The Australian-owned Westfield chain, which owns shopping malls in Europe and the United States, is being sold to a French company for US$24.7bn (£18.5bn). Professor Joshua Bamfield, of the Centre for Retail Research, told Sputnik why only the biggest and best shopping malls will survive the onslaught from online retailers.
This year millions of people will buy their Christmas presents on the internet but the rise of online shopping has not stopped a French company splashing out almost $25 billion on the Westfield chain of malls.
French property group Unibail-Rodamco is buying the business from Australian billionaire tycoon Sir Frank Lowy, who set it up in the 1950s, and his sons Peter and Steven.
Westfield has 35 shopping centers in the UK and the US while Unibail-Rodamco has 71 malls in Europe, including the giant Les 4 Temps and Forum des Halles in Paris, La Part Dieu in Lyon and La Vaguada and Parquesur in Madrid.
All are set to be rebranded as Westfield.
Earlier this month Hammerson, the company which owns the iconic Bullring mall in Birmingham, made a $4.53 billion bid for Intu, which owns the Arndale shopping centre in Manchester and many others in provincial English towns.
Professor Joshua Bamfield, director of the Centre for Retail Research, said both deals were signs of the growing “rationalization” of the shopping center industry.
“There are probably too many shopping centers in Europe and the UK and I imagine many of the smaller and less profitable ones will be closed down in the future and possibly be turned into housing or other uses,” Professor Bamfield told Sputnik.
“It’s always been survival of the fittest and it will continue to be so, rather than survival of the most worthy,” he told Sputnik.
He said there was a growing trend for consumers to avoid shopping in their local small towns and instead to spend their money at large regional malls.
“It’s a tough world on the high street now where the main growth is in barber shops, nail bars and catering establishments,” Professor Bamfield told Sputnik and pointed out that many traditional UK stores like British Home Stores and Littlewoods have disappeared and firms like Marks and Spencer have begun pulling out of “secondary locations.”
Window Shopping But Buying Online
He said a lot of people also used shopping centers like a sort of three-dimensional catalog where they could try on clothes or look at gifts but would ultimately buy them cheaper online.
“Ten years ago online retailing was just six or seven percent of the market. Now it’s 17 percent and in non-food areas it’s about 23 percent. Many retailers who have big online operations don’t really mind where people buy as long as they buy with them,” Professor Bamfield told Sputnik.
He also said more and more people were now seeing shopping centers as leisure destinations.
“The idea of spending a whole day in a shopping center is one that appeals to the operators and they have gone to great lengths to find leisure activities, restaurants, cinemas and all sorts,” Professor Bamfield told Sputnik.
‘People Feel Safer in Shopping Centers’
“People also feel physically safer in shopping centers than they do in high streets. In these days of terrorism I wouldn’t want to over-emphasize it but it is important in how people make their decisions,” he told Sputnik.
Unibail-Rodamco said there would be a “progressive roll-out of the world famous Westfield brand” around the world, including its flagship malls in Paris, Barcelona, Vienna and Warsaw.
The new unified business will be worth $72.2 billion and will be based in 27 cities, which together attract 1.2 billion visits a year.
Christophe Cuvillier, chief executive of Unibail-Rodamco, said the group planned to sell off some of its smaller shopping centers for around US$3.52 billion.
Westfield Founder was Holocaust Survivor
But a Westfield spokesperson said they would still be going ahead with a brand new “flagship development” in Croydon, in south London.
“The Lowy family is committed to the success of the Group and intends to maintain a substantial investment in the group,” said the Lowy family.
Hungary-born Sir Frank, a Holocaust survivor who moved to Sydney in 1952 and was knighted by the Queen last week, has a fortune of US$5.9bn, according to Forbes.
The views and opinions expressed by Professor Joshua Bamfield are those of the expert and do not necessarily reflect those of Sputnik.