Boutique or big? Start-ups urged to make the choice early on

Retail start-ups should decide from the outset whether they plan to remain a boutique business or expand into shopping centres, an industry expert says, or risk diluting their brand.

Retail expert Michael Baker is the principal of Baker Consulting, an economics advisory firm specialising in retail and retail property.

In an article for The Sydney Morning Herald, titled ‘The top 5 cities for retail inspiration’, Baker identifies New York, Hong Kong, Tokyo, South Florida and Bangkok as standout urban centres.

“For an established or start-up retailer, or anyone associated with retail property, ideas and inspiration can be found in many places,” Baker wrote.

“If you’re a retail professional, don’t just look at retail stores and shopping centres, and don’t just talk to people in your immediate line of business.”

“Seek out the smartest people you can that have even a peripheral impact on what you do – techies, economists, fashion experts, food experts, trade publication editors – and even people who are outside retail itself.”

Baker told StartupSmart one of the most appealing aspects of South Florida’s retail scene is its cultural mix.

“South Florida is amazing – it includes Cuban and Caribbean influences on retail,” he says.

“Its shopping centres have all the global brands, but there are also big centre sites with a lot of local colour. That’s what’s really important.”

Baker says that same level of diversity isn’t apparent here in Australia, for several reasons.

“A lot of what we’ve done has been derived or imported from Europe and, to some extent, America,” he says.

“If I were a Martian who dropped to Australia and was trying to figure out what’s different, I’d be really struggling.”

“Also, retail landlords are only interested in trying to get the national brands. That’s what’s made our retail centres the way they are.”

“What has happened here, unfortunately, is that over time independent retailers have been completely marginalised and wiped out of the shopping centres.”

Baker says it is therefore imperative for retail start-ups to decide from the outset how they intend to grow their business, and whether that growth strategy will include shopping centres.

Baker uses boutique café chain Brunetti as an example. In addition to five venues in Melbourne, Brunetti has also established a presence in Dubai and Singapore.

“They were being approached to go into shopping centres… but they couldn’t make a deal to go into those centres,” he says.

“When you have three stores [at the time] and you go into The Dubai Mall, that shows you there’s a lot of independent retailers but they’re hard to find because they will not go into [Australian shopping centres].”

“There’s a really fine line you walk between degrading your brand and expanding… A lot is to do with the philosophy and drive [of the owner].”