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What makes a great retail precinct?

An interesting article courtesy of The Australian, October 03, 2014

There was a time, not all that long ago, when Oxford Street in Sydney and Chapel Street in Melbourne were synonymous with fashion.

These retail strips were once the only destinations for designer and emerging apparel. On any given Saturday, you would be barely able to move for the crowds. Cars would crawl along Chapel Street as immaculately dressed shoppers ventured into boutique after boutique to browse and simply be seen. At Paddington Markets on Oxford Street, Australian designers such as Collette Dinnigan, the Zimmermann sisters, Sass & Bide and Dinosaur Designs were found selling their creations long before they became household names.

Today it could hardly be more different. Oxford Street is blighted by dozens of vacant, ageing shops baring ugly, depressing for lease signs, each seemingly bigger than the last, all desperate for attention. Buses scream past the sparse foot traffic; anecdotally, some part of the road, which starts at the city and ends at Bondi Junction, have a vacancy rate of up to 50 per cent. Chapel Street also has its share of empty shops; at least 20 between the once-busiest part of Toorak Road and Commercial Road in South Yarra show no signs of life. Bonds, Topshop and Target’s first street-front store have moved in as luxury high-end fashion boutiques leave. There is only one independent fashion designer left in the precinct after the other moved out last year and was replaced by an accounting firm.

So what has happened to Australia’s iconic fashion streets? Where did everyone go? Why hasn’t anyone done anything about the exodus until now? According to business owners, councils and retail experts, there has been a “perfect storm” of circumstances that has led to the decline of Chapel and Oxford streets over the past decade. Changes in the way we shop, problems with parking and traffic, greedy landlords, the global financial crisis as well as serious competition in the forms of Westfield shopping centres and the revitalisation of Melbourne and Sydney inner-city retail precincts have all left their marks. There has also been a reluctance to face economic reality by many involved on the strips and a lack of any coherent plan to adapt to the changing market. So how do we save them from oblivion? There are just as many proposed solutions as problems but a starting point may be as simple as really good food.

“Oxford and Chapel streets represent the high point of retail strips – when walking up and down the streets was the go – and that was in about the year 2000,’’ says Malcolm Gunning, president of the Real Estate Institute of NSW, who heads a specialist commercial retail business in Sydney. “But the profile of retail has changed, and not just with the move to online shopping. What customers want has changed. They want a shopping experience. Do you want to walk up and down a strip or go somewhere where you can spend half a day, go shopping, be entertained and get fed? That’s why the two streets haven’t been able to compete with that experience.”

This was perfectly demonstrated on a recent weekday lunchtime when two fashionable 20-something women were wandering up and down Oxford Street in Paddington, looking lost and complaining about where to find a good coffee. “Shall we go down there? I think I see a cafe down there,” one says as she peers hopefully down a side street. The women reluctantly venture down the street but to no avail; there are just more and more boutiques, again empty of customers, but nowhere to stop, chat and refuel.

“It has to be more than fashion, that is the answer,” says retail expert Gilbert Rochecouste, who has travelled the world giving advice on how to revitalise more than 200 failing high street shopping strips. He says what is happening to Chapel and Oxford streets is part of a global phenomenon. In Britain, a quarter of small traders on high streets are closing down. In Paris, the Marais district, once famous for its fashion, is being turned into an upmarket epicurean village. An organic bakery, fishmongers and oyster bars are going into former boutiques that have been vacant for too long. Even Australia’s big shopping centre retailers have realised that food is overtaking fashion as the favoured destination lifestyle offering.

“Food is becoming more critical,” says Rochecouste. “It is not about fashion any more; it’s about lifestyle … It’s the whole slow food, slow cities, slow concepts; it’s all built around handmade, hand curated. Food is central to the reactivation of these streets.”

