Westfield Shelves Online Mall
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Shopping centre giant Westfield has shelved its drawn-out plans for an online version of its Shoppingtown chain, with claims by the company it could go ahead with the model in future.
Westfield spent $5 million developing its online mall, which it announced a year ago. Its announcement to halt this work follows local online mall 131.Shop.com.au closing its doors, after venture capital firm Tomorrow took 45 per cent of the company with a view to injecting a new business into 131.Shops infrastructure shell (see story).
Even before 131.Shop's demise, the local market gained an insight into the cutthroat nature of online retailing when prominent e-tailing brand brand dstore was sold to Western Australian retailer Harris Scarfe last December. Westfield reportedly turned down the opportunity to buy dstore.
Westfield executive director David Lowy blamed such volatile market conditions for the companys decision to "postpone" its online activities. "We have decided to postpone the launch until such time as we are satisfied that Internet retailing has a reasonable chance of being profitable for retailers," he said.
Lowy observed that at the moment there seemed to be greater onine opportunities for niche goods providers, but believed that Westfields strategy and cost structure could be sustained in future.
While Westfield was protective of its online strategy and how it would be pushed in its physical shopping centres, it essentially centred around charging e-tailers for being part of the Internet Shoppingtown and for establishing aspects such as e-tenants online stores.
Lowy said that Westfield's online push was ready for launch with around 50 retailers committed to the Internet Shoppingtown, however Westfield pulled back the reins on the project when it began to doubt whether the venture would actually profit.
The Australian Stock Exchange-listed Westfield Holdings will incur the Internet Shoppingtowns $5 million expense in its profit results for this financial year and the group does not believe the outlay will affect its profit results for the year. These results are due next week.