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With the digital revolution well and truly arrived, and a huge range of products pushed through our mobiles to us every day, it’s only natural that people start to question the significance of ‘bricks and mortar’ and the value of the retail property asset.


DMA Development Manager David Cramb said that when you think ‘bricks and mortar’ versus digital retail it’s hard not to think Amazon; the ‘poster boy’ for global online retailing and juggernaut of digital disruption.


But how big is Amazon and what does it mean to Australian retailers?


David confirms that while Amazon is not the biggest retailer in the world, it is bigger than a collection of major Australian retailers put together.


“Amazon has recorded annual sales of $136 billion,” David said.


“This is significant when you look at the combined recorded annual sales of Australia’s major retailers (Woolworths, Coles, Harvey Norman, JB Hi-Fi, Myer and David Jones) which totals approximately $105 billion.”


However, David said that research shows the impact of Amazon varies from market to market.


“Research conducted by UBS outlined the impact of Amazon in Australia with the most significant three to five-year impact on sales by sector being electronics/appliances at -7%, followed by sports/leisure at -6.5%, and fashion/department stores at -6.4%,” he said.


“While the arrival of Amazon will cause considerable disruption to the Australian market, it is unlikely to have the devastating impact that has been seen in other countries such as the United States.


“Countries similar to Australia in terms of density and demographics, like Canada, have seen slower impacts with Amazon making up approximately one percent market share since launching in 2002.


“Based on this evidence, the impact is not expected to be immediate, rather a slow burn, but certainly not one to be discounted as we wait to see just how aggressive Amazon’s growth strategies will be.”


David said that with all of this discussion happening in the retail sector, future proofing retail assets and brands is certainly a topic he is having with many landlords as they plan to roll out new retail developments, or upgrade existing properties.


“Weaker retailers and centres that are slow to evolve are likely to be hit the hardest,” he said.


“But I also see the future as bright for retailers that are prepared to step up and embrace change.”


David works closely with DMA’s clients to explore concepts and develop strong development strategies that activate retail centres and draw consumers into their ‘bricks and mortar’ property assets.


“The first step is to understand that mediocracy is dead and ‘good’ is no longer good enough,” David said.


“Consumers are demanding more.


“Better design, more convenience and switched on retailers that are listening to the customer.”


David said this isn’t a new concept, and centres and retailers need to provide experiences that re-engage the emotions and stimulate the senses again.


“We’ve witnessed significant redevelopment of assets from major corporations such as Scentre Group and QIC, as well as owners of sub-regional and neighbourhood centres in an effort to reposition and re-align towards a technologically intelligent customer base.”


The second step David said is bringing together ‘bricks and mortar’ and technology with tech-hungry consumers wanting to interact directly with brands and products at the shop front.


“Some fashion retailers have taken up 3D virtual fitting rooms and dressing mirrors where consumers can imagine how they look in outfits without actually trying them on,” David said.


David also notes that it’s no surprise that dining precincts and ‘retail-tainment’ remain high property development priorities and hugely popular with consumers.


“We now have the ability to design and engineer major indoor entertainment facilities, and have started to see the emergence of wave pools, indoor skydiving and active adventure uses within our centres,” David said.


“As for dining out, there is no online shopping experience that can replace the feeling consumers have when they meet and eat with friends and family.


“However, the concept is not a silver bullet with significant planning and careful consideration around the finer-grain detail and tenancy mix required.


“In short, what will future proof retailers against the rise of Amazon and other digital disruptors – including those that we are yet to conceive – is each retailer’s ability to not only provide consumers with the ‘full package’ experience but also meet the ever-evolving demands of the retail consumer as they expect more and more from the moment they step through the glass doors.”


David and the DMA team are currently running a breakfast series on this topic. Please contact the team if you have any interest in attending.