Vicinity Centres chief executive
Steven Sewell says the company plans to dramatically ramp up its use of
data analytics and cutting- edge technology, including putting broadband
into all its shopping centres, to generate new revenue streams and
reduce costs.
Formerly known as Federation Centres, Vicinity Centres is the
second-largest shopping centre group in the country. An ASX top 30
company, it was formed by the $11 billion merger of Federation and
Novion Property Group that was finalised at the end of May.
The
jewel in its crown is a half share of Chadstone Shopping Centre in
Melbourne’s southeast, which is also half-owned by Melbourne billionaire
John Gandel. Mr Gandel also holds a 17 per cent stake in the merged
group.
Mr Sewell said Vicinity was running a competitive tender
with Telstra and Optus for the installation of broadband connectivity to
all its shopping centres and offices and expected to make a decision on
the winner in the next two months.
The rollout is expected to take place over the next year and a half
and would be worth as much as $20 million. ‘’We want to be able to
connect everything we want to connect,’’ he told The Australian.
“We
are building a culture of relentless curiosity throughout the
organisation — such that right across every business function, you just
do not accept that the business process, technology or method of doing
business is the way you have to do it going forward.’’
Vicinity
boasts a wide portfolio that spans direct factory outlets, subregional
malls and large suburban centres such as The Glen and Emporium in
Melbourne, in addition to Chadstone.
Many of the larger assets are co-owned with wholesale investors such as ISPT, Challenger, Perron Group and Gandel Group.
Mr
Sewell said he wanted to put in place the hi-tech infrastructure to
enable the company to capture more data on its shoppers, “analyse it and
use it’’.
“Analytics and traffic counters in shopping centres
today typically are a light beam across a doorway. We count legs and
divide them by two to see how many people are visiting our centres. Now
that just simply isn’t enough detail,’’ he said
“With WiFi, facial
recognition and all sorts of analytics, you can work out race, age,
gender, and understand the frequency of shopping habits by person.’’
Mr
Sewell revealed that in his previous role as chief executive of
Federation, he had been working for the past 18 months to build an
innovation framework with a team led by an external consultant from San
Francisco, Ron Spectre.
Mr Spectre, a former investment director
for Macquarie Venture Capital, has also worked with Wesfarmers and
Telstra in recent years.
Vicinity has been building the company’s
data analytics capabilities, which will now be used to inform leasing
decisions and development plans.
Vicinity has a $2.5 billion
redevelopment pipeline and will be a direct competitor in the market for
investment capital with the $21bn Scentre Group, which was spun out of
the Westfield last year.
“The biggest immediate applications of
the technology are to understand the profile of our shoppers and
communicate with them. The typical way is through loyalty programs. That
can inform leasing decisions but also our prospective meetings with
retailers, for the tenancy mix master plan, but equally for development —
the shape and size, what you build and don’t build.
“Having that layer of analytics will be powerful,’’ Mr Sewell said.
He said Vicinity also wanted to better leverage its relationships with advertisers in its centres.
“Across the 100 properties today we estimate that annually 500 million people go in and out of our centres every year.
“That
level of facetime with consumers is valuable to advertisers, or broadly
when you market across a big portfolio like ours, global advertisers
are interested in it — it is a valuable datastream and connection with
the consumer,’’ he said.
The investment in new technology will
also be used to reduce the group’s annual procurement budget, including
reviewing its contracts with utilities companies across its portfolio.
‘’Over
a year we purchase $600m worth of stuff. The market of how you build,
buy and interact with those suppliers is changing radically because of
technology,’’ Mr Sewell said.
There has been speculation Vicinity might look to sell a range of non-core assets following the conclusion of the merger.
Mr
Sewell confirmed the group had been approached by prospective buyers
and noted Federation had also been recently selling properties — for
example in Tasmania. But he said no firm decisions on asset sales by
Vicinity had been made.
‘’We are doing work at the moment to
forecast returns over the next five to 10 years for each of our
investments. We will constantly look at the portfolio and see where we
can invest our equity for the best return,’’ he said.
‘’We have a big balance sheet, debt capacity — our leverage will be around 31 per cent — we have got a lot of headroom.
“I
think what we aim to deliver is sustainable returns over the long
period with very conservative management of the balance sheet.’’
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