An Agora played a major role in the daily life of the ancient Athenians during 5th Century BC. Every day, locals would meet in these open spaces to discuss politics and current affairs or purchase goods from the local merchants looking to take advantage of the foot traffic.
If they were lucky — or not, considering how they viewed him at the time — they might find themselves in a conversation with Socrates as he badgered them with philosophical questions.
Over 2,500 years later, the role of marketplaces has hardly changed, with shopping centres becoming a major meeting place for the local community. The main difference is that rather than engaging with philosophers we now get product launches featuring Kardashians.
In fact, it seems shopping centres are just as popular as ever. Australia’s two largest mall operators, Scentre Group (ASX:SCG) and Vicinity Centres (ASX:VCX), recently announced occupancy levels over 99%. Westfield (ASX:WFD) has said that it had so much demand for spaces in its new World Trade Centre shopping complex that it could have ‘leased it four times over’.
Whilst online retailing is far more convenient and in many cases cheaper, it is very impersonal.
In 2014, the top five American retail stores by sales per square metre were Apple (NASDAQ:AAPL), Tiffany and Co (NYSE:TIF), Michael Kors (NYSE:KORS), Lululemon Athletica (NASDAQ:LULU) and Kate Spade (NYSE:KATE). This is despite all five allowing customers to shop online.
What these five, and many others now, have realised is that physical stores provide a chance for consumers to experience a brand personally. This trend is called experiential retail.
Deloitte summed it up best in its recent Global Powers of Retailing 2015 report. It said ‘retailing is no longer about the product but the experience. Customers want shopping to include entertainment, education, emotion, engagement and enlightenment’.
Not just for retailing
Perhaps the name ‘shopping centres’ is the biggest problem. It implies that its sole purpose is to allow people to shop.
Such thinking is simplistic; in fact, the shopping element is arguably becoming less important. In addition to giving retailers the chance to immerse their customers in a brand experience, shopping centres are also large entertainment and social hubs.
Australia’s local shopping centres have undergone an evolution with more and more space being given to a range of dining options as well as entertainment providers such as cinema complexes.
Just like the retailers in the mall itself who have evolved their stores from places of consumption to an overall brand experience, shopping centres themselves have evolved with the consumer trends. This is something many other property investors, such as office and residential property investors, find hard to achieve.
As long as shopping centres continue to provide a convenient and entertaining place to meet friends then they will have a future.
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