Rochecouste coined the term “fashion capital” when he ran Chadstone Shopping Centre in Victoria before switching sides to help high streets (he believes in karma, given he probably killed off a few during his tenure at Chadstone). He was also responsible for reinventing Melbourne’s Flinders Lane and Degraves Street as fashion and food destinations. It therefore comes as no surprise that Woollahra Council hired his firm, Village Well, to come up with a plan to save Oxford Street.

He believes a key problem is Oxford and Chapel streets are too like Westfields; they have lost their distinct identities. Gunning agrees, saying there is a “sameness” about the streets. “When the major chains moved in and gained a strong presence, that was the start of the decline [of Oxford Street], in my opinion,” Gunning says.

When Robby Ingham opened his designer fashion boutique in Oxford Street in the early 1980s, rent was “dirt cheap”. There was a buzz about the area as it had a concentration of students, start-up businesses and artists. Still there 30 years later, he remembers when the major retailers came to town. “When I came, the Paddington markets were the biggest pull. We would do 70 per cent of business on a Saturday. It was pumping,” he says. “Then you would see men in suits on Saturday, just looking at all the crowds. It was the retail chains and they offered extraordinary money to buy out leases to get shops on the street.”

The huge popularity of the street meant landlords soon put rents up to $200,000 a year when 15 years earlier they were $50,000. “Then we started the Westfield cycle when Bondi Junction opened in 2004,” Ingham says. “They approached everyone in the area to come and open another shop at the centre. They did a great job, it was a great centre and a lot of people went up there. And as a result, Oxford Street lost a lot of foot traffic.” Then came online shopping and another Westfield in Sydney’s CBD in 2011 and sales dropped significantly. Major retailers began to move out as they were no longer making money. Unfortunately, the boutique fashion shops that gave Oxford Street cachet could not afford to move back, leading to huge vacancies – reportedly up to 50 per cent in some pockets – along the 8km strip.

“Landlords didn’t want to drop their rents. Given the history of the street, they thought someone would come along soon, but many are still waiting,” Ingham says. “Now they have dropped the rent but it doesn’t matter. You could charge $1 a week and still no one would come because the shops are falling apart because the landlords haven’t spent anything on the properties for the past 25 years. It is that [landlord] shallow-mindedness that is creating the issues.”

It’s been a similar story over the past 15 years for Chapel Street, which stretches for 2.2km southeast from the Yarra River, through South Yarra, Prahran and Windsor. Jim Pothitos, who owns the famed Greek Deli & Taverna, is president of the Chapel Street Precinct Association, which represents businesses in the area. He moved into the street in 1985, attracted by the cheap rent. “It had a bit of a bohemian feel to it,” he says. “The boutique designers and the new starting designers were experimenting with clothing … we also had a good bunch of enthusiastic traders who wanted to improve the street and get people to know it nationally and internationally.”

That recognition came when the Como Hotel was built in 1989 and became the place to stay for visiting celebrities. The Jam Factory complex opened soon afterwards and the street became a “mecca and destination point”, says Pothitos. Rents went up accordingly. “In the past, we used to say greed is a good thing, but too much greed is a bad thing and I think that is what has happened to the rents in Chapel Street … they have crept up too high. They are unsustainable and people are finding it impossible to meet their commitments … I know for a fact that there are probably 50 shops that are vacant and that is just between Commercial Road and the river — it’s not a good look.”

Landlords on Chapel and Oxford streets are not a popular bunch. Local councils, business owners, traders associations and experts all blame them for the streets’ failure to adapt to the changing retail market. Rochecouste says it is very difficult for high streets, with so many landlords with differing points of view, to compete with the organised, well-funded, powerful management of companies such as Westfield. There are about 220 landlords on Oxford Street and more than 500 landlords in the Chapel Street precinct. Some are stubborn and refuse to reduce the rent while others have not upgraded their shopfronts for years. Rents are finally dropping (some by 30 to 50 per cent) but it may be too late. “(A high street) ultimately needs one body that will bring the street together,” Rochecouste says. “It needs a strong brand presence. Leadership, leadership, leadership – it is key. Great high streets understand what they are and what they are not. They are well managed … the ones that are successful have very skilled managers and business plans and marketing plans.”

