Malls & strips: what’s the difference?

(Image from Fleskw - via The Conversation)

Whether you like them or not, malls have been pretty successful in capturing a sizeable share of the retail dollar in Australia since the first ones opened in 1957 at Chermside in Brisbane and Top Ryde in Sydney (Chadstone opened in Melbourne in 1960). Much of that success historically came at the expense of strip shopping centres, so it’s worth unpicking what it is about malls that attracts shoppers.

Both retail forms have their advantages and disadvantages from a consumer’s and an urbanist’s point of view. A week ago I took a general look at malls (What’s so bad about malls?) but what I want to look at here is a singular advantage that regional malls have over regional strip shopping centres: unified management. In one sense that’s a trite observation – it’s hard to imagine that a collection of small businesses could’ve gotten together in the 1950s to build collectively something as large as suburban Chadstone in Melbourne, currently Australia’s largest mall.

The Myer Emporium, however, had no such coordination problems. It was able to ignore the objective of the MMBW’s 1954 Melbourne and Metropolitan Planning Scheme to confine development to activity centres served by public transport. Ken Myer constructed instead a massive new retail centre on a Malvern orchard, well away from the nearest rail station.

Let me be clear that this is not a post about which is ‘better or ‘worse’ – it’s about understanding the differences between malls and strips and, in particular, why they’re different. I’ve chosen to look at management arrangements because I think that’s a key difference and space is limited, but it’s not the only one. I’ll try and look at other differences another time.

The real power of the management advantage enjoyed by malls is in operations. A stand-alone regional mall like Chadstone or Northland has a single landlord and manager who coordinates a wide range of key commercial variables, from infrastructure to the overall retail offer of the mall.

I think of malls as being a bit like clubs. The welfare of each retailer depends not only on his own performance but on that of all the others — they generate business for each other. That’s true of strips too, but in malls the tenants formally cede a considerable measure of independence to the centre manager in return for maximising the benefits of the mutual inter-dependency of the parties. The manager’s role is to maximise the benefit for all tenants and, consequently, for herself. If she doesn’t also satisfy shoppers then both she and the retailers will suffer.

One of the most important qualities of any regional centre for shoppers, whether it’s a mall or a large strip centre, is the range and choice of products and services on offer. The mall’s advantage is it is ‘designed’ or ‘engineered’ to maximise the retail experience.  Managers are able to optimise a range of critical variables important to customers, like the mix of shops/tenants, the mix of merchandise value, and the mix of floorspace allocated to different retail segments. Considerable research effort is devoted to the subtleties and nuances of what sells and what doesn’t.

The centre manager can create a unified marketing image. She can also engineer a defined ‘experience’ or ‘atmosphere’ comprised of the retail offer, associated services like cinema, and the design of the physical environment. She can control the level and management of car parking, often providing it for ‘free’. Moreover she can provide simple things like clean, safe and working public toilets; tenant directories; staffed centre management offices; and security services.

The management advantage also extends to the quality of staff. Malls are largely populated by national franchises that can afford to put effort into choosing and training staff and supporting them with sophisticated management systems, inventory control and procedures manuals.

All of these activities are much more difficult for a strip shopping centre. Strips are composed of multiple landlords and multiple tenants. Individuals within each of these groups may have different priorities. Further, circulation and parking spaces are administered by a range of public agencies, such as local government and traffic authorities. In many centres there are residential and other non-retail occupants in the centre with agendas which might be inconsistent with the priorities of businesses and organisations that serve the public directly.

This diversity of purpose makes it more difficult to get any sort of sustained, unified action. Publicly funded programs like Mainstreet have endeavoured to create some semblance of joint action by retailers and other players but the results have been small scale, short-lived and largely confined to ‘beautification’ projects. Even where they work, they seldom go to the core commercial issues. Read the rest of this entry »


Are planning regulations making retailing uncompetitive?

City of Darebin's draft Vision for Northland

I agree with Australia’s retailers and the Productivity Commission that imported internet purchases valued at less than $1,000 should be subject to GST. But I only agree in-principle.

The trouble is, as the Productivity Commission’s report on retailing released last week shows, the administrative effort required to levy the GST would cost more than the tax would raise in revenue.

But the GST is really just a distraction – the underlying malaise of Australia’s retail sector runs far deeper. The Commission says retailers operate under several regulatory regimes that reduce their competitiveness. It nominates three major restrictions which require improvement:

Planning and zoning regulations which are complex, excessively prescriptive and often exclusionary

Trading hours regulations (in some States) which interfere with the industry’s ability to adapt and compete in a more globalised market

Constraints on workplace flexibility such as obstacles to the greater use of enterprise bargaining and the adoption of best practice productivity measures

Retail hasn’t historically been trade-exposed, so it hasn’t had to work hard at being competitive. Up until now, international suppliers have even been able to practice blatant price discrimination. But the internet has changed the game. Consumers can now compare what they’re paying for many products locally with what it costs to import them from overseas markets.

The impact of planning regulations on the viability of domestic retailing is of course of particular interest to The Melbourne Urbanist. The Commission notes that the ability to maintain a competitive and healthy retail sector is vitally dependent on the ability of new retail formats to gain entry to Activity Centres. A number of studies have shown that preventing the development of new retail formats lowers productivity, reduces employment and raises prices to consumers.

The Commission finds a number of barriers to entry, including limits on the size and scope of centres, prescriptive planning requirements and excessive scope for firms to establish local monopolies and maintain them by excluding new entrants, either with the implicit cooperation of planning agencies or through the courts. The Commission recommends that:

Activity Centres should be large enough in terms of total retail floor space and broad enough in terms of allowable uses to facilitate new retail formats locating in existing business zones

Prescriptive planning requirements should be significantly reduced to ensure competition is not needlessly restricted

The impact of new entrants on the viability of existing retail businesses should not be considered at any stage in the rezoning or development assessment process. This issue should only be considered at the strategic planning stage

The focus should shift to “as-of-right” development processes to reduce uncertainty and minimise the scope for gaming of the system by commercial rivals

Courts should be able to award costs against parties who are found to be appealing for non planning reasons

It’s interesting and illuminating to read the Commission’s report and at the same time look at what the City of Darebin is proposing in this report for the future development of Northland, a “hard-top” shopping centre (mall) with nearby “big-box” retail facilities at Preston, about 11 km north of Melbourne’s CBD. The exhibit above shows Council’s proposed vision for the centre and surrounding uses. Read the rest of this entry »