By Katherine Maitland
Bustling boutique shops on Adelaide’s high streets are shutting their doors to the rise in rental prices, the onslaught of online shopping and the current stiff economic climate.
The high streets of chic Adelaide suburbs, such as King William Road, Unley Road, Jetty Road, and Norwood Parade were until recently, lined with exclusive retail outlets and trendy brand labels, which have now been replaced with vacant shop front windows and major shopping stores.
What has happened to our high streets, and how do we bring back the creative, independent stores that make our state’s shopping experience unique?
Rental prices have certainly played a part in the decline of retail shops on the main streets in these suburbs. Retail shops such as Wild Child Stylelab, which has outlets on King William Road, Norwood Parade and O’Connell Street, have had to compete with high rents and challenging landlords for years.
“We have had our shop on King William Road for 38 years,” owner for Wild Child Stylelab Carolyn Foord says. “While we have a steady turn-over, we are not meeting the same profit margins as we were when we started, due to the high cost of rent, rising costs of superannuation and the lack of support from governments for smaller, individual business owners.”
“It’s a real shame to see businesses that have become part of the community on high streets, shutting their doors as the cost of rent increases year by year,” she explains.
Since Wild Child Stylelab has been in Norwood, rental prices have almost doubled per square metre in just five years.
“The landlords are killing the diversity of our main shopping streets and there will be no reason for interstate customers to visit the unique outlets in Adelaide. Instead, it will be mass produced labels and large super chains, which will be no different to any other state or shopping centre. There should be some assistance for small businesses in high end postcodes, and regulation for rent,” she says.
Andrew Taplin, Managing Director of Taplin Group says the commercial rental price has increased in Adelaide in the past 10 years, in line with the CPI (consumer price index).
“The rental price has been fairly consistent in the metro and suburban areas around Adelaide in recent times,” he says “Rental prices are determined by the CPI which has consistently been around 2.1% for Adelaide in the 2012/2013 period.”
“Where rent has gone up, it is usually due to the demands of the landlord and cost of living. Almost 80% of all landlords work on the consumer price index to calculate the rent prices,” he explains.
As rental prices in high streets are calculated on the cost of living and the CPI, in order for smaller retail businesses to stay afloat and be profitable, they need a high percentage of sales.
“Often people will say the price of rent has gone up, but what we’re finding is the product turnover has dropped due to competition on the internet, the big majors such as BIG W, Target and the extended trading hours,” Andrew says. “The formula is out of proportion.”
Andrew says Adelaide rental prices are significantly cheaper per square metre than the Eastern states.
“Adelaide rental prices are very much related to the position of the business. For instance, the rental prices on Jetty Road are cheaper than Rundle Mall, as Rundle Mall has more foot traffic. However, when you compare the price of rent in Rundle Mall per metre square to Sydney or Melbourne suburbs, it is considerably cheaper.
“Most commercial landlords are realistic, and will help try to come to an arrangement with the business owners to ensure both parties are happy,” he says.
While rent is a challenge for smaller Adelaide businesses, Entrepreneur and Adelaide City Councillor Houssam Abiad says retailers need to think outside the square to ensure a prosperous business future.
“As a small business owner myself, I understand the challenges of the retail industry in South Australia, but there has to be a change in the culture of retail to ensure longevity and long term prosperity,” he says.
“There’s no question that major department stores, are attracting business away from main streets to the shopping centres with free parking offers and convenience, but we can’t let that stop smaller businesses from offering a compelling product and experience. In the Adelaide market, we need to be entrepreneurs by default, not by choice.
“It’s all about the retail mix, providing a memorable shopping experience for the consumer, but also thinking, how can we provide more than just a good product?” he says.
According to Houssam, retailers on main streets need to embrace the internet, and offer specials, promotions, and drawcards to entice shoppers to the precincts.
“The only way to beat the digital age is to join it. Retailers must have an online presence, such as social media, an iphone application, or a digital strategy, as well as a shop front, to ensure they can compete today and sustain growth in the future.”
“The redevelopment of Rundle Mall is more than laying down new pavements; Rundle Mall will be joining the digital age with some serious retail intelligence smarts, helping us deliver, not just a product to our patrons, but also an amazing experience,” he says.
Houssam says it’s also about setting a new culture on the high streets, to encourage customers to interact with the businesses along the street.“It’s really up to the business owners to change their thinking. The beauty of the high streets is that business owners can work together on many cross marketing opportunities where they can bundle different products that will attract customers to the street….“As rent increases and online competitors increase, shop owners need to provide a unique experience, alongside digital marketing, and customer loyalty will follow,” he says.
Seaside-based retailer Kaviar Boutique in Glenelg has defied the current retail pressures by offering a personalised business with online options.
“Kaviar Boutique is a sole operated business, offering a range of casual and formal clothes, shoes and accessories for women in the 18-40 age group,” Kym Linke owner and buyer for Kaviar Boutique says “we have been operating for eight years, representing 20 different Australian based labels.”
While the price of rent in Glenelg has risen in the past five years, unlike other retailers, Kaviar Boutique has stayed clear of the high street, and thus, the high rents.“Our store is not on the main street and the reason is because the rents are too high for the climate we are in. In talking to other traders that have closed their doors, rent is a big factor,” she says.
“Our rent has risen every year in line with the consumer price index (CPI), but in saying that, I feel rents are too high to start with. There is no way I could trade directly on the main street as I would simply be working for the landlord. The rents on Jetty Road are hugely inflated and it’s easy to see why there are so many vacancies and a high turnover of business. Lots of businesses come and go within 12 to 24 months,” she says.
Kym says the internet has played an important role in the decline of retail sales, and that keeping up with technology trends has helped her business stay afloat. “We have found in the past few years, the marketplace has changed with a rise towards online shopping. The internet is a big competitor, but it’s a combination of factors as to why businesses like ours have closed. We participate in the online trade, with our own online shop, instagram and facebook sites, which helps the retail store,” she says.
Kym agrees that nothing compares to the experience you get from entering a store, seeing and touching a product and encountering a personalised service. “One thing stores like ours can offer that the internet cannot, is the personalised service. We pride ourselves on our service and we are very aware it’s what keeps our loyal repeat customers returning to our store regularly. It also gives us an edge because we chat to our customers about their needs and wants and directly tailor our purchasing to reflect that. We work hard on sourcing new and interesting stock for our customers. We are also able to see who’s shopping in store and exactly what they’re purchasing,” she explains.
So, what will the high street look like in ten years’ time? Will there still be individual stores exclusively selling diverse and unique brands? There’s no question the internet has influenced the retail market, as has the cost of rent. Only time will tell if the business owner can add value to the customer and think outside the square, or fall victim to the rising costs of owning a retail business in Adelaide.