Retail needs to create 'Sticky Places' to succeed Our suburbs are bursting with population growth and yet our mainstreets and activity centres are in decline. Retail owners in Australia are facing a unique pressure combination: tasked with planning for predicted large catchments in the long-term, while having to tackle the cycle of decline today. The human demands for the shopping environment might be fundamentally different from when malls were conceptualised last mid-century, but a human-centric approach is still the answer to finding a new path to thriving centres. Retail across the country is in strife. In Australia, the nationwide trend in retail decline is seeing our mainstreets and activity centres become the new struggle street. (For our readers abroad, 'activity centres' include shopping centres, malls, strip malls, mixed use/downtown retail hubs.) The growing image of empty shopping centres lined with discount signs and vacant storefronts is enough to strike fear in the hearts of investors, managers, and developers alike. Attempts at programming and place branding are often missing the mark, as centres continue to experience low footfalls, high vacancies, increasingly incentivised retail sales and leasing agreements, and largely underutilised public spaces. Retails sales month-over-month (MoM) over the past year have continued to show a downward trajectory (Trading Economics ABS reporting). With the combined effects of low income and low price is putting significant pressure on commercial property valuations, the retail sector has not been able to keep pace with its office and logistics rivals (Australian Financial Review 2019). Stock Photo: Retailers across Australia are facing low-footfall with many tenants continuously posting discounts as incentives as well as attempting to re-negotiated leases to reduce rent. Any of these sound familiar? Low footfall, low-tenancy / high-discounts, high-turnover Vacant shops and sluggish public spaces Unfulfilled brand promise, empty ‘newly constructed’ places Demands for lower rent, threats of lower property valuations Community growth and development not yielding results in retail turnover Programming misses the mark and does not deliver sustainable vibrancy Increased pressure for stable financial ROI against office and logistics rivals What’s changed? Or perhaps it’s time we asked.. “What hasn’t?” Australia’s population is on track to reach 30 million people by 2029 according to the Australian Bureau of Statistics. That’s an increase of over 4.7 million people from today. Melbourne alone has been reported as having one of the top five rates of growth in the developed world. Yet, our nation’s GDP could reach the lowest rates of growth in two decades. Everyday life has changed for Australians. We are stressed, socially isolated, and time poor, and this is strongly reflected in our buyer behaviour. While shopping centres of the 1960’s and 70’s introduced centralised locations of consumption and convenience, we can now complete this faster online. And where youth were attracted to activity centres for socialisation and connection, they now live their lives online. Stock Photo: The meteoric of online shopping is only one factor amongst a host of key behavioural changes that can inform the future of physical shopping centres and mainstreets. Does this mean online retailing is the big bad wolf for bricks and mortar? Not necessarily. Online retail, it’s true, is the greatest disruptor the industry has seen in recent decades, and it is solving the human needs for consumption and convenience in a way that is better and faster than physical centres can compete with. So don’t try. Play a different game. What hasn’t changed is our need for social connection and our need for ‘third places’ - the community building term for those social spaces we use that are not ‘home’ and not ‘work’. Less time but still in need of 'third places' We have less time and this simply means we want to spend that time more wisely. We are not choosing online experience in lieu of physical participation, rather we are demanding a more complex and layered experience from our in-person activities. When we shop, we want convenience. When we want more than that, we want a third place where we can connect with family, friends, and community. Beyond straightforward purchasing of products, we seek to hit our ‘to do’ list by checking off services all in one location, as well as having a chance for quality time, socialisation, play, and even rest. If there’s convenient parking, activities for the kids, and places to eat, so much the better. The strategic future of shopping centres it to become more than retail. Become the place that everyone wants to go, even if they don’t like “malls”. Become a local destination that reflects a thriving village hub of connection and vibrancy. Stock Photo: Becoming more than retail, invite shopping spend by first creating places in which people wish to linger, explore and spend time... and where they can check multiple things off their to-do list! Becoming more than retail. Create ‘sticky places’ for locals. 'Sticky' places are those that encourage people to linger, dwell, or spend time in that space after they have been attracted into the space (CoDesign Studio Placemaking Dictionary 2019). Places where you are not expected to spend money, but by staying there long enough, consumption becomes a natural consequence. “The retail sector is still going through a period of regeneration, as retailers which have yet to adapt to changing consumer habits find themselves continuing to struggle. “ (UBS, Real Estate Outlook APAC Report, 2019). Our suggestion is a pivot away from looking at traditional consumption. Ask people to spend time, not money. By creating sticky places, developers and managers can set a property on the path to go beyond attraction, to attain retention, thereby also unlocking repeat customers, and trigger a cycle of growth. Ultimately, this can lead to better performance in the retail segment of the property portfolio, and do so in a longer-term more sustainable way. This, in turn, then allows for better investment decisions and planning across the long term. Look at the example set by the leading shopping precincts in Australia. They are experiencing substantial foot traffic as they have been able to continually transform themselves into social and lifestyle hubs. Their physical structure, tenant mix, and programming has been holistically designed to fill the gap of ‘the local neighbourhood’, which is where we used to fulfil these experiences in our mainstreets and high streets. Creating Sticky Places: example of an installation in a Melbourne shopping centre where design and services meet to match a place story. (Image credit: Weekend Notes, 2015) Start by tapping into the local authentic story of place. Herein lies both the opportunity and the challenge for developers and managers. How can you meet the future demands of tomorrow’s growing population, while rising to the immediate challenge of a retail sector in decline. How do we do this at CoDesign Studio? We seek first to understand the people that use, live, and socialise at these places, and we use our process to do this authentically. CoDesign Studio Process: the Cycle of Retail Narration where authentic research establishes a genuine story of place, this informs strategic placemaking actions and can trigger an upwards cycle of precinct growth. The CoDesign Studio approach Our tactic is to take a holistic view of the user’s journey. Human-centred place research combined with effective engagement unlocks the possibility of authentic storytelling and branding of your place. By doing really good community engagement you can truly understand your centres and how they can become sticky places for people. It can be the hardest and sometimes most daunting part for managers and developers. The process can be time consuming to plan the right questions, attract diverse voices, listen with intent and openness, gather the data, and then turn it into an actionable placemaking strategy. The temptation and industry norm is to jump straight into strategy, without getting the accurate alignment and insight first, based on actual and observed behaviour and personal connection, beyond demographic data on paper. By prioritising authentic engagement and place research that is truly connected to your local stakeholders, you will be able to understand the narrative of your local place. Understand how your users connect and move through your space so that you can unlock consumption and dollar spend but in a way that genuinely contributes to the social and cultural fabric of their lives, leading to retention and an upwards spiral of growth. Written by Samantha Choudhury (Melbourne Principal) & Eliza Charley (Strategic Operations, CoDesign Studio). Banner Image Credit: Weekend Notes, Eastland Shopping Centre, 2015.