One of the biggest retail stories going the rounds recenlty is Target's demise in Canada. For people unaware of this dismal story, Target has decided to cease operations in Canada less than two years after opening in 130 or so locations vacated by Zeller's. Target reportedly blew about $2 billion in the process of trying to establish a beach-head in Canada.
A number of reasons have been put forward for Target's failure, including supply chain problems, misunderstanding Canadian customers and poor execution. Each of these issues is certainly relevant. However, one stands out to me above all - it's that Target was opportunistic rather than strategic about real estate. Buying up a whole bunch of leases from another chain is inviting trouble, particularly if those leases are in inferior locations (many of the Zeller's locations were) and if the new retailer uses pretty much the same boxes as the ones occupied by the previous retailer (Target did).
In Australia, retailers coming into the market in recent years have typically moved into purpose-built stores in very selective locations. This applies to Costco and to many of the international fashion retailers entering the country and rolling out store fleets. The practice of operating only out of purpose-built stores at premier locations is a sound one and should be continued.
There are exceptions to the rule, as always. For example, a retailer like Aldi might work out okay in a variety of inferior locations and configurations provided it can keep its pricing model intact. Generally, though, each retailer has an ideal set of format and location characteristics that need to be observed, although of course these are often tinkered with a bit to customise them to the industry culture in a new country. As someone in the US location research business, speaking about retailers, told me a long time ago: "No one wants anyone else's boxes." There's a good reason for that, and Target has now learned the hard way.
Shopping center operators have been trying for a while to figure out how to grab hold of that elusive 'community space' quality that will make their centers an irresistible place to hang out as well as a great place to shop. Technology is one answer, good dining experiences another, green space yet another. But at the end of the day these are still all 'features'. What makes a place the soul of the neighborhood?
This is the question that Publika, in Kuala Lumpur, Malaysia, has a red hot-shot at.
Like The Lab/The Camp in Los Angeles and K11 in Hong Kong when it first opened, Publika may not be quite conventional enough to get a guernsey on most standard-fare retail tours, so if you're going to see it then you will likely have to hoof it there by yourself. It is worth the short taxi drive out of central KL because it contributes some ideas about what the shopping center of the future might feel like. It's not the perfect, polished item but it's different, it works as a community hub and at the same time has a super-regional draw, nurtured partly by the aggressive use of social media channels like Facebook and Instagram.
Publika is a shopping center, art space, and staging area for all kinds of community activities that are initiated from the community itself. I put this phrase in the bold italics because it is a key point that the community members are pushing events into the center. These events include concerts, art exhibitions, dance, theater, fashion shows, flower shows, outdoor movie screenings, corporate functions, educational programs for children and wellness programs for all ages.
In all, Publika hosts more than 550 events annually, of which about 300, or 60%, are community-initiated. The other 40% are staged by center management. These events behave in an economic sense much like an anchor store, driving business to the food service establishments and mall shops. (There are a load of Youtube videos showing both indoor and outdoor events at Publika, although there is a bias toward live performances so it isn't exactly a representative sample. You can see them here.)
KL has a dearth of public space available for community events and Publika has emerged as an attractive alternative. There is some risk involved, since neighborhood-driven events loosen the control of shopping center management over what might happen. But it's a risk that Publika's creators were prepared to take in order to make it an authentic community beacon and to distinguish it from conventional fare, such as the more illustrious Suria KLCC and Pavilion KL downtown.
Some of Publika''s ideas have become local institutions. For example every Sunday is a "Wheelie Sunday" - between 7am and 10am the streets around the property are closed to traffic, bicycles are loaned out gratis and people descend on the area to bike, walk and jog.
From a configuration standpoint, Publika is a fusion of different components each with its own physical characteristics and point of view. There is an open-air space called The Square where many of the events occur, ringed by alfresco restaurants and office buildings.
The Square adjoins a three-level enclosed mall called The Boulevard that was constructed out of . two facing rows of traditional shophouses. This is where many of the retail stores are.
Parallel to The Boulevard is a pedestrian-friendly street with ground-level retail and multi-level residential above.
The project has a supermarket anchor but generally speaking the retail mix at Publika is focused on independent retailers and designers operating with two or three-year lease terms. Space is also set aside for pop-up shop tenants in their early days who are not yet able to stump up market rents and lease terms. The owners - Sunrise Bhd - are committed to nurturing local businesses and keeping the tenant mix differentiated from the malls in the city with the big retail names.
It would be getting ahead of oneself to suggest that Publika has all the answers for shopping center operators looking to sing deeper roots in the community. But it is certainly carrying out an interesting experiment that is sure to have valuable takeaways once the center - opened in August 2011 - is a little more mature.