What’s new May-June 2013

Discover the shift in Australian shopper behaviour

Last month’s release of Directional Insights’ Consumer Shopping Benchmarks 2013, compiled from over 26,000 face to face interviews in centre, shows some key changes in the ways that Australians have been using shopping centres over the past 2 years. They also demonstrate the ways in which the better shopping centres are adapting to these changes.

The biggest changes can be seen at the Neighbourhood and Regional levels. Sub-Regionals have tended to be less innovative, tracking steadily but unremarkably in the middle ground.

In a broader economic atmosphere of uncertainty and caution, Neighbourhood centres are proving their worth as community hubs. People are less likely to drive to Neighbourhood’s than in 2011; more are walking or catching public transport. There has been a slight increase in Leisure shopping (up 3% to 21%) and average time in-centre has increased from 38 to 43 minutes.

Shoppers are also using Neighbourhood centres in more diverse ways with small increases in the percentage of shoppers purchasing food catering and apparel, and more people visiting clothing stores and discounters.

Consumer shopping patterns have been most stable in Sub-Regional centres although, as with Neighbourhoods, shoppers are spending a little more time in-centre and have increased spending on the cheap and casual luxury of food catering.

While satisfaction with Sub-Regional performance has increased, there remains dissatisfaction with parking, value for money and the variety of stores in the retail mix – all of which are indications the industry’s exposure to online competition.

What should also be a concern for Sub-Regionals is the movement and innovation occurring at the Regional level, particularly around food retailing. Heavy usage of Regionals (up to 3 visits a week) has grown, driven by more consumers using major centres for top up grocery shopping. There has also been an increase in the use of Regionals for main grocery and food shopping trips, reflecting the efforts many centres have made in providing top quality specialty fresh marketplace precincts.

Regionals have been the most dynamic centres in terms of innovation and investment, chasing their customer aggressively, investing in experience, their food offer and facilities. They have created stronger drawing power with customers travelling further for this experience. Customers visiting from beyond the trade area are also spending more than previously.

Highlighting the importance of ‘experiential retailing’, the gap between Mission and Leisure shopping expenditure in Regional centres has doubled, with Leisure shoppers now spending an average of $92, compared with Mission shoppers average expenditure of $84. Expenditure per minute in centre has also increased.

Ongoing investment in the retail experience is required, however, as the amount of time consumers are spending in Regionals has continued to decrease in line with longer term trends.

The growth area over the last two years has been in food retailing and in the retail experience. Well-managed Neighbourhoods are localising and providing a community focus. Investment in quality facilities and specialty fresh food has built on the drawing power of the best Regionals. While some Sub-Regionals are performing well, others have the latent potential to provide the best of both worlds through targeted investment based on sound research into their customer base. Back To Top [/spoiler]

Fashion Shopping at the Centre For Attention

Clothing has been one of the hardest hit retail sectors in Australia since the GFC, with cautious spending, lower prices, high rents and online competition all contributing to a contraction in industry revenue. With competition hotting up, and the influx of international brands, change is the defining feature of the landscape ahead.

In this environment, we thought it would be helpful to examine the profile of Apparel shoppers who are not only the consumers of the retail clothing industry, but who make such an important contribution to Shopping Centres, particularly Sub-Regional and Regionals.

The following analysis has been conducted by extracting everyone who purchased an apparel item during their shopping trip when we interviewed them for our 2013 Australian Benchmarks – a total sample of over 6,000 shoppers!

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Apparel shoppers are more leisurely shoppers than the average, as you would expect, and also spend considerably more time in centre than the norm. It takes time to try on clothes after all, and it is, by its nature, a comparative form of shopping: 12% of Apparel shoppers spend more than three hours in Australian shopping centres, compared with just 5% of customers overall. The average shopping trip for Apparel shoppers lasts over thirty minutes longer than the Directional Insights’ Benchmark average.

Also unsurprising is the fact that most apparel shoppers are women. What if we told you, though, that women make up 85% of apparel shoppers? This reiterates what we’ve commented on in e-directions previously [http://www.directional.com.au/whats-new/august-september-2012/]. Men tend to shop for themselves. Women shop for themselves and others, most notably family members.

This becomes clearer when we look at demographic profiles in the sample. Compared to the Benchmark average, Apparel shoppers are more likely to be engaged in home duties, be in Married/ Defacto relationships with children, and have children under fifteen years of age living at home. They also have larger average household sizes.

