Retail Outlet

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<img src="https://counter.theconversation.edu.au/content/78593/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Self-checkouts aren’t necessarily faster than other checkouts, don’t result in lower staff numbers, and there are indirect costs such as theft, reduced customer satisfaction and loyalty.
Worldwide, self-checkout terminals are projected to rise from 191,000 in 2013 to 325,000 by 2019. A survey of multiple countries found 90% of respondents had used self-checkouts, with Australia and Italy leading the way.
Employment in the Australian supermarket and grocery industry went down for the first time in 2015-16 and is projected to remain flat for a few years. But staff numbers are projected to rebound again, in part due to the need to curtail growing theft in self-checkouts.
Social trends pushing self-checkout
There are a couple of intertwining trends that explain the rise of self checkouts.
We now visit our supermarkets more frequently than ever before, two to three times per week in fact. This means our basket contains fewer items and being able to wander up to a self-checkout, with little to no wait time, has been an expedient way to shop. Most shoppers consider self-checkouts both fast and easy to use. Although this varies with age - 90% of shoppers aged 18-39 found self-service checkouts easy to use, only 50% of those over 60 years said the same.
Shoppers also gain value from taking control of the transaction – being able to ring up their own goods and pack them the way they want. This is because a sense of control over their own shopping can lead to greater customer satisfaction and intent to use and reuse self-serve technology.
The numbers behind self-checkouts
Wages represent around 9.5% of supermarket revenue in Australia, and reducing wages is one of the reasons proposed for the uptake of self-checkout.
But from a business perspective, moving from “staffed” checkouts to self-serve machines isn’t cheap. A typical setup costs around US$125,000. On top of that there are the costs of integrating the machines into the technology already in place - the software and other systems used to track inventory and sales, and the ongoing costs - to cover breakdowns and maintenance.
But the biggest direct cost to retailers of adopting self-service checkouts is theft. Retail crime in Australia costs the industry over A$4.5 billion each year.
There is reason to believe that rates of theft are higher on self-service machines than regular checkouts. A study of 1 million transactions in the United Kingdom found losses incurred through self-service technology payment systems totalled 3.97% of stock, compared to just 1.47% otherwise. Research shows that one of the drivers of this discrepancy is that everyday customers - those who would not normally steal by any other means - disproportionately steal at self checkouts.
Studies also show that having a human presence around - in this case employees in the self-checkout area, increases the perceived risk of being caught, which reduces “consumer deviance”. This is why retailers have been adding staff to monitor customers, absorbing the additional losses, or passing them on to customers in an “honesty tax”.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%2010.15.06%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%2010.15.06%20AM.png" alt=""> 
As you can see in this graph, preliminary work by researchers Kate Letheren and Paula Dootson suggests people are less likely to steal from a human employee than an inanimate object. Not only because they will get caught, but because they feel bad about it.
On the other hand, consumers have plenty of justifications to excuse self-checkout theft, which is leading to its normalisation.
To combat this, researcher Paula Dootson is trying to use design to combat deviance. One of the ways is through extreme-personalisation of service to reduce customer anonymity. Anonymity is an undesirable outcome of removing employees and replacing them with technology.
Other ideas are to include moral reminders prior to the opportunity to lie or steal (such as simply reminding people to be honest), and to humanise the machines by encoding human characteristics to trigger empathy.
While self-service technologies will continue to be adopted by businesses broadly, and particularly within the retail sector, it will be important for retailers to take a holistic approach to implementation and loss prevention.
Self-service technology reduces front line staffing costs and increases efficiency by re-distributing displaced staff into other service dominant areas of the business, but it creates unintended costs. These business costs can be direct, in the form of theft, but also indirect costs, like reduce customer satisfaction and loyalty. Something that some supermarkets are focusing on today.
<a href="https://theconversation.com/profiles/gary-mortimer-1322" target="_blank"></a>
<a href="https://theconversation.com/profiles/gary-mortimer-1322" target="_blank">Gary Mortimer</a> is associate professor, Queensland University of Technology 
<a href="https://theconversation.com/profiles/gary-mortimer-1322" target="_blank"></a>
<a href="https://theconversation.com/profiles/paula-dootson-129022" target="_blank">Paula Dootson </a>is research Fellow; PwC Chair in Digital Economy, Queensland University of Technology.
<a href="https://theconversation.com/profiles/gary-mortimer-1322" target="_blank"></a>
Both are authors for The Conversation.
<a href="https://theconversation.com/profiles/gary-mortimer-1322" target="_blank"> </a>
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The economics of self-service checkouts

