Pre-seen exam information
Semester 1 2014
• The impact of online shopping on
shopping centres in Australia
• Management and leadership: Mary
• Australian Beverages Ltd
Global Strategy and Leadership
© CPA Australia Ltd 2014
Page 2 of 25
Global Strategy and Leadership
Case Scenario 1: The impact of online shopping on shopping centres in Australia
The Australian shopping centre industry comprises companies that build, develop, and manage shopping centres in Australia. Shopping centres are purpose-built complexes containing retail shops, restaurants and other eateries, services such as banks, and leisure facilities such as cinemas and bowling alleys. The shopping centre owners derive income from charging tenants for rent on the space they occupy within the shopping centre, as well as the recovery of common expenses (i.e. electricity, water, repairs, and maintenance, and marketing) for operating the shopping centre. Rents are charged to tenants based on supply and demand. The higher the consumer traffic in a shopping centre, the higher the rents shopping centre owners can charge tenants, as demands for rental spaces will be high. Changes in consumer behaviour can potentially have a significant effect on demand for spaces in shopping centres. Below is an extract from an article that appeared in The Australian Financial Review in February 2011, entitled ‘Satisfaction guaranteed’. This article discusses the impact of the increased use of technology in the shopping behaviour of consumers in Australia, and the implications for shopping centre owners in relation to their growth and profitability as a result of the growing trend of online shopping. Three years after the publication of this article, online shopping is still a major concern for traditional Australian retailers, who have seen their sales1 decline by 0.3% per annum over the past five years, with sales forecast to improve slightly to a growth of 0.3% per annum over the next five years, to 2019. These retailers still struggle to offer a compelling business model that competes successfully against the greater ranges and lower prices of domestic and overseas online retailers. Online sales by Australian and international retailers have enjoyed a double-digit growth over the last five years, and industry observers expect strong growth to continue. If Australian trends follow those of the US, the use of mobile devices for the purpose of online shopping is likely to make up a significant portion of this online sales growth.
Excerpt from ‘Satisfaction guaranteed’:
For years in Australia techno-pundits talked about the impact of the internet on shopping— without any discernible change to the retailing landscape. Now, within months, a perfect storm has taken place—if you are a large Australian retailer, that is. The global financial crisis forced US businesses to look for sources of revenue outside their normal channels. Sophisticated US internet retailers started to look elsewhere for growth and they found, with a few tweaks to their websites and some negotiations with logistics suppliers, they had become global internet retailers. Australian consumers, always early adopters of technology and often disappointed when US websites advised they could not ship to Australia, rejoiced. The accessibility of the internet means consumers are no longer dependent on traditional methods of shopping. They are not looking at blatant advertisements in newspapers nor are they prepared to buy something (which is expensive) without first seeing whether they are getting a good deal. These early adopters don’t really care where the product is coming from. They make impulse buys, but not by visiting a store. They find their product while engaged in a range of activities. What matters to them is ease of purchasing, range and price. Their allegiance (if there is such a thing in this new world of internet shopping) is to the product or brand, and...
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