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Is Opening a Business in a Shopping Centre an Advantage?

While shopping strips still exist, especially in inner-city suburbs like Melbourne’s Fitzroy and Brisbane’s West End, it’s fair to say that most people living in the suburbs do the majority of their shopping in large centres. According to the Small Business Mentoring Service, a third of shopping in Victoria for example is done in large shopping centres. In fact, there are newer suburbs on the fringes of many of our cities that offer no other shopping experience to locals than a centre that combines department stores, boutiques, hairdressers and eateries all under the one enormous roof.

But what exactly are the advantages to a business opening in these centres? How easy is it to get into them and are there any disadvantages? Let’s examine some of the factors involved in making a decision about whether a mega-centre is the right location for your business.

What are shopping centres looking for in a tenant?

2013 figures from the Shopping Centre Council of Australia (SCCA) show there were 1,367 shopping centres in Australia with 48,400 speciality shops providing 94 square metres of shopping centre space per 100 people. The biggest shopping in centre in Australia is Chadstone in Melbourne, with an annual turnover of $1.415 billion.

Because they need to attract large numbers of shoppers, when centres look for a tenant, they are looking for one that already has its own customers, a business that is a proven brand. This is why The Body Shop, Boost Juice and Footlocker can be found in just about any centre in Australia. If you can locate your business in a centre and share the stage with these retail giants, their customers will soon become your customers.

Look for that hole in the centre

But what happens if you are not yet a ‘brand’? If you have a track record of financial success, you stand more of a chance. One approach is to open away from the centre, make a success of the business for a couple of years and then apply when you have a solid financial track record.

Another method could be called the ‘donut’ approach – look for a hole in the shopping centre that would be filled by your business. If you are a children’s clothing retailer, find a centre without one and point out that your business would add value to the centre’s appeal. It’s like a pack of cards – centres are always looking to hold a full deck. They need the right tenancy mix to survive; the perfect shopping centre would be a reflection of society, catering to every Australian’s needs.

Buying a shop vs leasing from the centre

There is some debate over whether it’s better to own the shop that you operate or lease it. Shopping centres would argue that leasing is the better option since it involves less capital outlay at the start and if the location proves unprofitable it’s easier to move on to a new place. The fear is that the lease may not be renewed by the centre, thus forcing the business to move on.

The counter-argument is that the owners of the shopping centre may be forced to keep on a tenant that is performing badly and is not attracting customers to the centre. It’s also pointed out by the SCCA that most lease terminations are instigated by the tenant, not the centre owners.

Business on the move with cloud-based tech

If your goal is to lease space in a shopping centre, you need to be flexible enough to move easily. The fewer machines and cables you need to unhook and move to the new place, the easier it will be.

You probably use a fax machine for orders, contracts and invoices, but did you know you can fax online using a cloud-based system that links to your email client? You attach the documents to an email, address it to a fax number and send it just like a regular fax. If you want to know how to email large files without being caught out by your email’s attachment limit (10MB on some servers), you can use the same system to send files up to one gigabyte.

By becoming a tenant in a shopping centre you can take advantage of a massive customer base. Look for the hole in the shopping centre’s line-up and you can piggy-back along the retail trail with some of Australia’s biggest brands.

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