The Westfield business group, after its recent merger with a Franco-Dutch real estate Goliath made it the largest commercial real estate corporation in the world, has come a long way from its humble beginnings in Blacktown, NSW nearly 60 years ago.

⇡ Westfield development signage, 1960s (Source: ‘Westfield History’)

The story begins with two postwar Jewish refugees from Eastern Europe. They both arrive in Sydney in the early 1950s and both separately start up small businesses in western Sydney. Frank Lowy and John Saunders (originally Jeno Schwarcz) come into each other’s world when Lowy would regularly deliver small items to Saunders’ milk bar. The two hit it off and in 1955 they combine their skill sets and open a delicatessen together in Blacktown (outer western suburbs of Sydney).

Lowy’s road from small goods deliverer to nation-wide mall king

In July 1959 Saunders and Lowy, having adopted the one-stop-shopping model of US retailing and recognising the population growth potential of western Sydney, open their first shopping centre – Westfield Plaza❈ in Blacktown [‘Australia’s retail history – Westfield Parramatta’, 29-Sep-2017, www.arc.parracity.nsw.gov.au]. With 12 shops, two department stores and a supermarket, “people flocked to see the plaza which newspapers of the day described as the most modern American-type combined retail centre” [Scentre Group, (history), www.scentregroup.com].

Westfield Plaza of itself was not anything like a full-blown shopping mall on the American scale, but it did launch Westfield✥ on its skyward trajectory. In 1960 the Westfield Development Corporation was listed on the Australian Stock Exchange as a public company. According to the gurus of applied finance, such has been Westfield’s phenomenal success in the commercial property game that “anyone who had the foresight to invest $1000 in the fledgling Westfield group back in 1960 and (then) reinvested all the dividends back into stock would have a holding valued at $136 million” (as at 2004)
[‘Lowy’s retail revolution’,  Sydney Morning Herald, 26-Apr-2004, www.smh.com.au ].

⇡ Burwood Westfield Shoppingtown, 1966

Westfield Hornsby shopping centre (1961) opened two years after Blacktown…by 2018 there were about 36 Westfields in Australia, the majority in the eastern coast states of NSW, Victoria and Queensland❂. In 1977 Westfield took the plunge and moved into the American market. The first US Westfield mall was the Trumbull Shopping Park in Connecticut…by 2005 there were Westfields in 15 American states, many clustered together in particular cities (in 2018 the total number of Westfield malls in the US was given as 33). Worldwide there are over 103 Westfield shopping centres including in the UK, New Zealand, Italy, Croatia and Brazil [‘Westfield Group‘, Wikipedia, http://en.m.wikipedia.org].

 

⇡ Westfield Eastgardens (NSW)

The Lowy/Westfield formula for success

Locating for growth: Unlike the mall pattern in America (developments on the edges of urban sprawl) Lowy and Saunders put their retail centre developments in places that were close to railway stations, in areas that were growing or were already built-up, allowing Westfield to “dominate the prime catchment areas for retail spending” [‘Sir Frank Lowy’s Great Australian success story’, Australian Financial Review, 14-Dec-2017, www.afr.com].

Westfield’s involvement in commercial property projects did not confine itself to solely building the shopping centre, but rather it retained an ongoing role in the venture through ownership of the investment portfolio. Thus, Westfield maintained a constant cash flow while its assets ensured it would be able to secure finance for future expansion. With the growth of department store retailing from the 1960s, it was specialist developers like the Westfield Group and Lend Lease who became the dominant players over time in the Australian landscape [‘Westfield’s history tracks the rise of the Australian shopping centre and show what’s to come’, (Louise Grimmer & Matthew Bailey), The Conversation, 13-Dec-2017), www.theconversation.com].

The challenge of online shopping

Lowy’s Westfield, like all 21st century retail industry players, has had to adjust to competing with the modern worldwide phenomena of the “digital revolution”. Large retail players losing market share to online sales have adopted strategies such as moving to “smaller, more carefully curated boutique stores in affluent areas” (eg, DJs, Debenhams UK), thereby severing their reliance on being inside big shopping malls [ibid.].