Apparel shoppers are willing to travel to buy. They are more likely than average to come from Secondary, Tertiary and Beyond the shopping centre trade area. A relatively low 42% come from the Primary Trade Area compared with the overall average of 54%. Apparel, then, is a lure; an appetising bait that can, with the right mix, draw customers from farther afield and from competing centres.

Table 1 shows the stores visitation percentages for customers purchasing Apparel. While the major department and discount department stores are clearly dominant, specialty clothing stores received the highest percentage of visitation. Specialty footwear and accessories stores also garnered the interest of a good percentage of Apparel shoppers. This suggests that specialty fashion retailers retain the potential to attract healthy foot traffic in major centres.

Cross visitation by Apparel shoppers is also good: 20% buy take-away food, a further 14% purchase from cafes or restaurants. Apparel shoppers also make good use of supermarkets, other specialty stores and services in-centre.

Lastly, and as ever, most importantly, Apparel shoppers are good spenders. Their average spend is $122.59, compared to the Benchmark average of $75.84 for purchasing customers. Their expenditure on all categories is generally good.

Apparel shoppers appear to be engaged shoppers – they visit and purchase from a broad range of stores, they spend a lot of time in centre, they spend well. This highlights the importance of fashion retailers ‘getting it right’. Their key shoppers enjoy shopping and do purchase when in centre. They’re willing to spend the time to be ‘sold’ on an item (or two or three). Despite the ongoing gloom and fierce competition, the well-positioned and managed store can do well. So while the changes ahead will bring casualties, we shouldn’t assume that revenue contraction will occur across the board. There is room, and a customer base, on which to flourish. Back To Top

The Department Store Lure

The press on department stores over the past few years has been almost universally negative: outdated, understaffed, poorly positioned, over-priced, offline, fading into oblivion.

Customers are reportedly scathing of service levels, commentators derisive of sluggish moves online.

In this article, though, we’d like to look at what department stores do bring to the table. How are they performing as anchors and who do they attract to shopping centres?

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In-centre interviews with 2,000 department store customers reveal a unique demographic profile and a valuable contribution to expenditure patterns in regional centres. Amongst regional shopping centre customers, 23% still visit Myer and 22% visit David Jones.

When comparing these customers to Directional Insights’ Regional Shopping Centre Benchmarks, we find that visitors to department stores are older, wealthier, live in smaller household sizes, and are more likely to be female, in employment, employed in managerial and professional roles, and living in SINK/ DINK households.

How do they shop?

Department store visitors are far more likely to be Leisure shoppers than the average regional shopping centre customer. They also spend a lot more time in centre. While Regional Shopping Centre customers spend on average just under 80 minutes in-centre, shopping trips by visitors to David Jones and Myer average 109 and 116 minutes respectively.

Leisure shopping, time in centre, and high household income are all predictors of higher expenditure: visitors to David Jones spend $138 in centre; those who visit Myer spend $128. Compare this to the Regional Centre average of $86 and the value of these customers begins to become clear.

And while the apparel spend of these customers is very strong, as you would expect, they exhibit a higher average spend on all commodity groups except for Food Retail – and even this sits just under the Benchmark average. Not bad for customers who are clearly focused on discretionary shopping!

That there is a trickle-down effect in this expenditure can be seen by looking at the retail services category, which includes all hair, optician, film processing, dry cleaning, and repair spending. In a good example of anchor functionality, visitors to both the major department stores spent strongly in this category, averaging between $9 and $13 more per shopping visit than Benchmark figures for all shoppers.

Cross-visitation patterns also tell a story. Of those customers visiting Myer, 27% also visited BigW, 29% visited Kmart, and 31% visited Target. Clothing stores received even greater patronage, attracting 41% of Myer customers. Sitting beyond Myer’s mid-range position, David Jones still shared strong cross-visitation with clothing, accessories and discount department stores. The strong apparel spend of department store customers, then, was not confined to the anchors.

Food catering visitation amongst department store visitors was also stronger than average, with David Jones customers particularly attracted to cafes and restaurants. Again this is related to time in centre, spending capacity and shopping mode.

Customer interviews, then, suggest that department stores are fulfilling key aspects of their anchor role. The customers they draw to centres are valuable, spending well and widely. If the grand old anchors which drove the early development of suburban Regional Centres in Australia can revive their personal fortunes, they may yet last another turn of the retail wheel. Back To Top

The Buzz

Want to Stand Out From the Crowd?

