What’s new October-November 2013

Directional Insights in London

Directional Insights recently enjoyed a research trip to London. While we were there we had a chance, of course, to check out the latest in UK retail and shopping centre development. While much has rightly been written about Westfield Stratford City, we were also very impressed with Westfield London.

Read More »

The 150,000 sq. m. centre was built at a cost of around £1.6bn (A$2.7bn), and opened in October 2008. When we visited, late on a Wednesday night, the centre was quiet but still impressive with shoppers making their way around for some late night mid-week purchases.

Public transport access was good – we hopped off the tube at Wood Lane and made the brief walk across to the centre.

From the outside, Westfield London is monolithic. Stepping inside, the scale of internal space is not at first obvious. A plain entrance hall with double escalators took us past Next into the first level on the North West Corner of the building, which is roughly rectangular in shape with anchors at each far corner. Access between levels is easy with escalators interspersed throughout the centre.

Westfield London is not a strikingly different retail form in any way, but what it does it does very well. It is immaculate, and the presentation throughout the centre and in every store is superb. Westfield has clearly set an exacting standard and brought every retailer up to meet it.

No corners have been cut on fit-out, display or merchandising. Shop fronts run horizontally, but use three-dimensional space to create unique facades that are integrated to the character of each store’s brand and internal environment. It is hard to find a single item out of place in any store. The lighting is splendid and matched to merchandise offer – the Disney store glitters like a fairy ice-cream cake.

We saw one SALE sign in the entire centre.

Continuous sales have become a significant deflationary driver and an exercise in brand devaluation in Australian retail. The message at Westfield London appears to be that the centre (and its offer) is too good for sales. Here you pay the full price because that’s what it’s worth.

On the upper levels double shop fronts sit beneath a high curved ceiling structure filled with triangulated skylights. There are no “down-market” sections in this centre, but it’s also clear where the money is.

In the high-end precinct chandeliers, that must be 15 feet in length, are suspended above a grand piano and leather lounge chairs. The toilets are more luxurious than those in a five-star hotel.

One of the strengths of a shopping centre of this scale of investment is that while catering to a full range of demographics, it embeds aspiration into a built form. There are no barriers to the high-end of the centre, anyone can access it (and use the bathrooms!). If you can’t afford to shop here, you can experience what it might be like to shop here. The upper end provides a stamp of class for the entire centre, elevating the experience of all customers.

And as we said, while the upper end is clearly different, it is not so different from the rest of the centre. Corridors throughout are exceptionally wide, ceilings very high. The upper floors contain wells to lower levels, contributing to the sense of spaciousness throughout.

The centre atrium is massive, extending from the ground floor to the roof, with a vertical sight line interrupted but not obscured by broad overhead pedestrian access ways.

The boundaries of space envisaged for internalised malls is being pushed at Westfield London: the atrium feels like public space because it’s so large. The ground floor, too, is uncluttered, almost like a tiled park, with no commercialised activity.

Victor Gruen’s original vision for the shopping centre was the inclusion of non-commercialised space. And while you couldn’t really say this about Westfield London, leaving the heart of the ground floor open with such expansive breadth and vertical depth with no commercial clutter, has create a powerful sense of public space.

The most apparent lesson from Westfield London concerns standards: setting them and meeting them. The centre is immaculate, every shop is beautifully presented and tightly managed with space being utilised as an architectural element in sophisticated internal place making. Retailers have come on board and importantly they have not jumped on the downward spiral of endless and gratuitous sales, which cheapen the aesthetic of shopping centres and erode brand value.

Homemaker Centre Shoppers with Purpose

In the last few years there has been considerable movement within the Large Format Retail property sector. One reason for this is that enclosed, well-presented Homemaker Centres combine many of the strengths of traditional shopping centres – parking, air-conditioning, and amenable environments – with a specialised product category and customer focus.

There is no publicly available consumer research available on Homemaker centres in Australia so we thought we’d share with you some of our latest data.

