Is it time for the return of homemaker centres?

Woman shops at furniture shop

This article appeared first on Inside Retail Australia.
Read the original article here: Opinion: Is it time for the return of homemaker centres?

In 2019, research by Morgan Stanley noted that shoppers were migrating away from homemaker centres and the big box retailers that flog their goods there.

The reason, according to the global investment bank, was that shoppers had less time to travel to homemaker centres. Instead, they preferred to bundle all their errands into one convenient trip to, say, a shopping centre where they could pick up something for tonight’s dinner, go to the pharmacist and grab some new cushions for the lounge.

The conclusion was that homemaker centres would soon be a thing of the past, and big-box retailers needed to start thinking about where that left them, literally.

But, of course, that was before Covid hit.

It’s been well documented that during the pandemic, spend on homewares skyrocketed as people stuck at home looked around and didn’t like what they saw. Brands such as Nick Scali, Adairs and Temple & Webster were big winners raking in record profits. And, it turns out, plenty of these sales were made in homemaker centres.

Aventus, which runs about 20 homemaker centres in Australia, recently upgraded its earnings guidance with CEO Darren Holland telling the Australian Financial Review earlier this year, “We’ve had more customers visit our centres over the past 12 months — 44 million — than ever before.” And it’s not just Aventus that has a renewed love of the homemaker centre. Harvey Norman recently dropped $100 million on Watergardens Homeplace in Melbourne’s north-west, with another $28.25 million going to a regional centre in Western Australia.

The other factor working in favour of homemaker centres is lower rents than shopping centres. During 2020, while many retail tenants stopped paying rent and, in some cases, closed their doors entirely, homemaker centres continued to cash rent checks, seeing them go on to live another day.

And so it seems that homemaker centres are benefitting from the Covid crisis, and perhaps it is little wonder since Aussies love to shop in physical stores. According to research commissioned by payments platform Adyen, physical stores remain the bastion of Australian retail, with 72 per cent of Australians preferring to shop in-store, a figure higher than American (61 per cent) or British shoppers (50 per cent). But if retailers are concerned people won’t have time to head for the homemaker centre once life returns to normal and the pace picks back up to pre-Covid levels, there’s a way to circumvent this: the evolution of homemaker centres.

A number of homemaker centre businesses, including Aventus, have been evolving the tenant mix at centres to include gyms, cafes and medical centres to attract more weekday shoppers. This, coupled with additional categories entering the big box mix, including pet supplies, adventure gear and pharmacy goods, means homemaker centres are offering consumers a changing shopping experience.

There’s also a push to evolve retail spaces by the companies behind big-box retailers with Spotlight Group — the parent company of Spotlight, Anaconda and Harris Scarfe — unveiling plans for a $500 million mixed-use retail, office and hotel project in Castle Hill in Sydney’s north-west. Spotlight executive deputy chairman Zac Fried told AFR: “We want to build a world-class diversified portfolio for the family with a focus on edge-of-centre assets, be they large-format retail centres, neighbourhood centres, offices, hotels, fast food outlets or service stations.”

And Spotlight isn’t stopping there, with a stake in ASX-listed retail landlord Home Consortium, which recently created a real estate investment trust. The foundation portfolio of 30 large-format convenience centres, created from the former Masters Home Improvement warehouses, is branching out into aged care facilities, medical and childcare centres, pharmacies and gyms, which will radically change the face of homemaker centres. And the strategy seems to be working, with the trust upgrading its full-year earnings guidance off the back of increased foot traffic at stores.

Covid has done plenty to get people online shopping, but all this suggests there’s life in the old homemaker centre yet.

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Craig Flanders

A passionate advocate for the strength of full integration shaped by 25 years in advertising where he’s held a number of senior management roles, Craig oversees all aspects of our integrated offer.