On February 6, 2019, my classmates and I visited Westfield London’s offices located in Shepherd’s Bush, London. After its recent £600 million extension completed in March 2018, Westfield London is now the largest shopping centre in Europe, boasting a retail floor area of 2.6 million ft² with over 300 shops. (City-walks.info, 2019) We were given a presentation by several managers from Westfield Group which covered a variety of topics regarding their business philosophy and practices, such as their company background, centre locations, and their frequent involvement in philanthropy and giving back to the community. Additionally, they informed us of the growing success of Westfield as a business, including a variety of analytical data from their past financial year, their recent partnerships and mergers with other large corporations and their future plans for expansion and growth. This company report will be covering the strengths and weaknesses of Westfield (primarily focusing on the UK establishments), a portfolio of their UK shopping centres, their main competitors, and their marketing strategies.
Strengths:
As a result of owning 35 shopping centres in 13 different countries (Urw.com, 2019), Westfield has obtained many strengths as a corporation due to their massive global presence. One primary strength is that of their brand portfolio; Building and maintaining strong relationships with large anchor retailers such as John Lewis and Marks and Spencer’s incentivises smaller brands to become involved in the shopping centres whilst additionally attracting larger consumer audiences.
Secondly, URW has emerged as a primary host for Digitally Native Vertical Brands, or DVNBs, who wish to grow their brand awareness and engage more efficiently with customers in a retail environment. Partnering up with DNVB’s such as Daniel Wellington, Morphe and NA-KD presents Westfield with a unique competitive advantage by presenting these previously online-exclusive brands an opportunity to penetrate and establish their presence in the retail markets. As illustrated in appendix 1, in 2018, the amount of partnerships with DVNBs in European Westfield locations increased by 46%, leaping from 24 the previous year to 35 partnerships.
Additionally, the recent opening of Phase 2 extension in Westfield London in March 2018 has resulted in a growth of +8.6% in tenant sales, specifically displaying a strong growth in sport (+6.8%) and dining (+4.5%) in UK centres. Upon completion, the expansion is expected to raise annual footfall from 27.3 million to 39 million; This is a predicted increase of roughly 42%.
Weaknesses:
The largest issue shopping centres face in today’s market is the competitor that is online shopping. As shown in appendix 2, when asked in a 2018 study, 51% of consumers said they preferred to shop online instead of a physical store. (Ecommerce News, 2019) This is mostly due to consumers not knowing exactly what product they’re looking for and preferring the ability to research brands and assess similar items to ensure they choose the best product. Not only do more consumers prefer shopping online, but research shows that online buying is becoming far more frequent, with 55% of consumers saying they shop more online now than they did in the previous year. (Ecommerce News, 2019)
A second weakness is the massive impact shopping Westfield has had on previously existing small businesses in the surrounding areas. After the opening of Westfield London in 2012, some businesses reported a decline in trade of as much as 90% (Evening Standard, 2019). This is due to smaller, independent business not being able to compete with the competitive prices and in-store promotions of the larger brands, thus driving customers away. This leaves many business owners in the area struggling to maintain profitability with their small businesses. Some people own the belief that building mega-centres such as Westfield presents a variety of ethical issues, not only to the surrounding economy and businesses, but additionally because of the amount of pollution, increase of traffic to the area, and the rise in house prices that those currently living there may no longer be able to afford.
Portfolio of Products/Services:
Westfield Group owns 35 different shopping centres across the globe in Europe, America, and the United Kingdom (BBC News, 2019). In the UK, the two main centres are Westfield Stratford and Westfield London/Shepherds Bush. Each of these Centres offers a wide variety of retail and entertainment opportunities, including fashion, dining, leisure, and events. Due to the increase in competition from online retailers, Westfield’s philosophy is to provide not just a shopping centre, but to offer a customer experience unique to any other establishment.
– Westfield London – Boasting five anchor stores and over 300 luxury, premium, and high street retailers, the 2.6 million sq. ft complex is the largest shopping centre in Europe. Additionally, they have a Gymbox Fitness club and a 17-screen Vue Cinema. In 2016, Westfield London attracted footfall of 27.3 million and achieved retail sales of £996 million. (Westfield Centres, 2018)
– Westfield Stratford – Westfield Stratford City is a 1.9 million sq ft luxury shopping and leisure destination in Southeast London, with over 250 shops and an annual football of roughly 40 million per year. Launched in September 2011, the centre is located next to the Olympic Park in London and attracted over 48 million visitors in the Olympic year.
Competitors:
In a 2018 Report by Global Data (OzSeeker, 2019), Westfield Shepherds Bush and Westfield Stratford were ranked the top two best performing shopping centres in the United Kingdom, with Kent Bluewater Centre coming in third, Intu Trafford fourth and Intu Lakeside placing fifth. (Appendix 3) Each centre was judged on four sections: performance (footfall, sales, turnover,), potential (shopper spending/five- year forecasts), provision (leisure facilities, loyalty schemes) and meeting shopper expectations (a survey of 5,000 shoppers on a UK nationally representative basis) (OzSeeker, 2019). Their overall scores are as follows:
1. Westfield Shepherds Bush – 4.09
2. Westfield Stratford City – 3.98
3. Kent Bluewater Centre – 3.63
4. Intu Trafford 3.44
5. Intu Lakeside – 3.40
In terms of just footfall, Westfield Stratford has the highest annual rate of 50,000,000 visitors (appendix 4) in the United Kingdom, whereas competitors such as Kent Bluewater and Intu Trafford only reach figures of around 28-30 million customers per year.
As displayed in appendix 5, Westfield Stratford City has the highest retail sales of the two UK Westfield Shopping Centres with annual retail sales of £1.19 billion, closely followed by Westfield London (Shepherds Bush) with retail sales of £1.01 billion.
Marketing Strategies:
The goal of a marketing strategy is to set a foundation for a business’s marketing plan- this is accomplished by having a good understanding of customer wants and needs. (Smallbusiness.chron.com, 2019) For Westfield, their overall goal is to build the ultimate luxury-shopping destination. The company’s leadership sees that effective digital strategy and digital integration to their shopping experience is a key component of their future success. (Cuker Agency, 2019) Their partnership with Cuker agency involved the development of a comprehensive, segmented social media strategy on Facebook, Instagram, Pinterest and Twitter that engaged Westfield’s audience. They also produced social campaigns that encouraged engagement in the shopping centre, for example one campaign that invited mall shoppers to suggest the next restaurant to be added to the food court via their social channels. (Cuker Agency, 2019) Additionally, in some locations, they have replaced traditional ad formats such as escalator ads with digital media screen that show shoppers messages tailored to the person’s age or gender. Also, Westfield plans on incorporating mobile into the strategy by serving ads to consumers’ phones when they are in proximity to the screens. (Digiday, 2018)