Read More »

In this article, we compare the shopper profile of Homemaker centres (HMCs) customers with those of traditional shopping centres (TSCs) using our proprietary 2013 Consumer Shopping Benchmarks.

Firstly, we see the average age of HMC customers is similar to the average age of customers in traditional shopping centres – however the spread across age cohorts is quite different.

In HMCs there is a peak in the 30-39 year age bracket with 23% of customers, while in TSCs the spread of customers between 20 and 70 years of age is more evenly distributed.

This difference in age distribution is reflective of the strong appeal Homemaker Centres have for those in the early lifestages such as Young Couples and Young Families. It is these Lifestages that are particularly attracted to homemaker centres as they are in the process of setting up house and family and investing in their domestic space by making purchases in furniture, white goods and children’s items.

While there is a strong appeal for those ‘setting up the home’, the Homemaker centre still has appeal across the age spectrums. The older age cohorts make up an important proportion of customer spend at Homemaker Centres. Being more strongly established and proud in their homes, these older customers spend more per visit even though they visit less frequently.

So while we have a good idea of who is actually purchasing at Homemaker Centres, what exactly are these customers looking for?

The top four product categories motivating shoppers to visit an average Homemaker centre include:

  • Indoor Furniture (16%);
  • Homewares (9%);
  • Home Entertainment Equipment (7%), and
  • Baby or Children’s Items (7%).

While the top four reasons to visit a Homemaker correspond to the idea of establishing a family nest, how does this translate to actual product conversion? We can see that the top goods and services purchased are:

  • Food Catering (20%);
  • Homewares (14%);
  • Baby or Children’s Items (12%), and
  • Home Entertainment Equipment (7%).

Interestingly, only 6% of customers buy Indoor Furniture on their visit, reflecting the time taken and comparative shopping pattern for this category and subsequent relatively low conversion rate of visitation to purchase.

As Table 1 shows, shoppers at HMCs are on average more affluent than those visiting TSCs. They are also more likely to be in Professional or Managerial roles, and employed full-time, with a greater capacity to spend on the discretionary product mix of HMCs.

Table 2 provides some further details into the divergence between customers of these two shopping centre types. The primary point to be made is that the inherent nature of the HMC product categories result in much less frequent visitation. This means that information about way finding to the centre, and navigation within it, are very important because HMC customers are less familiar with the shopping environment than TSC customers.

Further, while the gender split for HMC is still bias towards females, there are a higher proportion of males visiting than at TSCs. This can be attributed to the appeal of the product mix of HMCs and that some of the larger value items such as furniture and white goods are more likely to be joint purchase decisions.

Additionally, men outspend women in HMCs, in contrast to their behaviour at TSCs where they are much more likely to be wallet shy.


Turning to look at shopping patterns, we can see that shopping in HMCs is targeted, with only 18% of customers reporting their shopping trip as Leisure oriented. In part this is an indication of the research surrounding bulky goods shopping. Generally, those researching beforehand are focused on what they’ve already been investigating and arrive at the centre with fairly specific items in mind. Therefore, it is very important that Homemaker centres facilitate efficiency to accommodate this high degree of Mission shopping.

When they do, they reap the rewards with HMCs drawing high average spends per customer, and even higher spends amongst those making a purchase ($222).

Homemaker and other large format retail centres are a specialised property category, with very few companies experienced in conducting consumer research for them. If you would like to know more about our expertise in this area, feel free to give us a call on 1300 138 651 or email us at info@directional.com.au

Time for ALDI

ALDI has been one of the most successful and aggressive international players in the Australian retail scene since its arrival in 2001. In that time it has opened 305 stores and is currently experiencing sales growth of almost 7%. Not surprisingly then, plenty more stores are planned as the German giant moves south and west from its established position in the eastern states.

