As professional investment advisers when we look back Australia’s biggest success stories, the Lowy name is right up there. Frank Lowy’s story is truly amazing, born in the former Czechoslovakia, his family lived in a Hungarian ghetto during World War II. After fleeing the Nazi-occupied country, Mr Lowy migrated to Australia in 1952 and founded a smallgoods delivery company. Then he started building shopping centres to service the new need of consumer choice, of course that grew at an incredible pace into the Westfield chain, with centres opening across Australia and the US. Mr Lowy served as the director of the Reserve Bank of Australia several times and knighted by the Queen. Essentially, he is the King of Shopping centres. When the King calls it quits and has left the building, investors need to take note and listen to the underlying message. The retail bricks and mortar shopping world is changing, and changing at an incredible pace, so fast that even the Lowy’s know, it’s time to get out. One of the reasons for Frank’s call could be that Australian retail sales have been pretty weak recently, even with an unusually large bounce in November last year. According to the ABS, sales increased by just 2.6% in the year to April, continuing the deceleration seen in the past few years. Sales are weak, especially given Australia’s population is increasing at 1.6% p.a. However a trend that I am sure Frank is aware of is that domestic online sales account only for 5% of total retail sales, according to the ABS, but they are currently growing at 32% per annum. Domestic online sales currently account for more than half of total retail sales growth in Australia. A year ago the share was half that, and two years ago it was less than 10%. If you needed a statistic to summarise the disruption currently occurring in Australian retail, it is this. Consumers are becoming more comfortable with the e-commerce and thanks to the Amazons and Alibaba’s, less emphasis is placed on stores but rather on entertainment and the customer experience. So if the customer is in control, what do they want? What retail will look like in 2030? Embed from Getty Imageswindow.gie=window.gie||function(c){(gie.q=gie.q||[]).push(c)};gie(function(){gie.widgets.load({id:’v7oe1kMZSIJvVPjZ8y2lmw’,sig:’0pWfuhI-xUjVnYolwhRZv-XEPrfFR7FMYwKDkguzFPY=’,w:’594px’,h:’396px’,items:’891257074′,caption: true ,tld:’com.au’,is360: false })}); In 2030, the retail store as we know it is dead. The digitization that swept through books, music and travel has blown an equally chill wind through all retail categories. For shoppers, the preferences of millennials and Generation Z have taken precedence, and both demographics now move fluidly from “experiencing” products in stores to ordering them online. Their smartphones and wearables buzz with customized assistance from virtual agents. Surviving retailers are the ones that have embraced digital and envisioned new ways to serve their customers. Physical stores have morphed into lively, immersive environments. They rely on sensors to capture and analyse data in real time, and all boundaries between online and offline shopping have blurred. Collaboration is the order of the day. Supply chains have moved to starring roles. Digitization has rewritten the rules of competition in every retail function, and after much trial and error, supply chain operations now hum efficiently as a result of connected, automated elements, including inventory, logistics and fleet management systems. Airborne fulfilment centres and drone-launching delivery trucks have closed the last-mile gap. Change can be daunting, but it brings with it enough opportunities for retailers to move ahead, unconcerned by the gloom that pervades much of the traditional sector. What the customer will look like in 2030 In 2030, millennials will rule retail. Representing a quarter of the U.S. population, and overtaking baby boomers as the largest generation, their numbers are expected to swell to 95 million by 2030 as young immigrants expand their demographic ranks. The characteristics that define millennials include: A love of convenience. The easier and more effortless the retail experience, the better. Millennials expect the latest technology to be applied from the time they start researching products, through purchase, shipping and delivery. Convenience will accelerate, powered by the rise of innovative payment methods, such as mobile checkout in the fitting room, and emerging fulfilment technologies (think airborne warehouses A preference for visual and experiential retail. Millennials expect not only immersive and interactive customer journeys but also fun, one-of-a-kind experiences, supported by technologies such as augmented reality (AR). Home improvement chain Lowe’s has been quick out of the gate on AR, taking the wraps off several tools, including an in-store smartphone app that layers a to-do list over a store map and also lets shoppers click on product reviews. Desire for complementary products and services. Based on their expectation for convenience, millennials see services such as banks, dry cleaners and bistros to be natural extensions of retail. Embed from Getty Imageswindow.gie=window.gie||function(c){(gie.q=gie.q||[]).push(c)};gie(function(){gie.widgets.load({id:’99PTj4qhTjFdH_rgdzU4vw’,sig:’qE67jh0U-Apo0hsvHJG7svFAUM9nELh1t4qOQ5DUhOY=’,w:’594px’,h:’396px’,items:’1010024660′,caption: true ,tld:’com.au’,is360: false })}); Disdain for traditional sales events and promotions. By 2030, millennials’ response to time constrained deals will have had a major impact on sale season. For millennials, promotions are digital, communicated one to-one and in real-time via mobile devices instore and online. Store sales events, as a result, will become highly personal and immediate; as shoppers enter…

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