any thoughts on SCG?, page-36

These kind of thoughts are raised quite often w re; SCG or any other REITS. The reality of retailing is that over the last 20yrs shop fronts are all loss leading. They are a marketing expense. Its been like this for 2 decades. There have been exceptions like TopShop (UK) who thrive in the big store format but thats mainly due to their fashion acumen.

Scentre/Westfield understand this better than most. To think that they have not anticipated the demise of the big store format is not correct. They receive sales figures from all rentals and they do a lot of market research. What has been happening over many yrs now, is such that store space is a fraction of what it was and it has transitioned to services. I.e food, entertainment, consumer staples, hairdressers etc etc. The future of the business lies in the wants of people to get their car washed/fixed, while doing their food shopping, then let the kids play in the indoor playground, then lunch etc etc. This is how the business is restructuring itself.

If the business stood still regardless of online trends then it would have a problem. The reality is that it doesn't as it owns land that commands a premium price. You have to remember that a significant % of share price is underwritten by NTA.