Future of online retail lies in bricks and mortar stores
That’s the belief of European shopping centre giant Unibail-Rodamco’s chief executive Christophe Cuvillier, who plans to buy Frank Lowy’s Westfield Corporation for $US24.7 billion.
Cuvillier says there will always be a place for shopping centres despite the threat of online shopping, which has contributed to fewer shoppers at malls, particularly in the US.
He says it is difficult for pure online retailers to be profitable because their margins are “crushed” by the need to offer free or cheap delivery.
“The only way to make money on the internet is to either to be called Amazon and a couple of others which are so big, or a couple of niche players,” Mr Cuvillier told reporters on Thursday.
“The future of online retail is from brick and mortar retailers.”
He said retailers with brands and a combination of competitive websites and physical stores can control their own margins and products.
And that’s where Unibail-Rodamco’s interest in Westfeild comes in, as the Australian company owns the flagship shopping centres that offer the prime real estate to attract customers.
“Even the pure online players are opening outlets in destination shopping centres because they need the contact and to broaden the brand experience,” Cuvillier said.
“This is where both Westfield and Unibail are concentrating on.
“World class shopping destinations and shopping centres are the worldwide format for this because you have very little city centres available for brands to open large flagship stores.”
The Unibail-Rodamco offer is one of the largest corporate takeovers in Australia’s history, and will give the European company Westfield’s 35 US and UK shopping centres.
Westfield was established in Sydney’s west and listed in 1960, before growing rapidly under the control of Mr Lowy, who was chief executive for 50 years before handing over to his sons Steven and Peter in 2011.
Lowy will step down as chairman, but will remain an active investor, chairing an advisory board for Unibail-Rodamco that will offer strategic advice.
His sons, Peter and Steven, will retire as co-chief executives of Westfield, and only Peter will hold a spot on the board of its news owners.