In December last year we announced two new research products: a Multi-Channel Consumer Behaviour Survey and User/ Non-User Online Surveys.

The latter have been producing good, affordable results for our clients this year, offering deep insights into the reasons into the shopping patterns and preferences of residents in Trade Areas.

Our Multi-Channel Consumer Behaviour Surveys are also proving useful, offering an efficient form of recruitment for online surveys about shopping trip behavior. One of the many advantages of this product is that it enables us to recruit shopping centre customers to research and marketing panels. This provides a ready source of respondents for future surveys and potentially participants for follow up research such as focus groups.

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The affordability of these research products adds flexibility to consumer behaviour and marketing research projects. In one recent Multi-Channel survey, of a mid-sized metropolitan shopping centre, for example, we asked customers about their online shopping behaviour. The results were illuminating to say the least. And while we can’t draw concrete general conclusions from what is essentially a localised study, we thought you might be interested in what we found. We asked customers how often they had purchased goods or services online for personal reasons (not including banking or bill payments) in the last 12 months (see Chart 1.)

We also asked them what they had purchased.

As Chart 2 shows, Leisure and Stationary unsurprisingly topped the list.

However but many other categories were also impressive 9% for Food/ Liquor/ Groceries.

If you would like to commission research using either of these products, please contact us today for further information.

Back To Top

A Sunday Not So Far Away

The introduction of Sunday trading in Perth last year was rightly hailed as a momentous change that will transform the retail landscape of Australia’s boom city. But while everyone knows that people will flock to the shops in Perth on Sundays, fewer know who these shoppers will be, what their shopping patterns will look like, how much time they will devote to shopping and how much they will spend.

Segmenting our Consumer Shopping Benchmarks into weekday and Sunday shoppers (depending on the day of interview) provides a consumer sample of 18,200 customers, from which we can analyse differences in shopping behaviour between the two groups.

This is useful for all retailers and landlords, and also provides a guide to what Perth operators can expect in terms of customer profiles and shopping patterns on the new day of trading.

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While we might think of Sunday shopping as a leisurely activity, the data shows that Sunday shoppers are still fairly focused in their outlook. This can be explained by Sunday shoppers’ income and employment profiles. Where only 28% of those interviewed during the week were in full-time employment, this jumped to 55% on Sunday. As a result there is a large variation in average household income between weekday ($69,600) and Sunday shoppers ($82,700).

Sunday shoppers, then, are relatively time-poor, with many having been working all week. While some are looking to relax and browse, most will arrive with a fairly good idea of what they are looking for. This is part of a general post-GFC trend towards goal-oriented shopping, but it is interesting that we don’t see more relaxed shopping on the weekend, which we like to think of as leisure time.

Sunday shoppers stay on average only fractionally longer, are more likely to drive to maximise their time, and aren’t willing to travel much further to the shops than their weekday counterparts. Reflecting their higher household incomes however, they do spend more, averaging $80 per visit compared with $64 for weekday shoppers.

While shoppers spend more on everything on Sunday, the biggest contributor is the main food shop: 17% of Sunday shopping trips in shopping centres are built around the main weekly food shop, with 51% of spend overall going on food, groceries and liquor.

The challenge is to make the weekend shopping centre environment more adhesive – to encourage people to stick to their shopping trips for longer. Improving the shopping experience will of course help here, but part of the response may evolve with the increasing importance centres are placing on community. Spending time in-centre on weekends might require higher-order motivations than personal purchase satisfaction (although this can never be underestimated).

Positioning centres as part of the surrounding community allows consumers to feel good about being a part of that centre – and therefore inside it for longer. It’s marketing gold, can be leveraged to centre wide campaigns, and enables the centre to contribute to social capacity building. Win, win and win. By Matt Bailey Back To Top

NOTE:This is general information only and does not constitute advice nor take into account any individual’s or company’s specific requirements, and should not be relied upon as such. Readers are advised to seek specific advice. Directional Insights makes no representation nor gives any warranty as to the accuracy of future forecasts. This information is not intended as investment advice or other advice and must not be relied upon as such. You should make your own inquiries and take independent advice tailored to your specific circumstances prior to making any investment or other decision. To the fullest extent permitted by law, any conditions, warranties or liabilities implied by law into these conditions are hereby excluded. All copyright resides with Directional Insights Pty Ltd.

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