Local governments and their communities around the world have been concerned for decades about the decay of their High Streets (called ‘strips’ in Australia, ‘Main Streets’ in America, and various other names in Asia), which is closely linked to the growth of shopping centres. Shopping centre operators have always had a strong preference for chain-store tenants that have a regional, national or international presence, since they tend to have proven retail track records and stronger credi
redit profiles than their independent peers. So as shopping centres became more popular and consumer business shifted there, independent retail became the fall guy.
In Australia, for example, Australian Bureau of Statistics data indicates that about 43 per cent of retail sales were made by independents as recently as the 1990s, but that number has come down to only 29 per cent being done by them now. The household goods sector has gone from roughly 61 per cent of sales by independents to 21 per cent. Apparel and accessories from 45 per cent to 21 per cent. These are colossal declines.
As professional mall development steadily penetrates more of developing Asia, should local leaders and independent retail businesses likewise be concerned about the ‘destruction’ of independent retail and the decline of ‘the street’, which is so deeply woven into the social, economic and cultural fabric of the region?
One retail segment that seems to be relatively immune to the shift is food service (cafes, restaurants, takeaway). Using the same Australian dataset, 65 per cent of food service sales were made by independent operators in the 1990s and they are still accounting for approximately 62 per cent today.
Operating cafes, restaurants and street food stalls is a way of life in developing Asia, supporting and giving meaning to life for millions of operators, and delighting hundreds of millions of customers at low prices.
Mall operators have attempted to incorporate some of this culinary authenticity into their own projects but outside of the cores of the big cities, the overwhelming majority of food operators are outside shopping centres, open to the street and unairconditioned.
The best food and beverage is still owned by independents
Korn is a Thai woman in her forties who owns one such street-front restaurant on Pratumnak Hill, a residential enclave high above the Thai resort city of Pattaya.
The restaurant has such a strong following that the owners open and close pretty much when they feel like it. They don’t market themselves, it’s all word-of-mouth and passing traffic. Almost without doubt, they operate the business in a way that flouts every single rule that they’d be required to sign on to in a modern shopping centre lease. Is this, somehow, the secret of their success? It certainly is part of the answer.
The restaurant is very easy to miss although its street location is excellent. There isn’t a lot of clear signage to get your attention. The menus are old and greasy from being handled too much, and some of the tables are the kind of weather-beaten picnic tables with benches that you find in a park. Each of the tables is attended by a standing fan, essential since the restaurant is open to the street.
The floor is bare concrete and the roof overhead, which has just recently been replaced, is steel. There is just room enough for seven or eight tables, a gigantic fridge and kitchen. There’s no bathroom so if you’re caught short you take a key and exit out back to the toilet at the wet market behind the shop.
Korn cooks and her partner Lod takes orders and serves the customers. The place is usually open by 10am and the shutters are down by 8pm, even though the whole street comes alive at night: a ribbon of restaurants, cannabis hangouts, bars, salons and massage shops stretch all the way down to the Gulf of Thailand less than a kilometre away.
Korn likes her life back at 8pm, no exceptions, and she doesn’t mind leaving money on the table. If she feels like taking a day off, or even a week, which is quite often, she closes up without warning and posts only a handwritten notice.
Korn and Lod know many of the customers on a first-name basis, and greet each one accordingly. When the restaurant is busy, customers can grab their own drinks from the fridge. When business is lighter, Lod has a smoke outside or chats with customers she knows and is happy to share a beer if someone offers her one. Customers, many of them friends working in businesses all around the restaurant, buzz in and out all day to buy food and snacks. There is a constant stream of chatter and gossip.
The food is simple but authentic, tasty and inexpensive. The only technology is a plastic card with a QR code dangling from the roof at eye level that customers can use if they want to scan to pay the bill. For such a crude looking little operation, it is remarkable what a long list of success drivers there are.
Customers in the restaurant cannot help but feel that they are part of the restaurant’s family and eating at the family table. They can ask to have their food prepared any way they want, and know they will not overpay for it. When it’s busy or Lod isn’t around, they can fetch their own beer from the fridge and ice from a massive chest on the floor, or yell out to Korn in the kitchen for it.
This place is representative of hundreds of thousands of food businesses like it in Thailand, Cambodia, Vietnam and elsewhere in developing Asia. They are ubiquitous, so much so that they become almost an invisible part of the passing commercial landscape.
Would they go well in a shopping centre? Some do fine, but a restaurant like Korn’s, not on your life.
They would have to open and close at certain times, have minimum operating hours per day and be open without fail on a minumum number of days per week; they’d need bank guarantees and they would need to meet product guidelines, employee conditions and conform to various and sundry other regulations relating to health and safety. They would have to pay for things like common area maintenance and mall management, which would add to the economic burden of their operations.
To be sure, independent operators cannot defy every law of retail, such as having a good location and good product, but they can ignore just about everything else and make a living. Freed from rules and regulations, they go their own way and give customers a unique proposition that is both a social and economic one.