In an emerging boutique area on the cusp of Surry Hills and Redfern lies the Follow Store, which stocks a mix of Australian made clothing by independent designers, as well as one off or original items, accessories and jewellery for women. Owner Sarah Thornton says people have to make a conscious effort to include them in their shopping trips and they rely less on passing foot traffic.
She says she chose the store based on its heritage listing and unique features as it was an old pharmacy from 1898 and includes all the original shop fittings, cupboards and draws and original glass and decorative features – something a contemporary mall could not replicate.
“It is an amazing building steeped with history and it was perfect for our aesthetic,” Thornton begins. “As it is our first shop we had less capital to invest in and the shops rent is significantly cheaper than that of the shops on Crown Street. We actively chose an emerging area hoping to build a strong customer base that would return to our store regularly for the unique things we offer.”
Thornton says in this financial climate it is particularly hard for new businesses to open in popular shopping strips and that other boutiques should be following in their shop’s footsteps and moving away to destination shopping areas. She is also a big fan of the emerging culture of ‘pop up shops’ across Sydney as they give artists and designers short lease opportunities that were once not possible.
“The Sydney rent is way too high and we see lots of small businesses fail for these reasons,” Thornton says. “There definitely needs to be a shift in helping to incorporate smaller local retailers, or the future will not look very bright for the next generation and Australian small businesses.”
Based on a small shopping strip in Pyrmont, Sydney, the St Frock boutique sells affordable fashion clothing and accessories for women. Head buyer Sandradee Makejev says they are definitely not considering moving into a big shopping centre any time soon, and are instead looking to open a second boutique in an up coming shopping strip in another suburb. She believes the high rent set at shopping centres would be a barrier for small one off boutiques trying to establish a client base.
“A lot of our clientele that frequent our boutique work in close proximity, therefore we see them on a weekly basis – so if we were to relocate to a large shopping centre we would lose the relationships that we have developed with these regular customers, something that we value highly,” explains Makejev. “Any downturn of consumers that we might find by being in a retail strip is easily supplemented through our online store and markets that we sell at every week.”
She believes customers return to St Frock, which stocks brands such as Mink Pink, Staple The Label and Somedays Lovin, as the overall shopping experience is much more intimate and the familiarity customers have with the store encourages them to invest and trust in the brand.
“While I think consumers are becoming a bit de-sensitised with large shopping centres that present a cookie cutter mould for your shopping experience, I think they also serve their purpose in their convenience,” Makejev added.
If trade falls flat for boutique owners generally, and they do not have the marketing power to help attract customers, Makejev says it is up to owners to negotiate reasonable rental terms to ensure their survival and viability. Global sales manager Adam Banfield, from Melbourne-based boutique stores Nobody, says retailers should stop using external factors such as high rent and online sales as a scapegoat for poor performance. Nobody, which has a shop in trendy Chapel Street and one in vibrant Brunswick Street, predominantly sells denim and has a smaller offering of tops and other coordinates all made under the Nobody brand.
“While although the fiscal expectation of opening in a shopping centre is often more onerous than that of a strip, foot traffic and a stronger consumer intent to buy can be enough to still make the venture worthwhile, Banfield begins. “Capitalism dictates survival of the fittest, however and so long as there are players (often your global chains), willing and able to pay the rents centres are charging, there will be a market waiting for them. If this means white washing the retail experience in shopping centres is an end result, those not wanting to be part of it will go elsewhere - and if this means by default people go to boutique strips, then so be it.”
When discussing the future of the boutique shops, Banfield says that ‘consolidation’ has been the buzz word for a long time.
He says if in times of hardship retailers do not look at combining stores or business aspects, then their downfall only leaves more space in the market for others.
“We’re already seeing retailers and wholesalers tumble left right and centre who perhaps have struggled to subscribe to this (consolidating),” he says. “There’s little reason to suggest the same can’t happen for boutique strips, or even shopping centres. “But this is a good thing, clear out the chaff, noise and clutter to let those more focused on the job at hand, of servicing the market the way it wants, to get on with things”
Banfield says the real root of the problem still remains well within retailer’s control and the sooner more people realise this the sooner they’ll be able to put such distractions aside and enjoy the benefits of a successful business. He explains that although the retailer Vs landlord battle currently being waged across Australia is well documented, in many cases retailers are using external factors influencing their business, like the depressed retail environment and losing sales offshore through e-commerce opportunities, as a scapegoat for poor performance.
“More often than not the real problem with poor sales lies much more closer to home than they might realise, or perhaps want to,” Banfield says. “Misery loves company, but those who are up in a market that’s currently down are the ones concentrating on the things they have control over. Not to suggest due diligence need not be carried out in ensuring an appropriate agreement is struck when securing a site, but if more people concentrated on augmenting the value they are bringing the market, it’s not naive to have faith the results will subsequently follow.” Sydney-based store 7camicie, in Paddington, sells Italian style shirts for men and women and is co-owned by franchisee John Tannous. Tannous says the store has a very ‘boutique centric model’ and says Paddington has always been a favourite for finding something different, fresh and exciting that is not easily available elsewhere.
“People love to shop outdoors and make a day of it and I think more and more consumers will eventually want to come out of shopping centres and enjoy that personalised buying experience again,” Tannous adds. “When online is taking a toll on retailers, the reason people want to buy from boutiques is to find something not widely available from big retailers and to receive good old fashioned customer service.”
Despite the pros of being outdoors, more of a cultural vibe and a ‘more personalised service’, Tannous says the lack of conveniences such and supermarkets and parking can deter consumers. He also stresses that the weather can put people off and there are no marketing campaigns to help promote boutique strips. However, the variable outgoings associated with shopping centre tenancy agreements, such as fees for centre management, centre landscaping, security and maintenance of car parks and other public facilities, can be far too costly for boutique owners. “Our landlord gives us the freedom to operate our store the way we see fit, right down to the fit-out and re-modelling of the premises,” Tannous explains. “But when dealing with big shopping centres there are concerns with costs that are unique to the shopping centres own model, such as redevelopment and ongoing fit-out costs. Rent may be split into a base rent model with turnover rent being added on top, based on variable sales performance - if you sell big, you also pay big.”
Tannous suggested that when trade is flat for bricks and mortar stores that landlords should temporarily reduce the rent until consumer confidence is up again.
Leanne Thayer, owner of two women’s swimwear shops, Shekki, based on boutique strips in Perth and Broome, says given the choice she would not swap her location for a spot in a shopping mall. She says as most of the major shopping centres require a copy of store finances, and in turn raise the rent accordingly, as well as demanding new fit-outs every three years, the cost is just too high for her. She said as centres can also make you move stores once you have set up, and can dictate trading hours, this too would deter her from making the transition.
“I would like the additional foot traffic that would come with a shopping centre location, but in lieu of the extremely high rents, I spend additional money on advertising to get the customers in the door. I can access the store after hours as it suits me as I am often working back unpacking stock, plus I can run after hours events in-store without requiring special permission for access. I think people are getting sick of the multinational companies where everything is mass produced and they are wanting that boutique experience.”
