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Landlords, prepare to provide what Woolworths wants

Categories: Commercial, Retail

Woolworths is changing store format to focus on customer experience and sustainability. Here’s what that means.

Customer demands are changing the retail experience in shops of all sizes, across the world – including at Australian supermarket giant, Woolworths.

The company, which has almost 1,000 stores across the country and had revenue of $59 billion in 2016, has announced a major shake-up of the way it will now format its stores. This next generation of Woolworths supermarkets will have important implications for landlords.

Changing Consumer Demand

The changes outlined show retailers taking a greater insight into the needs of time-poor customers:

  • A large “Ready to Go” section at the front of store providing quick take-away options, like sandwiches, salads and juices
  • A Macro Wholefood Market containing more than 200 lines
  • A “living lettuce” hydroponic installation (for customers who would like to pick their own lettuce, fresh from the plant)
  • An in-store “cheese cave”
  • Pick Up lockers for online customers
  • An instore bakery, butcher and seafood counter
  • A fresh sushi counter
  • A seamless customer experience between the main Woolworths store and adjoining liquor outlet, BWS.

“Our teams have spent a great deal of time understanding how our customers like to shop, looked across the globe for inspiration and designed the store with the local customer at the forefront to create this next-generation grocery shopping experience,” said Woolworths Supermarkets managing director Claire Peters.

“Every possible angle and aisle in this process has been revisited and the result is a rustic yet futureproof design with a real community spirit.”

Tenants Look For Sustainability

While some landlords will be gritting their teeth at the capital works needed to facilitate these changes, experienced commercial property investors will be licking their lips at the opportunity to attract major supermarket retailers with incentives and willingness to support the Woolworths chain. With many retailers adapting to changing consumer environments there is an increased likelihood of renovation or refit requests. This can of course be seen as a positive for both tenant performance and property values.

Sustainability has been a key driver of such changes.

“We’re committed to reducing our impact on the environment and operating our stores more sustainably, so a lot has changed behind the scenes too,” Peters said.

“We’ve fitted out the store with LED lights to reduce power usage, switched to carbon-efficient refrigeration and air-conditioning systems, and have an area in-store where customers can bring in their soft plastics to be recycled.”

Energy efficient and sustainable commercial properties are in high demand by particular tenants. It’s becoming a key attraction for businesses, alongside traditional considerations like location, exposure, car parking, and floor space.

Smart landlords and investors will ensure their properties are sustainable and flexible to attract the best tenants. Australia’s largest supermarket looking to reduce their energy bill is an indication that other retailers may begin to look for the same.

Understanding tenant demand and shifts in the commercial property market is key when investing in commercial property. Investing alongside a commercial property syndicate gives you direct access to this expertise. Get in touch with Properties and Pathways to find out more.