The Five Stages of Grief
This series of articles by retail analyst Michael Baker explores a retail format that is far more sustainable than its energy guzzling cousins at the mall.
In her famous 1969 book, entitled “On Death and Dying”, Elizabeth Kübler-Ross identified the five stages of grief through which people typically go in dealing with personal tragedy: denial, anger, bargaining, depression and acceptance.
Retail developers also have their five stages of grief, which relate not to tragedy but to the threat of new competition. These five stages all have to be negotiated by traditional mall developers in the fight against town centre projects.
In America, developers have long worked their way through the five.
Stage 1, as in the Kübler-Ross model, is “denial.” In this instance, it’s denial that the new format is going to be rolled out at all because “consumers will not accept it.”
Stage 2 is “obstruction.” Since it now does look like it will happen after all, attempt to thwart and frustrate the innovators by using the planning and legal systems, for example by attempting to make it difficult to acquire sites.
Stage 3 is “skepticism.” You’ve had limited success in Stage 2 and not enough to ensure the defeat of the new concept. So it’s time to just reassure yourself that the new format won’t achieve enough scale to be a serious competitive threat, or that it will fail for other reasons such as lack of climate control or inadequate demographics.
Stage 4 is “acceptance.” The concept is found to have some compelling merits after all and has gained traction with consumers, who now prefer to shop at the new format than at your place. It’s time to stop denying it and just accept. And while you’re accepting, you’d better get cracking now and incorporate the new format into your own business model.
Stage 5 is “ownership.” You are now successfully building and operating the new concept yourself and it’s time to start taking ownership of it by claiming that it was all your idea from the beginning.
Truth be told, the US developers went through a couple more stages involving completely dumping all enclosed mall development in favour of town centre developments, and then massively embellishing the town centre model itself until it has been disfigured beyond all recognition.
But we don’t need to get into that right now.
Where are Australia’s developers on their journey through these five stages of grief? Certainly they have gotten as far as Stage 3 but have not quite yet moved on to Stage 4, acceptance.
The principal reason for dallying on Stage 3 is that so far there are few or no genuine town centre projects on the ground in Australia to act as role models for further development of the concept.. Execution of the projects that are extant has not been that great.
A tent in a hurricane is as strong as its weakest moment. Likewise, the weak link in a retail concept can be its complete undoing. It could be that the town square is too small and poorly designed, the restaurants too few in number, too unappealing or in the wrong places, the fashion brands boring, the scale too large, the parking inadequate or poorly located, or any number of things.
Consumers are not particularly forgiving and although many in the retail industry still say that “location, location, location” is everything, the reality is that the best location in the world is worthless without good concept execution.
So Australia needs some good town centre prototypes, but before it can get to that it needs to settle some arguments, largely spurious, that are standing in the way of getting to square one.
The development community usually bases its objections to town centre developments on three planks:
1. Open-air shopping is not preferred by consumers, particularly during the seasonal extremes of summer and winter when air conditioning or heating are essential for a comfortable shopping environment
2. Town centres are upscale concepts that only work in upscale neighbourhoods
3. Town centres are “open” concepts in the sense that they are integrated with their surroundings and permit the free flow of pedestrians from the shopping centre to the adjacent neighbourhoods. This is inconsistent with the successful shopping centre economic model, which depends on “capturing” consumers in an inward-facing and effectively sealed envelope.
Each of these arguments has merit yet there is compelling evidence that they are at best overblown, at worst completely wrong. Since there are so few reference points in Australia it is useful again to look at examples in America, where consumer research and the ringing of the register has often suggested a clear preference for town centres over enclosed malls. The open-air formats have worked in hot and cold climates, and in trade areas with high-end demographics and more moderate income profiles.
Arguably one of the best and most successful town centre developments ever built, Easton Town Center, is in Columbus, Ohio, hardly the sort of place you associate with toney demographics and a balmy climate. Since it isn’t on the tourist trail few Australian shopping centre professionals ever go there. Perhaps they should.
Easton, built and operated by Steiner + Associates and now 11 years old, is in a master class, thanks to its outstanding implementation of shopping centre economic principles, an emphasis on casual dining concepts and superb execution of public spaces with greenery, water features and street furniture. Its sales density runs about one-third higher than the US average for traditional regional shopping centres. This, in a place where the summers are hot and muggy and the winters are long, with temperatures typically hovering around 0 degrees Celsius.
The argument that town centres can’t make it in areas where climate can be extreme has literally dozens of examples to contradict it. Easton Town Center is just one. Over in Philadelphia where the winters are similar to Columbus, the Suburban Square town centre development continues to thrive. It just celebrated its 75th birthday.
For examples in hot climates you can try any one of the fabulous smorgasbord of town centres in south Florida, such as CityPlace, Mizner Park or Coconut Point. Or look around southern California, where you’ll find Gardens on El Paseo, Bella Terra and Victoria Gardens.
If you are still not satisfied, try scorching hot Phoenix where the average temperature for the three summer months is 40 degrees Celsius, which is higher than any Australian state capital. Open-air town centre developments there include Desert Ridge Marketplace, Tempe Marketplace and Kierland Commons. Kierland has a sales density approximately 75 per cent higher than the US average for regional centres and is widely regarded as a poster child for the town centre genre.
If the climatic argument doesn’t work, developers who are at Stage 3 in the five stages of grief frequently fall back on demographics to make their case. It is observed by some of them that US town centres tend to work best in upscale neighbourhoods.
This is often true but again there are too many exceptions to make the argument stick – Easton Town Center, Bay Street Emeryville in Oakland, Englewood CityCenter in Colorado, Winter Park Village in Florida, the list goes on.
No one would argue that American and Australian consumers are identical in their preferences but there is too much evidence that town centres will work well if they are executed well.
The challenge then for the development and planning communities in Australia is to work together effectively, using good prototypes, to design and build something that emulates the best of the town centre genre. Then, developers will finally get to Stage 4 of the five stages of grief, and who knows, stage 5 may be closer than you think.
Michael Baker is a Sydney-based retail property analyst and consultant. He is a former research director of the New York-based International Council of Shopping Centers. Contact: Mbakerconsult@gmail.com or www.mbaker-retail.com