group’s Chairman in 2016. It’s the end of an era, but a pleasant ending. Frank Lowy’s legacy will live on and those at Scentre Group will protect it.
Westfield originally was about Australia; Scentre Group couldn’t be more Australian. The new orientation of the Group – its ‘people orientation’ – is telling. It states that, from here on in, Scentre Group is not just concerned with the trade area residents, but it’s also focused on its own people, its own workforce.
Seeing that workforce as representative of the community as a whole gives each employee a sense of empowerment. Allen and his senior team have challenged them to ‘push the limits’ by asking what would they like in a centre? What do they think constitutes an ‘extraordinary place’ and how does it connect and enrich the community?
As we said previously in this article, at Scentre Group this is no token line; it’s not some spin. By stating it as a fundamental principle of the new organisation they’ve inextricably tied their workforce to the communities surrounding their centres. It’s a first, and requires the staff to indeed to push the limits because it’s their vision that will create the extraordinary places.
With a development pipeline of this size over the next few years, the potential is enormous. How the centres will be transformed will depend on a host of issues, and prominent among them is the integration between the digital and the physical. Scentre Group believes they lead the industry in that arena.
In a profile such as this, one can’t end without reference to retailer relations. Scentre Group believes that, as the leading force in the Australian shopping centre industry, and with its commitment to create extraordinary places along with an impressive 550 million shopper visits a year, it is poised as never before to become the catalyst for the new breed of retailers who’ve recently either arrived or are about to hit our shores.
Whether you talk to Peter Allen, the senior executive team or those at centre level, one viewpoint is common and that is: it’s all about partnerships. They’ve already got the runs on the board, they don’t need to prove anything but that’s not the motivation. It’s where they go from here that counts; it’s what that partnership can deliver that’s important. From firsthand experience, we can tell you that the tail is up. The adrenalin is pumping. They’re not chafing at the bit waiting for the start – they’re already up and running and the pace is frenetic! SCN