Big Guns issue; always an interesting time. Almost without exception, the CEOs, in the CEO Outlook remark on the resilience of our industry. In difficult times for retail, our centres continue to show great strength. In a year in which we’ve seen some of the most savage downturns in residential housing values, increased levels of household debt and reduced retail spending, our major centres have more than just weathered the storm.
Seventeen out of the 98 Big Guns are under re-development, indicating supreme confidence by both developers and investors. Of the remaining 81 we profile, only six (or 7%) showed an MAT fall greater than 2.5%, so it would be a fair statement to make that 93% of Big Gun centres either maintained their MAT or improved it. Look, for example, at the Top 10. Some really healthy increases in MAT and only one centre with a negative growth and that only down by a quarter of 1%!
But you can bet that the press will try to find some negativity and highlight it! In our last issue, we published the Little Guns results; 96 centres were featured; 64 showed an MAT growth; 15 were stable or had less than 1% drop and of the remaining 17, only 10 had a negative greater than 2.5%. Our comments of course were up-beat; so they should have been; it was a great result. A Brisbane paper led with “Little Guns show downturns”.
You might wonder; why? We don’t; we’re in the business – publishing – and we know that industry. It’s an age of cost cutting; where ten reporters/ columnists were before, now there are two. There is little time to be investigative there’s scant opportunity for quality reporting and there’s seemingly no chance to present a balanced commentary. Editors demand the sensational, the shocking, the disturbing; that’s what catches attention, what elicits comment, what sells.
Of course, times are tough, but that’s nothing new; there have always been tough times and there always will be. But our tough times are not cyclical, they don’t result from natural causes; they stem from changes in human behaviour. In our case – the shopping centre industry – it’s all about disposable income. Only 70 years or so ago, there wasn’t any! People in general didn’t have disposable incomes so they went to the shops to buy basics. By the time the 60s arrived, disposable incomes had emerged and shopping centres started to proliferate.
Today’s shopping centres are bastions for disposable income; almost everything sold is bought with disposable income. Think of a supermarket and how much of the goods for sale are necessities. Yes, the plain salt is, but even then, you can get exotic sea salt, rock salt from deserts and all kinds of fancy salt – disposable income items. What we think of (or rather don’t think) as ‘necessities’, very rarely are; they are luxuries. In a supermarket, the vegetable counters with the beans, carrots and potatoes may well be necessities, but it stops there; move to the fruit where the apples, pears and oranges might fit the bill, but the imported Israeli figs, the Californian peaches and the Malaysian mangoes are bought with disposable income!
As we as a society change the way we spend our disposable income, so does our industry experience challenge in our efforts to capture it. Change in disposable income spending results in tough times for us!
But we’ve got an advantage! We’re not retailers, we’re not suppliers of things people buy with disposable income. We’re in the property business and we own, develop and manage places of social interaction, places of community gathering, places of human congregation – places where people like to be.
People who sell things like to rent space in places like that! Good leasing executives hone in on what it is people want to buy and lease to those who sell it.
As I said in this column a few years ago, if everyone decided to spend their money on dancing, our department stores, supermarkets and majors would convert to large dance halls; the specialty shops would become places you go to learn the cha cha, the tango, the waltz or the quickstep!
Those who don’t understand our industry link us too closely with traditional retail; those who don’t understand what we do, find negativity in retail downturns.
Without exception, our CEOs in the CEO Outlook, talk about ‘community spaces’, senior team members discuss it constantly; our design and marketing columns are full of the subject. Our industry is in good hands.