Australia’s major tertiary hospitals are like miniature cities, with daily population bases in the tens of thousands. Aside from providing critical healthcare services and research and training, patients, visitors, staff and suppliers access hospitals 24 hours a day, seven days a week. Convenient access to everyday services and the food is important for the public and often a critical factor in retaining quality staff.

It is no surprise that our hospital foyers are flanked by convenience-based retail and food offers tailored to this captive market. However, we are not yet seeing progressive, vibrant and thriving retail spaces, despite the compelling numbers of potential customers.

If you have ever wondered why hospital retail lacks imagination and why their cafeterias make you hesitate in the line, it’s probably because our expectations in regard to retail and food are ever-changing. Thankfully, the mediocre hospital cafeteria could soon be a thing of the past.

In 2014, Hames Sharley and retail consultants Karima Group undertook a review of the foyer, cafeteria and retail offer in one of Australia’s largest tertiary public hospitals. While our observations identified considerable room for improvement, we also saw an opportunity to transform the age-old cafeteria-style food into an exciting multifaceted market dining offer. But before I reveal how we arrived at our ideas for this area, it’s important to understand the ground rules for any such transformation.

In 2014, Hames Sharley and retail consultants Karima Group undertook a review of the foyer, cafeteria and retail offer in one of Australia’s largest tertiary public hospitals.

To be socially and financially successful, retail and dining precincts need to be appropriate to their context within the hospital setting. The benefits of such precincts are clear: they provide much-needed services, as well as a place of distraction and respite for staff, patients and visitors. They play a role in staff retention and, importantly, accrue ongoing rental income for the hospital from tenants. Quite a bit of the work done over recent years helps us better understand the opportunities, but our public tertiary hospitals have not yet unlocked the full potential. Hospital administrations realise this and are engaging with retail experts to redefine how they manage and deliver their retail and food offer in future.

Health providers are seeking out retail expertise

At the same time, governments want to reduce overheads by focusing on the core business and using the private sector wherever possible to improve value and efficiency. Hospitals traditionally operated their own cafeteria, or let tenancies directly to small operators. Now they are seeking new possibilities.

Some health providers are considering handing over “head leases” to retail providers who can manage the development and operation of vibrant retail precincts within their hospitals. That move is supported by private industry. The aim is to generate greater rental yields for the landlord as well as a critical mass of retail which is sustainable for the operator. Health providers focus on their core business while benefiting from the head lessor’s retail knowledge and expertise.

However, Brad McAvoy of the advisory company, Calcutta Group, says it can be tough to generate arrangements that achieve flexibility and desirable returns for both landlord and lessor. His team guides the procurement processes and supports decision-making in bringing an opportunity to market.

For example, retail provider Zouki Group is making inroads in this space in Victoria, New South Wales and the ACT. They take on the head lease for a precinct and deliver and operate a range of services under their own brands. It may only be a matter of time before other Australian states and health providers sign up similar savvy operators as they attempt to revitalise their retail precincts and generate better returns.
Providing more retail is not the panacea for underperforming hospital retail precincts. These environments need to be skillfully designed to align them with the needs of their patrons: staff, patients and visitors. Much like in the broader city context, retail precincts in hospitals need to be market focused and an appealing destination. The primary focus should be around creating a curated food and convenience-based retail offer in an environment that engages the senses, transporting patrons away from the surrounding clinical feel of the hospital environment.

Sophistication is driving successful retail precincts

Since accessing basic retail services can be challenging for patients, staff and visitors, the retail mix should consider:

• a multifaceted food/cafe

• a convenience store/marketplace with fresh fruit, baked goods and florist

• newsagent, post shop and gift shop

• cobbler, key cutting, laundry and dry cleaning services

• commercial chemist

• hairdresser

• ATMs and vending machines

Focusing food on healthy eating options is a no-brainer. The low-nutritional-value options served in the past have generated public criticism, and rightly so.

Fortunately, state government policy has been moving in the right direction, with policies such as in Healthy Options WA: Food and Nutrition Policy for WA Health Services and Facilities and A Better Choice – Healthy Food and Drink Supply Strategy for Queensland Health Facilities. This means food outlets within hospitals must provide and actively promote a greater selection of healthy nutritious food and drink options.

There’s even potential to establish a mini supermarket on hospital campuses – an innovation that ought to also be considered as part of a review of the broader urban context.
Having recently undertaken a review of the foyer, cafeteria and retail offer in one of Australia’s largest tertiary public hospitals, the retail consultancy, Karima Group, working with Hames Sharley, identified that both the existing condition and policy direction supported a new market court.

Market court concept offers an opportunity

Our focus was to adapt the existing infrastructure with minimal capital investment and minimal interruption to the hospital. Our concept sought to expand upon the existing retail offer by adding a new small market grocer as well as a post shop and a concierge service for cobbling, laundry and dry cleaning. The existing cafeteria could be converted into a market dining ‘eat street’ with a range of food options presented via differentiated counters. Retaining the existing kitchen areas within the tenancies and minimising demolitions and new structure meant reduced upfront cost and risk to the lessee, reduced fitout period and reduced material waste in the construction work.

As you can see from the concept illustrations above, as well as providing much-needed amenities, the precinct is warm, inviting and offers a respite from the environment on the wards.

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