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Restauranteur Paul Mathis and business partner George Incretolli will open a new Supercharger Wholefood outlet at Prahran in Melbourne's inner eastern suburbs in a deal brokered by Savills Australia.
The 102-square metre outlet is on the ground floor of the Peregrine's Luxton Apartments at 22 Chatham Street within the Prahran Retail Hub.
Supercharger will take the tenancy on an eight-year lease from Peregrine Projects.
Listing agents Michael Di Carlo, Jeremy Marmur and Jock Thomson did not reveal the rental, but rates in the neighbourhood have been circa $850 per square metre.
Di Carlo said the new store, Supercharger's second Melbourne store, followed the opening of its first, in CFS Retail Trust's Emporium Melbourne on Lonsdale Street in the CBD.
“This new lease follows what a very successful debut for Supercharger at Emporium.
"Paul Mathis' vegan menu is also likely to be very welcome in Prahran, which boasts an eclectic mix of dining experiences and a population well attuned to the vegetarian offering,” Di Carlo said.
The new store is due to open soon.
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Savills secures Paul Mathis to open second Supercharger outlet in Melbourne

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Leading adventure retailer Kathmandu is opening what is set to become Australasia’s first Green Star accredited retail store in Melbourne CBD on November 14.
In partnership with the Green Building Council of Australia (GBCA), the Kathmandu Store Design and Development team are currently developing an industry-first Green Star rating tool to guide the sustainable design of stores across Australia.
The store has been built to achieve a five Green Star score by using sustainable design techniques, building materials and featured technologies that reduce carbon emissions and landfill waste.
Tim Loftus, the Kathmandu sustainability spokesperson says that the Galleria store brings the company’s commitment to sustainability to life.
“Kathmandu is creating a benchmark for sustainable design and building in retail.
“The Galleria store speaks to our brand belief of respecting the environment. We’re incredibly proud to invite Melburnians to visit Galleria and experience the store.”
Romily Madew, GBCA's CEO echoed Tim's thoughts and suggested Kathmandu’s leadership sends a signal to the retail industry.
“Kathmandu is showing the rest of the retail industry that sustainability is a strategic business decision – one that reinforces brand equity and commitment to ethical business practices.
 “Consumers are increasingly rewarding sustainability with their wallets, and Kathmandu’s leadership will lead the way in reinventing the bricks-and-mortar retail experience in Australia.” 
Chair of the City of Melbourne’s Environment Portfolio, Counsellor Arron Wood, says the new store sets a precendence for sustainable practice in Melbourne’s retail sector.
“There is a clear business case for green buildings in terms of air quality and staff attraction and retention’, Cr Wood said.
“Staff that work in healthy and well-designed environments are more likely to be happy and productive employees.”
The Galleria store is the first to be built as part of Kathmandu’s sustainable building design programme, which uses innovative principles and materials to reduce a store’s overall environmental footprint. 
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Kathmandu set to open Australasia's first Green Star store in Melbourne