Read More »

While many ALDI stores are stand-alone operations, they are increasingly being found in Australian shopping centres. This facilitates ALDI’s expansion in some markets, and provides landlords with an additional or alternative supermarket anchor that has strong consumer recognition and appeal.

It is also important to remember that ALDI stores are packaged in a smaller footprint than either Coles or Woolworths’ preferred models.

According to Directional Insights’ 2013 Consumer Shopping Benchmarks (for centres that have ALDI as a tenant) 19% of customers visit ALDI whilst in centre.

Though when considering ALDI as a possible tenant, what data would you draw on? There is no freely accessible data profiling ALDI customers, and while we always recommend site specific research, it can be handy to have some figures to work with before you take this step. As such, we’ve analysed over 1,000 shoppers in Australian shopping centres who visited an ALDI store whilst in centre to give you some information about the ALDI customer.

Firstly, some demographics: ALDI customers are more likely to be female, have a lower than average household income and an older average age. There is a strong representation amongst consumers over the age of 60 who are attracted to ALDI’s value offer.

Further, in terms of transport, 90% of ALDI customers travel to the centre by car, and on average they are more likely to be travelling from the secondary trade area.

For ALDI customers, the two largest Lifestage groups in terms of both expenditure and visitation are Young Families and Older Couples, with 35% of ALDI customers being over 60 years of age and 26% retired.

So is ALDI right for your centre? They are small and so easy to fit in. They will generate foot traffic, have a very high conversion rate of visitation to expenditure, and have a broad appeal (although at the lower to mid-level of the market).

And of course it depends on the type and positioning of your centre. With restrictive planning legislation being lifted in Victoria, and being touted in other states, ALDI is being canvassed as a potential addition in Homemaker and Large Format Retail centres. But at the end of the day, how would an ALDI fit into your specific centre?

Well, the dominant occupations and roles of ALDI customers are Retiree/ Superannuants, Professionals and those engaged in Home Duties. Professionals make up 21% of ALDI customers: while this is a lot lower than the 35% they account for in Homemaker centres, it is in line with figures for Traditional Shopping Centres (TSCs).

As Table 1 shows, Retirees/ Superannuants and Home Duties customers together account for 43% of expenditure in ALDI, compared with 20% in Homemaker centres and 36% in TSCs. Professionals on the other hand account for nearly half the spend at Homemaker centres.

This is not to say there is no place for ALDI in Homemaker centres – there are strong arguments for broadening the customer base and improving trading activity across a full-week, and consumers have been spontaneously suggesting supermarket additions to the Homemaker centres we’ve been conducting surveys in .

There are many different types of Homemaker and Traditional centres positioned at different levels in the market. This study indicates that customer profiles, behaviour and needs should be thoroughly investigated before committing to a particular supermarket model in a homemaker centre.

If you would like more information about our research into ALDI customers, or our shopper profiles for Homemaker centres, please feel free to contact us at info@directional.com.au  

The Buzz

How targeted are your marketing campaigns?

From your consumer research you’ll have a good idea about the demographic profile of your shoppers, their occupations, household incomes, household size and so on.

But how does this affect their awareness and preferences for advertising media? If your trade area has a large number of professionals in their forties and fifties, what would your media spread look like? What are the most productive channels through which to advertise?

When building a social media campaign, what percentage of customers are likely to be aware of what you’re doing? What is the demographic breakdown of those who are? How rapidly does consumer interest in social media advertising decline over the age of 30?

There is a general acknowledgment that digital channels are less effective at targeting older consumers – but is this true for all channels? How do email newsletters, personal emails, websites and social media stack up for consumers over the age of 40?

The answers to all these questions and many more are available in the Directional Insights Shopping Centre Marketing Report 2013-14. Based on in-centre interviews with 26,000 consumers, it provides detailed data and analysis on marketing awareness and preference for different Channels, including:

The Directional Insights Shopping Centre Marketing Report 2013-14 is a comprehensive marketer’s handbook on advertising consumption by shopping centre customers, and an essential tool for shopping centre marketing and management professionals.