The advent of pop-up stores has also provided a challenge to established retail stores and malls in the 21st century.  Uniqlo, In-N-Out Burgers, Niké, Nestlé, Coco-Cola, and numerous other businesses have established their pop-up presence in Australia over the last decade or so. The immediacy and flexibility of this retail mode have allowed them to drastically cut their overheads and take a share of the permanent entities’ market. Westfield’s response has been to rebrand its casual leasing division as the “Pop-up Department”, and thus making it easier for pop-ups to be accommodated within the Westfield shopping centre umbrella [ibid.].

⇡ Westfield Geelong (Vic.), 1986

In the face of growing online competition from e-commerce giants such as Amazon, the malls and large department stores have made concerted efforts to lure back lost customers…to take Westfield as an example again, the approach has been to try to enhance the in-store services available to customers, to provide “unique services and experiences” that would value-add to their visits in a way the online businesses couldn’t offer [ibid.]. This prompted a strategy change from Lowy◙, a refocus on “developing flagship stores in prime international retail sites, (and) developing shopping experiences, not just transactions”✦ [‘Sir Frank’ (AFR), loc.cit.].

The model for the new approach, as usual, has been the overseas malls, especially the US.  These shopping enterprises, to entice the buying public to desert the online mode and return to the physical store, have taken to offering punters a new mix of leisure and entertainment options inside the malls. Shopping centres in Australia have already embraced some of these innovations⊙ (like upscale dining, cinema complexes, fitness clubs) and are certain to add many of the other mall features already in place in the US (eg, concert venues, day spas, art galleries, farmers’ markets) [Grimmer & Bailey, op.cit.].

Footnote: Remarkably on song as Frank Lowy’s business antennae has been, there have one or two lapses (over a sixty year span!) where Frank DID NOT emerge out of a deal with “laugh lines around his pocket” (a “Fred Daggism” (AKA John Clarke)) … probably the lowest point was Lowy trying to buy the TEN Network in the 1980s and getting his fingers badly burnt. Within the milieu of the mall Lowy has had a reputation for being a tough landlord. At one point Westfield Group was brought before the ACCC (Australian Competition and Consumer Commission) which found that Westfield had abused its market and commercial power. Lowy was forced to formally undertake to “not engage in unconscionable conduct and intimidation” of tenants [‘Westfield promises not to bully’, (Anthony Hughes), Sydney Morning Herald, 18-Jun-2004, www.smh.com.au].

⇡ Westfield’s founder & entrepreneurial driving force

 PostScript: Nothwithstanding Westfield’s measures to try to counter the inroads made by the online merchandisers, Westfield, in line with the catch-all trend adversely affecting global retailing, had suffering a downturn in trade. Ultimately Lowy (and his sons) decided at the end of 2017 to sever their hold on the hitherto family business empire. Lowy meticulously and vigorously negotiated the sale of Westfield to international property giant Unibail-Rodamco, a societas Europaea (a public company set up under the auspices of the EU). The transaction netted the Lowy family a cool $32.7bn with the new merger entity taking the name Unibail-Rodamco-Westfield [‘Westfield: Lowy family sells shopping centre empire to French property giant’, (E Morgan & I Verrender), ABC News, 12-Dec-2017, www.mobile.abc.net.au].

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❈ some sources give the name as “Westfield Place”

✥ etymology: ‘West’ = the location in Sydney’s western suburbs \ ‘field’ = the first centre was located on subdivided farmland

❂ Burwood Westfield Shoppingtown (inner west Sydney) opened in 1966, was the first Westfield to carry the (now characteristic) company logo…it was also the first to contain a major department store – David Jones [1959 Westfield Place opens in Blacktown’,  (Australian food history timeline), [www.australianfoodhistorytimeline.com.au]

◙ Westfield’s two-man partnership came to an end when co-founder John Saunders sold out his half of the business in 1987

✦ in 2014 the Westfield Group undertook a major organisational restructure, splitting into two entities – Scentre Group (Australasia) and Westfield Corporation (Europe and America)

⊙ the Chadstone Shopping Centre in Melbourne, for example, now has the Legoland Amusement Park within its walls