How to open a store, part 2: Shopping centres

  • Property
  • September 22, 2016
  • Sarah Dunn
How to open a store, part 2: Shopping centres

Shopping centres hold their own set of benefits and drawbacks for a green operator. They offer guaranteed heavy foot traffic, rain or shine, plus built-in security, good neighbours and predictable hours, but also a certain amount of paperwork.

I have a feeling that most of New Zealand’s shopping centres frown upon large numbers of cats in retail stores, but just in case, I had a chat with Scentre Group’s regional leasing executive Fiona Cameron and national retail design manager, Gabrielle Bevin-Smith.

Scentre Group operates the Westfield brand and controls around 300,000 square metres of retail space in New Zealand.

The first thing Scentre Group would need to know about a prospective tenant, Cameron says, is the square footage it needs and the service or product it requires.

“We’re very careful about where we put people in our centres so everyone sits in the right precinct.”

From that point, Scentre Group would send the retailer its commercial terms and provide the centre’s demographic information. This would cover the centre’s size, its customers and its sales.

It’s then up to the prospective tenant to see if this matches their ambitions for their store. Cameron recommends going to the centre you want to locate your store on, spending time there, looking around and carefully considering what you see.

“See the type of person that’s coming to the centre and see if that’s the type of person they want to market their shop to.”

Cameron says the potential lessee can expect a high level of transparency from Scentre.

“It’s very important they understand what they’re required to do in terms of fit-out, paying rent, that kind of thing.”

“We’re very upfront about that, we don’t want any surprises.”

Centres are necessarily invested in the kind of fit-out their retailers choose to install. Bevin-Smith says lessees aren’t required to employ Scentre’s retail designer, but the fit-out must meet Scentre Group’s standards.

The concept design will be reviewed by Scentre Group. It must be contemporary and meet any site-specific requirements.

As much as critiquing, Bevin-Smith says, the design team will also be guiding and educating lessees. They project-manage the timeline so that the retailer will open on the day they’ve agreed to open on.

Bevin-Smith says Scentre’s design team will provide a retailer with a programme and work backwards from the trade date. She says some retailers, especially green ones, have been known to underestimate how long a fit-out will take.

Retailers should consider how their fit-out fits with their store’s branding.

“A retailer needs to give themselves a good amount of time and think about, ‘What actually do I want to portray to my customers? What is my brand?’”

Customers demand more in the way of in-store experiences now, Bevin-Smith says.

“People can easily shop online, so if you’re presenting a store that’s just got stuff in it, that’s no different from going online.”

Standard leases at Scentre Group malls are five to seven years. The fit-out needs to last the duration of that lease, which is difficult in a high wear-and-tear mall environment. Retailers need to make sure the finishes and products are going to last the distance, and not look shoddy in six months’ time, Bevin-Smith says.

She recommends retailers take the time to seek out a reputable store designer, saying it’s important to invest in somebody that understands retail and has experience in designing retail stores.

“It is an investment, but for a five to seven year lease, it’s worth it.”

Leasewise, Cameron says prospective tenants need to take the time to make their solicitor and accountant fully aware of what they’re committing to.

“We would never accept a lease agreement that someone took away and returned the next day if they were new retailers.”

She also recommends retailers consider how they will use their marketing strategy to entice that bountiful shopping-centre foot traffic into their store. They will be able to access support from the centre’s marketing manager and can get on board with centre-wide campaigns.

“Just because you open a shop in a shopping centre doesn’t mean people are automatically going to go.”

“It’s important to take opportunities, provided it fits with your brand.”

This story originally appeared in NZ Retail magazine issue 745 August/September 2016

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