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Stockland has announced it will expand its Green Hills Shopping Centre at East Maitland in the Lower Hunter Valley of New South Wales.
It comes with an estimated $377 million cost.
Upon completion by mid-2018, the gross lettable area (GLA) will more than double to about 70,000 square metres. 
It has secured an agreement for lease with David Jones, which will open a 6,225 square metre single-level department store at the centre in 2018.
Other tenants include Big W, Target and the biggest Dan Murphy’s store in the trade area.
A concept JB Hi-Fi Home store is also planned and another by South African retail group Pepkor’s Harris Scarfe, which will have homeware and clothing.
Stockland Green Hills is already home to Coles and one of the best-performing, full-line Woolworths supermarkets in Australia.
An additional 141 speciality stores will take the total number to more than 225 stores. The centre’s existing mini-majors will be retained and improved, including Best&amp;Less, Reject Shop, Blooms the Chemist and Hot Dollar.
Preliminary site establishment works will start immediately, but the major construction works will be deferred until the new year so as not to disrupt the pre-Christmas retail trading season.
Brookfield Multiplex is the lead contractor on the project.
The new precinct will have a garden courtyard, outdoor pavilion dining area fronting Mitchell Drive and the car parking will be nearly doubled to 3,100 spaces. 
“We’ve identified Stockland Green Hills as a highly accretive redevelopment opportunity. It’s already one of the most productive centres in Australia and this expansion will enable us to capture a portion of the estimated $867 million of escape expenditure that leaves the primary trade area every year,” said Mark Steinert, managing director and CEO of Stockland.
The recamp is expected to deliver an incremental internal rate of return (IRR) of more than 12 % in the 10 years post-completion and an incremental, stabilised funds from operations (FFO) yield of just more than 7 %.
The project is estimated to create more than 1,350 direct jobs during construction and more than 2,150 indirect jobs. On completion, the centre will create more than 1,250 jobs in retail, customer service and hospitality and an estimated 1,200 indirect jobs for local suppliers and service providers within the regional economy.
Stockland Green Hills's current specialty retail sales productivity is $14,275 per square metre.
In November 2014, Shopping Centre News named Stockland Green Hills as the top performing centre for specialty sales in its Little Guns survey of shopping centres between 20,000 and 50,000 square metres.
As part of the redevelopment, Stockland also plans to invest around $1.6 million to increase the centre’s solar power generation capabilities with the installation of a 700kW photo-voltaic system and is aiming for a minimum 4 Star Green Star Retail Design and As Built ratings for the project.
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David Jones heads to Maitland as Stockland embark on $377 million Green Hills redevelopment

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A warehouse in Brisbane's Cooper Plains has been auctioned for a little more than $1 million through Raine &amp; Horne.
The <a href="https://www.realcommercial.com.au/property-industrial+warehouse-qld-coopers+plains-501643281" target="_blank">806 Beaudesert Road</a> property sold under the hammer for $1,012,000 to a partnership of two private investors, fetching slightly above the $900,000 reserve price.
The net yield works out at 6.6%.
The property has been home to a Goodyear franchise since 2004, with the firm recently committing to a new five-year lease.
The lease is worth $67,000 a year.
“This property clearly ticked many boxes given the credibility of the tenant and the length of the lease, with two-street access,” said Raine &amp; Horne's Joseph Grasso, who helped broker the deal.
“The only negative was some minor flood damage, caused when the Brisbane river flooded in 2011.”
The auction drew 22 registered bidders, with four offers prior to the auction.
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Warehouse in Brisbane's Cooper Plains fetched $1 million plus at R&H auction

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A KFC outlet at Menai Central retail complex in Sydney’s southern suburbs has been sold by the Sentinel Property Group for $3.05 million to a private investor through Burgess Rawson.
Sentinel, which acquired the Menai Central in 2013, sub-divided and now sold off the drive-through KFC takeaway food outlet. 
The 684 square metre property is tenanted by KFC on a long-term lease until December 2022
It is set on 2,003 square metres on the corner of Old Illawarra and Menai Roads in the Sutherland Shire.
The Menai Centre has 10,796 square metres of retail space with 275 car parks, underpinned by long leases to major national retailers including Dan Murphy’s, IGA, Supercheap Auto and Bank of Queensland.
Sentinel’s unlisted property funds deliver an average net distribution across its entire portfolio of 11.5% per annum. 
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Sentinel sells KFC Menai outlet for $3 million through Burgess Rawson

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Melbourne’s commercial property market continues to its strong run, with a tranche of sales in the lead-up to the end of the year.
Highlighting the trend, a ground floor retail shop in the heart of Brighton’s restaurant and retail precinct recently sold for $1.9 million.
Located at 370 Bay Street, the 233 square metre ground floor retail shop (above) is securely leased to food retailer Burger Edge. 
It provides an annual income of about $50,000 per annum with short-term upside. 
The selling agent was CBRE’s Rorey James.
“This result is yet another example of the strong market confidence towards well located strip retail properties, which is being further enhanced by the low interest rate environment, improved consumer sentiment and upturn in business confidence,” James said.  
In further evidence of the uptick in sales activity, an owner-occupier recently secured a retail presence in North Balwyn for $700,000.  
Shop 3, 74 Doncaster Road is a 62 square metre retail property in the heart of Balwyn North Shopping Village.  
CBRE’s  Sandro Peluso brokered the deal.
“The building rate was equivalent to more than $11,000 per sqm, indicating the strength of demand shown by these owner occupiers looking to secure retail space in Melbourne’s eastern suburbs,” Peluso said.  
The two transactions follow a recent  sale of a Richmond development site for $16.7 million, on a tight yield of 1.5%.  
Situated at 79-89 Swan Street, the 1,540 square metre site comprises a 2,057 square metre two-storey building that has 10 shops and eight office suites with shared amenities.  
The property was sold through auction after an initial Expression of Interest sale process.
Seven bidders drove the price more than $4.2 million above reserve to the final bid of $16.7 million – a rate of just under $11,000 per square.  
“In a trend that is continuing to gain more traction in 2015, the property was sold to a local buyer, who managed to outbid several activity offshore and local groups,” CBRE director Mark Wizel said. 
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Melbourne retail property market continues bull run: CBRE

