Shopping centre owner Scentre Group to evolve into ‘a house of brands’
Scentre Group chief executive Peter Allen has outlined a bold vision to evolve the Westfield shopping centre owner into “a house of brands” that could in the future offer education services, more co-working facilities and property development and management services for big retail investors.
The CEO of the $8.5 billion Scentre Group, which owns 42 Westfield shopping centres in Australia and New Zealand, said more than 40% of the retail stores in its portfolio were now experience and services-based.
“On the Westfield side, the real opportunity to grow that today is synonymous with shopping. Where we are evolving is I think it should be synonymous with life. We are that third place outside of people’s homes and work where people want to spend time … Our social infrastructure is so flexible to have different uses,’’ he told The Australian.
Mr Allen said Scentre planned to integrate more childcare into its centres, which could be a stepping stone for offering more educational facilities.
“Education is an opportunity. Childcare is the start of it but we are looking beyond that,’’ he said.
Three Westfield centres have also introduced co-working spaces for customers looking for a quiet space to work. The biggest is at Chermside in Brisbane which has 500 seats.
“It is about the utilisation of space,” Mr Allen said. “There is talk of the department stores not needing as much space in the future. That opens the door for us to potentially convert that to co-working spaces.”
A survey last year released by global shopping centre giant Unibail-Rodamco-Westfield predicted that more than half of the retail space in stores would be dedicated to providing experiences.
The “Westfield How We Shop: The Next Decade” report found 59% of consumers in Britain and across Europe were expecting that more than half of retail space would be devoted to experience rather than product by 2025, while 75% of consumers said this would happen by 2027.
Mr Allen, who took over as CEO of Scentre in 2014 when retail magnate Frank Lowy and his family split off Westfield before it was acquired by Unibail-Rodamco, said similar trends on wellness were apparent in Australia.
“When you think about where people are spending their money, it is on themselves but not just in terms of beauty, but wellness. The use of the space given our proximity to the customer can change and can vary. To me we have the social infrastructure that can be flexible,’’ he said.
“The majority of health funds are certainly looking at that. The aggregated medical holistic health-focused practices are also looking at it. That is a big change in society. We are on the crest of the wave in terms of what we can do and what we can provide in terms of our services.”
Scentre already provides design, development, management and leasing services to its joint venture partners.
In the future Mr Allen said the group could provide these services to other shopping centre owners such as AMP Capital or listed commercial property players such as Dexus or GPT.
“I think Scentre Group could be potentially a house of brands. There is a real opportunity to expand when you think of the skills set we have from the design, development, construction, management and leasing point of view that we could potentially expand to other areas,’’ he said.
“We provide a lot of these services for our joint venture partners. Is there an opportunity to provide those services to parties where we don’t have an interest in the assets? We could provide those services to support and manage, for example, all the shopping centres that AMP Capital owns. We are very unique in terms of the platform we have. We are 30 minutes from 80% of metro Australia. We may not want to buy more centres but we could manage them on behalf of others.”
Mr Allen said the biggest lesson for Scentre from the COVID pandemic was to focus on the customer more than ever before.
Last year the group launched two new offerings, Westfield Direct and Westfield Plus.
The former allows customers to buy products online from multiple Westfield retailers in one click-and-collect transaction. The latter offers customers that download an app four hours’ free parking, the ability to book tables at centre restaurants and other benefits.
Scentre will report its half-year results on 24 February.
The group posted a $3.6 billion half-year loss last August, a result hit by its decision to lower the value of its assets due to pandemic challenges faced by retail tenants.
This article originally appeared on www.theaustralian.com.au/property.