Chapel Street is far ahead of its Sydney sister in having a body that unites traders and champions its future. The Chapel Street Precinct Association has had a business development manager, Oskar Cebergs, for nine years and is able to collect levies off traders. Oxford Street, however, cannot collect levies because of government and council regulations and has had a dedicated person to advocate for the area for only two years. Oxford Street retailers recently met members of the Chapel Street Precinct Association to seek advice on how to meet the challenges facing the strip.

“Oxford Street is too important a high street for people to ignore, but I don’t think people have known what to do or how to do it,’’ says Sally Tremlett, co-ordinator at the Paddington Business Partnership. “You cannot say as shop owners, ‘Well, Westfield has killed me and online has killed me; the public realm has killed me.’ We have to start taking some responsibility for ourselves. I don’t think moaning is going to get us anywhere. We need to start trying to get a game plan and start ticking those things off and hopefully the end result will speak for itself.”

Oxford Street faces more challenges than Chapel Street. It has the bureaucratic nightmare of having two councils (Sydney and Woollahra) responsible for the strip, while the state government owns the road. “The elephant in the room is the fact that it is like a freeway along Oxford Street,” Tremlett says. “Both councils and we as the partnership need to lobby as one voice to get rid of the clearway … and reduce the speed limit to 40km an hour. That is one massive political beast in itself, but that is the one thing that will change the streetscape dramatically.”

Rochecouste’s report for Oxford Street and a similar one completed last year for Chapel Street recommend spending money on beautifying the streets (which retailers say have been neglected for far too long), upgrading basic amenities such as toilets and lighting, fixing footpaths and making the strips welcoming again. Reactivating Paddington Markets is also a key for Oxford Street, as is “calming” the street ambience by reducing traffic clearways. In Chapel Street, proposals include creating “pocket parks”, improving basic infrastructure and creating four distinct village-type neighbourhoods on the strip. “Chapel Street is long overdue for an upgrade,” concludes consulting firm Hansen Partnership in its report. The responsible council, Stonnington, is spending $2 million to build the first of four suggested public spaces but traders want more.

The introduction of what is known as the “baker’s dozen” – a good-quality bakery, cafe, butcher, florist as well as fruit and vegetable shops – is integral to increasing foot traffic during the week. Currently there are no such basic food and service amenities on Oxford Street (locals have to go elsewhere) despite the 20,000 people living within five minutes’ walk of the strip. On Chapel Street, the growth of apartment buildings means the precinct needs to service local residents as opposed to just being a fashion strip.

Rochecouste believes good fresh food and dining experiences are crucial to getting locals back shopping on these streets. And once the locals come, the rest will follow. “The future is realism and localism,” he says. Shoppers, especially Gen Y or millennials, will travel across town for artisan sourdough or a cold-drip coffee or a farmers market. Once people eat, they will linger, wander past a fashion boutique, browse in a local bookshop. This has happened on Crown Street, Surry Hills, and on Brunswick Street, Fitzroy, with both considered thriving high streets.

“I don’t think we will ever be a pure fashion strip again,” concedes Tremlett of Oxford Street. “I believe we have a lot more to add to this streetscape than fashion if we are going to succeed. I don’t believe we can reinvent the past; we need to rebrand and recreate the future if we are going to succeed as a high street.” Cebergs wants Chapel Street to evolve into a lifestyle destination, whether for homewares, fashion or food.

Ingham, who has watched the rise and fall of Oxford Street over three decades, believes the future is in attracting people with passion back to the strip again – the young fashion designer to the vintage jeweller to the small hole-in-the-wall patisserie. “You have to want to come here (as a shopper) because there is nothing like it anywhere else,” he says. “You need passion. Shopping centres require business models. High streets require passion.”

Article Courtesy of: The Australian, © Copyright 2014, The Australian

Chapel Street illustration by Megan Hess © Source: Supplied