Call 1300 138 651 or email Directional Insights now at info@directional.com for more information or to purchase copy of the report for just $350, which includes a free presentation of key messages (in Sydney, presentations in other areas by arrangement).

Zooming in on Showrooming

Showrooming has been one of the hottest topics in retail over the past two years, as shoppers increasingly utilise multiple media and distribution channels.

To give just one example of a hybrid path to purchase: a consumer receiving a colour brochure in their letterbox, attracted by a product might investigate its specifications on the manufacturers website, seek a tangible impression or more information from a bricks and mortar store in their nearby regional shopping centre, do some price comparisons on their smartphone whilst in store, and look up reviews online while they mull over the purchase decision later that night.

Multiple channels, one transaction.

Read More »

Consumers have clearly embraced hybrid shopping. They see it as an improvement in the shopping experience, identify distinct forms of value in different channels, and seek out particular channels for what they do best.

For bricks and mortar retailers the obvious problem here is free-riding by competitors, who they effectively support by paying the costs of displaying goods in accessible locations. (This is not dissimilar to the complaints newspapers made about Google News, which harvested their content while providing little return.)

It is important to remember, though, that free-riding is not necessarily a one-way street: bricks and mortar retailers can free-ride off the information garnered through online channels. Many shoppers who prefer to buy in store will still research online before purchase. Clearly there are differentials in the costs associated with running different channels, but the bricks and mortar retailer can benefit: pre-purchase online research may facilitate higher conversion rates from store visitation to sales, for example.

One alarming outcome of research into showrooming in America is the suggestion that investing in the shopping environment can further expose a business to the practice because it has effectively created a nicer showroom (and paid for it with higher price points). This study was, though, a comparison between discounters Target and Walmart should not be directly translated to more sophisticated retail environments which thrive on ambience and experiential shopping.

It does, though, highlight the conundrum of showrooming. A survey by BDO in 2012 asked 100 chief financial officers at leading U.S. retailers to identify their primary strategy for countering showrooming:

  • 25 % of CFOs said they were improving their customer service model;
  • 25 % reported expanded options for in-store pickups and returns for online purchases;
  • 17% were focused on product exclusivity;
  • with another 17% looking to match prices with online retailers.

Customer service is clearly crucial to the whole retailing experience, but in terms of showrooming, Kirthi Kalyanam and Andy Tsay from the Leavey School of Business at Santa Clara University, warn that “any type of service that can be utilized without making a purchase remains unreliable in dissuading showroomers from buying from a competitor. A more focused approach would be for a retailer to stay within striking distance of the prevailing online prices and install improvements that better enable closing the sale, either in its brick-and-mortar stores or on its website.”

Some ideas they suggest are;

  • Targeted price matching with strategies such as broadcasting coupons to in-store customers;
  • Product exclusivity and private labelling;
  • Better integration across channels;
  • Models whereby manufacturers compensate retailers who display their goods.

There are clearly challenges to all these strategies, especially the last, but in a period of enormous structural change, retail models will also rapidly adapt.

This article drew on research published by Kirthi Kalyanam and Andy Tsay in ‘Free riding and conflict in hybrid shopping environments: Implications for retailers, manufacturers, and regulators’, The Antitrust Bulletin, Vol. 58, No. 1/Spring 2013.

This entry was posted in What's New. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Subscribe to eDirections Get the latest news, trends and consumer insights sent to your inbox every month. Its FREE! Click here
    To discover the current strengths and challenges across Australia’s different retail environments  click here.
    See what attributes drive customer loyalty and consumer mobility by clicking here.
    The profile of the Retired and Superannuated shopper get broken down and brought into the spotlight here in the most recent eDirections.
    Want to gain insight into the Homemaker Consumer from our new Australian Consumer Shopping Behaviour Report? Then click here to read more
    Directional Insights has a new research report! Click here to find out how you can access it.