H M Online Shopping

Westfield is in the unique position of prospering in weak retail times

Well, let me tell you about a couple of guys who became billionaires.

In the 1950s, two Hungarians opened a delicatessen in Sydney's Blacktown to cater to the growing numbers of migrants. Business was so good, they had enough profit to start developing land on the side.

Soon they were making more out of property than they were out of cold cuts. That's when they noticed that the Americans had begun building these things called "shopping malls". They decided to build one in Sydney.

The site they chose was in Sydney's west and it was on farming fields, so they called it "Westfield".

Frank Lowy, pictured, was 26 and his business partner, John Saunders, was 32.

Over the next 50 years, they went on to create one of the most successful companies in Australia - if not the world. Anyone lucky enough to be an early investor would now be a millionaire many times over.

Every month or so, I like to take a look at what I call a "Barefoot Bluechip", a company that we all know, use and own - through our superannuation investments.

So let's see if Westfield is a stock you should have on your shopping list.

THERE are two securities that comprise Westfield.

The Westfield Retail Trust (WRT) has a 50 per cent share in the Australian and New Zealand shopping centres (including the mega-profitable Bondi Junction), while the Westfield Group (WDC) comprises the balance of the Australian malls, the international assets and the property development business.

Both stocks have forecasted healthy dividend yields of more than 5.5 per cent.

With Westfield's share price (WDC) trading near its lowest point in three years, let's go shopping to see if there's a bargain to be had.

How do they make their dough?

REMEMBER when Gerry Harvey got crucified this year for campaigning against GST-free online sales? There was a name missing from the coalition of big retailers - Westfield.

Why did they stay quiet?

Well, they didn't want to draw attention to the fact that one of the major reasons retailers can't compete with online sales is that Westfield slugs its 24,000 tenants with some of the highest rents in the world.

These costs are passed on to consumers, who are increasingly preferring to buy online.

Here's how the business model works.

If you go into your local Westfield, you'll notice the big retailers - Coles, Woolies, Myer, DJs - take up most of the space.

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Have yet to jump on the e-commerce bandwagon, a new site is looking to rectify the situation. According to their release, Suddenlee.com is “a new e-commerce concept that allows you to shop multiple retailers at once and receive your items together in one sustainable package the next day.”

How exactly does this work? No, it’s not some digital bot capable of moving at the speed of light—rather, it’s because of actual human beings . Think of it sort of like a shopping messenger service: you select your desired products (from over 300 retailers), specify the size and color, add them to your “Sudennlee Shopping Tool,” and Sudennlee sends you one bill, and more importantly, one shipping fee. Best of all? Since they are living, breathing humans doing the shopping for you, they can get you the items from H&M and Zara that you don’t have the ability to purchase online.