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The SPAR supermarket at Burpengary - the midway point 35 km between Brisbane and the Sunshine Coast - has been listed for April 6 Burgess Rawson auction.
<a href="https://www.burgessrawson.com.au/buying/QLD/RedcliffeorBribieorCaboolture/Burpengary/Retail/4P0203#.VtXsDIx97u0" target="_blank">Its net rent is $178,015 pa + GST</a> (allowing 2% CPI June 2016) in Brisbane's northern growth corridor, agent Glenn Conridge said.
It comes with 15 year lease plus options through to 2039 to SPAR, the global retailer with 12,000 stores in 40 countries.
It is a modern 867sqm store with corner retail exposure amid Liquorland, pharmacy, medical Centre, childcare, dentist, newsagent, bakery plus many eateries.
The 2.04 ha site comes with 260 on site car spaces.
A Tasmanian supermarket at 212-230 Mount Street, Burnie, is currently being marketed by Burgess Rawson via an Eexpressions of interest campaign closing on Thursday 3 March.
The agents expect a sale price in excess of $17.5 million, with a new 20-year lease plus options through to 2051.
The net income is currently at $1,236,483, boosted by depreciation benefits.
Woolworths is responsible for the usual outgoings, except for building insurance.
While the retail development goes back some 50 years, it has recently been extended and refurbished, Graeme Watson, Burgess Rawson director, said.
“Not only is the supermarket said to be the highest performing in the state, it is well up there on a national level in terms of performance also."
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Burgess Rawson list Burnie Woolworths and SPAR Burpengary 

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Vicinity Centres (Vicinity) and Perth Airport Pty Ltd (PAPL) are to developer Western Australia's first Outlet Centre at Perth Airport in a joint venture.
The $145 million centre will be branded DFO, Vicinity's brand for its Outlet Centre portfolio, which will increase to five across the country.
The portfolio currently includes DFO Homebush in New South Wales and DFO South Wharf, DFO Essendon and DFO Moorabbin in Victoria.
The DFO's have generated an internal rate of return of 14.5 percent since acquisition in 2010.
The proposed Outlet Centre development will have over 110 stores across 24,000 sqm and provide parking for over 1,600 cars.
Construction is expected to commence in mid-2017, with completion forecast for 2018.
CEO and managing director of Vicinity Angus McNaughton said they identified Perth as a prime location due to its low representation of Outlet Centre space.
"This joint venture provides a unique and exciting opportunity for Vicinity to further solidify its market leading position in Outlet Centres," he said.
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Vicinity announce plans to develop Outlet Centre at Perth Airport

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The loss-making Australian Geographic retail chain of 67 stores could disappear by March 2017.
The Myer Family Investments vehicle, owned by one of Australia's richest families, has owned the chain since 2007.
The Australian Financial Review said commercial property sources said individual store leases at some of the outlets were being offered to rival retailers as the Myer family tries to salvage some value from a retail business that had been generating annual sales of close to $50 million.
It is understood the retail chain has been quietly offered to potential buyers but that avenue has been largely unsuccessful, leading to plans for a wind-down of the business.
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<div>It follows the Australian Broadcasting Commission deciding 12 months ago that the national broadcaster would shut its 50 ABC Retail store network.</div>
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<div>Records lodged with the Australian Securities and Investments Commission show that financial accounts lodged by Australian Geographic Retail for the 2014-15 financial year indicate the business reported a loss of $3.34 million, a worse result than the previous year when it reported a loss of $2.54 million. </div>
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Australian Geographic's total revenue was $49.1 million in 2014-15, up from $44 million in the previous year.
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