Melbourne retailers to get a much-needed boost, as hospitality businesses shine

Melbourne retailers are set to get a boost, with free Wi-Fi hotspots, access to mentoring services and more late night events like White Night on the horizon, according to the City of Melbourne.

A new strategy report from the City of Melbourne and the Victorian government found in the past decade the hospitality sector has boomed, but retail has lagged behind because of the high Australian dollar and online shopping.

In response to the findings, the City of Melbourne’s latest retail and hospitality strategy outlines a number of ways the local council and state government intend to strengthen the sector in the next four years.

According to the strategy report, the retail and hospitality sectors make up 10% of Melbourne’s economy, contributing $8.7 billion in 2012.

But the report finds the hospitality sector is well and truly leading the growth.

In the past decade, employment has lifted in the retail sector by 14% and businesses take up 10% more floor space, compared to a 71% employment increase in the hospitality sector, while businesses take up 40% more floor space.

Retail Doctor Group chief executive Brian Walker told SmartCompany hospitality businesses are likely to continue to outstrip retailers. 

“I don’t think we’ll see a great change to these trends. The growth in the hospitality, outdoor eating, entertainment precincts and community hubs will continue,” he says.

“City planners have been increasingly building residential buildings through apartments in the city, as Melbourne is becoming far more integrated in all its activities. To have precincts of entertainment, food, hospitality, galleries, theatres and more plazas is an important part of getting the right mix of businesses.”

The high Australian dollar and the rise of online shopping were identified as the main challenges for Melbourne retailers. However, the report found opportunities still exist for savvy businesses.

“The retailers succeeding in this climate are those who are developing innovative retail offers than embrace these changes and enhance the consumer experience,” the report says.

“It’s all about creating consumer solutions that maximise the power of connected networks, solve real customer pain points and consistently look for opportunities to simplify the lives of customers.”

To help retailers be more innovative, the city council and state government will encourage more late-night shopping, new pop-up shops and greater access to free Wi-Fi.

“Businesses that are able to plan ahead for a range of late night events can attract a stream of business previously not available to them,” the report says.

Another future growth opportunity identified in the report is for retailers to better target Chinese tourists.

“The way in which businesses react and maximise opportunities through initiatives such as bilingual communications and staff, or accessibility to visitor information in multiple languages, will be vital to their future growth,” the report says.

The council will also work with tourism bodies to facilitate opportunities to leverage spending from attendees at business conferences and events, hold workshops and webinars to help businesses integrate technology into their bricks-and-mortar stores and focus on boosting innovation through the City of Melbourne’s Small Business Grants program.

Walker says the free Wi-Fi initiative and encouraging later trading hours are effective strategies to strengthen the sector.

“Google research suggest over 75% of big ticket purchases are pre-researched and over 60% of Australians now have smartphones, so I think free Wi-Fi will work, but it’s something that’s mandatory now,” he says.

“It will be a short-term differentiator, but won’t have a big impact in the mid to long-term.”

Walker says retailers should also be able to alter their trading hours to better suit peak times, as seen in some European cities.

“Retailers need flexibility to open in the hours where the traffic is there. For example, trading between 7pm and 8pm is more profitable than between 9am and 10am in the mornings,” he says.


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