An artist's impression of a retail high street for Green Square, Sydney

Many would claim that retail is the basis for placemaking. And, in a lot of ways, they wouldn’t be entirely wrong. Commerce is arguably more than the exchange of goods or services for some form of payment. Embedded in the economic exchange of retail are a wealth of cultural and social cues about a place, its values and its identity.

For instance, a street lined with bicycle shops and cafés would tell you something about what people value in that area and how they intend to spend their disposable income. It also tells you that there is disposable income to be spent in the first place.

So the kind of retail that takes root in a place is a kind of qualitative litmus test for the culture and interests of the people who take their business there. It would be too much of a jump to assume that all who bring their patronage to a specific area are indeed local. We know that people are willing to travel to spend their hard-earned dollars. The progressive demise of Sydney’s Oxford Street in favour of Westfield Bondi Junction over the past years proves this point quite well.

And while that might be well and good, I can’t help but notice that retail is a really fickle thing. Retail is, by any standard, very present in our urban and suburban experience. As a nation, Australia boasts the most intense concentration of shopping centres per inhabitant, yet not all retailers are finding equal success.

And all these shopping centres are not great places either, are they? We’ve wholeheartedly bought into America’s worst export, the suburbanisation and therefore Cartesian segregation of all aspects of life, connected by the power of private automobile.

It’s fair to say, however, that with the growing prominence of the urban regeneration agenda in our capital cities, the approach to retail is changing. No longer are we looking to create closed off shopping centre environments, we are looking at more integrated models of urban development, where the finegrain of shops and the vibrancy of the ground plane can spell out success for a mixed use or residential project.

In that endeavour to bring life back to the streets through active shopfronts and healthy pedestrian flows, it is not unusual to try and seed this activity in the early stages of a development through finding loss leading tenants that carry with them a strong cultural or social potential.

The hope is, of course, that with a growing customer base, the business models will also gain stability, and the much-loved tenants will be able to retain their place as a commercial and cultural anchor. And sometimes, this does happen. But all too often, the early loss leaders end up as the losers.

There are property economics at play in this equation, obviously. As the patronage for a tenancy grows, so does its rental value, meaning that businesses banking on small margins, such as hospitality, find it hard to survive the rental hike they brought about.

Nonetheless, walking the streets of popular Sydney neighbourhoods, I am often struck by the passion and effort that goes into new retail ventures. Independent retail in particular is a labour of love, not a money making scheme (from my experience).

I am equally struck by how much turnover (not the monetary kind) I observe over short periods of time in the same tenancies. You can even sometimes feel these well-intentioned tenants, teetering on the edge, trying to retain the loyalty of a customer base that has often moved onto the next best thing.

Yes, we must admit, as customers, we are fickle. We want to try something new, we want to see what people are talking about. Beyond affecting the bottom line of the businesses we desert, it’s easy to see how our spending and patronage behaviour does, in the end, impact the quality of our places.

So what does this mean? Does it mean that a successful place can have unsuccessful business and vice versa? What is the relationship between place and retail? Can good business sense make a good place?

It’s not easy to answer any of these questions in general terms. Each neighbourhood, development, street has its own cultural and economic drivers. But I think it is fair to say that the equity exchange between place and retail can be a little more complex than what people assume.

High quality retail experiences are expensive to maintain and don’t always make a lot of business sense, but they are loaded with place capital. Therefore, a retailer can be a net contributor to a successful place, without being able to reap the financial rewards it needs to survive.

Conversely, bad retail can continue to attract patronage despite shocking in-store experience, sloppy street presence and a low sense of belonging to a community.

What this tells me is that retail doesn’t necessarily equate to placemaking. Good retail pays disproportionate place dividends but can end up being a loss-making proposition on the short and on the long term.

We readily apply this logic to civic uses such as museums, galleries. We find other ways of justifying expenditure on such projects because we know they benefit the sum more than it does any of its parts. It’s important to see the contribution of good retail within the context of the city value creation system in order to use it as a constructive contributor to placemaking.

Michelle Tabet is an independent strategy director at michelletabet.com