Posts Tagged ‘Italy’

Westfield gets a Brazilian… and goes Italiano

August 12, 2011

It is rare to see an Australian multinational announce two international expansion moves in the same week. And it’s even rarer when said moves are to two different continents.

Shopping centre giant Westfield made two such announcements this week, with joint ventures signed in firstly, Brazil, and today, Italy.

As I wrote about in a book chapter on Westfield a few years ago, the firm has typically been reluctant to seek opportunities beyond the English-speaking world.  The firm entered the US way back in 1977, with a portfolio of properties slowly emerging over the coming two decades.

Westfield succeeded in the US by buying run-down malls that no one visited anymore and turning them around through innovative redevelopment projects.  Most competitors in the industry preferred building new malls.

By the late 1990s Westfield had emerged as the dominant player on the US scene, and continued to grow right through to the global financial crisis.

In the broader world, they have been more cautious.  As we argued in the chapter:

“Westfield’s internationalisation was never a story of extreme risk-taking.  Frank Lowy saw little value in acting as the pioneer in environments where the payoffs were too low.  As long as there were opportunities to be had in the US, then Europe, Asia and New Zealand could wait. Eventually in 1997 the group took over the management of ten St Luke shopping centres in New Zealand. In 2000 Westfield Trust and St Lukes Group merged and the New Zealand centres were re-branded as Westfield centres. Attempts to enter the UK market in the 1970s and 1980s were unsuccessful. Lowy expressed considerable frustration with the lack of dynamism in the UK investment houses and lack of planning enthusiasm (Margo, 2000). Not until early 2000 did Westfield finally obtain access with a 75 per cent stake in a centre at Broadmarsh, Nottingham. The firm has made considerable headway since, with seven centres on the books, and is set to open the largest centre in Greater London in early 2008. Westfield briefly entered Asia in 1998 with a ten per cent share of Suria Kuala Lumpur City Centre in Malaysia.  This investment was short-lived, however, with the company withdrawing in 2000 after the Asian currency crisis.”

So why has the firm moved now?

On the Brazil front, the firm is tapping into one of the most exciting and fast-growing large economies in the world.  The firm may see some useful urban similarities to Australia and tthe US (i.e. more ‘wide, open spaces’ in the ‘burbs), and Brazil may also be seen as far less challenging than China and India for example (with much less government intrusion likely).

At the same time the firm may see far fewer prospects in the moribund US economy and its close-to-saturated Aussie home.

Bringing a local, experienced joint venture partner is a very sensible move for a multinational with no experience in the market. While Westfield hasn’t typically hooked up with shopping centre management firms before (preferring instead to court construction firm and funds management partners – i.e. in essence, supply partners), local adaptation is clearly front of mind here. There should also be an appetite for knowledge acquisition on both sides of this equation.

The Italian move looks a little riskier, with patchier economic conditions and a reputation for bureaucratic randomness.  There may be an argument for very localised attractiveness here, as the firm is targeting one of the wealthier and more retail-savvy parts of the nation – Milan (also home to some of the oldest shopping arcades in the world). Indeed, this could also be a brand-building exercise in a city/region with no shortage of brand champions, especially in the luxury and masstige segments Westfield is keen to attract across its empire.

The final piece of this strategic puzzle might well rest on the role of individuals in both constraining and driving choices.

Firm founder Frank Lowy finally handed over the reins to his baby about five months ago (stepping down as Executive Chairman).  His sons appear to stamping their mark on the firm’s future with these two bold (but tentative) moves.


The tyranny of distance (for Aussie beer drinkers)

September 28, 2010

One of the joys (and frustrations) of travelling is seeing new and/or different business ideas executed well.

Our apartment in Rome was just a couple of doors away from perhaps the best executed specialist beer bar I’ve seen outside of Belgium.  The hole in the wall, with the cool moniker of Ma Che Siete Venuti a Fà (which translates roughly as “what the hell are you doing here?”), was a true revelation.

Italian beer barI’d never really picked up a beer culture in Italy beyond the pale, insipid Peroni etc one sees everywhere. This place turned that impression on its head.  Here were 14 taps of artisinal beers from nearby lands (Belgium, Netherlands, Germany, Denmark, Britain) and the ‘hood (i.e. Italy), all fantastic quality, diverse in style, well-explained by the friendly barman, willing to give you a taste and enthuse about the offerings.  And, this was all delivered at competitive prices (nothing more than 6 Euro a pint).

The set up was decidely unpretentious, with most beers consumed standing out in the small, cobbled street or perched on the small number of stools.  There was no food on offer, but plenty within staggering distance.  No one was over-inebriated. All seemed most happy discussing the beer and the football on tv.

This is exactly what I’d love to see in Melbourne.  But the problem is one of distance and the associated costs.  No one could get such beers in kegs to Australia quick enough or cheap enough (especially once excise is hurled on top), so the variety and quality just wouldn’t be there.  What we do end up with is such European beers (in bottles) that are priced out of reach of all but the most eager/profligate, and/or the compulsion to pair such beers with overpriced food as some sort of destination venue.

The other option is cheerleading for the local microbrewers and trying to build a broad enough suite of offerings (which the Local Taphouse has made a good fist of in Melbourne).

Interestingly, that was the strategy of the bar across the road in Rome.  It only offered Italian microbrews (including some amazing stuff in 750ml bottles, such as collaboration between an Italian mob and US brewer Dogfish Head called My Antonia), but was smart enough to offer loads of tables, and excellent, cheap food (including the best pizza we’ve had in Italy this trip). This strategy worked extremely well due to the spillover from the destination bar.

I’d travel a long way for Ma Che Siete Venuti a Fà. Many others would too – it has topped the global ranking tables at the Ratebeer website in the past. Unfortunately, no bar in Australia can make such a claim.