Mirvac, one of Australia’s leading property groups, recently announced a new partnership with Wing, Alphabet’s on-demand drone delivery service, that will see it transform underutilised retail real estate into fulfilment hubs.
The partnership is kicking off with a trial at Orion Springfield Central, Mirvac’s retail property in Ipswich, Queensland, in 2023, and will be expanded to other Mirvac-operated retail properties in urban areas, where drone delivery can create added value for customers, over the next few years.
In a related development, Coles has just become the first major retailer in Australia to offer “store-to-door” drone delivery, with the launch of a pilot program with Wing on 2 November.
Customers in the Gold Coast suburbs of Ormeau, Ormeau Hills, and Yatala now have access to 500 of the most popular Coles grocery items, such as bread, fresh produce, convenience meals, snacks, health care items and household essentials, in minutes via a dedicated fleet of Wing delivery drones co-located in the Coles store car park.
The initiative follows a successful pilot program launched in Canberra earlier this year, where Coles co-located its products at Wing’s drone delivery facility. More than 5,000 deliveries were made through that pilot program, with some of the most popular items including fresh fruit, milk, bread, and eggs, along with confectionery, snacks, and cold drinks.
The next big thing?
Simon Rossi, general manager of Wing Australia, told Inside Retail that interest in drone delivery has never been greater – both in Australia and globally.
“We’ve worked with some fantastic partners to bring the benefits of drone delivery to the communities we serve,” he said.
But futurist Gihan Perera is not convinced that drone delivery will become the next big thing in Australia.
“At this stage, drone delivery falls into the same category as self-driving cars. The technology works, it’s better for the climate, and early adopters are enthusiastic about it. But society isn’t ready for it to become a mainstream option,” he told Inside Retail.
He believes many people have privacy, security, and safety concerns about drones flying around their homes and communities.
“They are more forgiving if they provide an essential service (like, for example, delivering essential medical supplies to remote areas). But home delivery is already seen by many people as a ‘luxury item’, and drone delivery even more so,” Perera said.
As far as he is concerned, the safety concern is real. He thinks it’s no coincidence that CASA [Australia’s aviation regulator] has only granted approval in lower-density areas, such as the outskirts of Brisbane, rather than densely populated city centres.
“This is a good starting point for Wing to develop, improve, and extend its capabilities before expanding its coverage to major residential areas,” he noted.
He also feels that privacy and security concerns will increase the likelihood of drones being damaged by angry consumers. For example, the neighbours of customers who use drone delivery.
“This is similar to the backlash to the original Google Glass, due to privacy concerns. It will take some time to convince the regulator and a sceptical public that the benefits of drone delivery outweigh the costs,” he said.
Growing interest and demand
Despite the challenges, Perera sees drone delivery playing an important role in the future. Gartner predicts that more than one million drones will be carrying out retail deliveries in the US in 2026.
“Three things could accelerate the growth and adoption of drone delivery: consumer awareness of the sustainability benefits, people seeing pilot projects succeeding in communities just like theirs, and drones being more commonplace for essential services,” he stated.
In 2021, Wing made more than 100,000 deliveries to customers in Australia. In the first three quarters of 2022, Wing has already exceeded 120,000 deliveries.
“Mirvac Retail is always exploring new innovation and partnership opportunities to provide a more seamless and exciting shopping experience for our customers and that support omnichannel growth of our retailers,” Benjamin Conlon, national manager of retail development strategy at Mirvac, told Inside Retail.
Conlon explained that Mirvac is also committed to maximising usage of its assets and is excited to transform a section of its car park to facilitate an on-site Wing distribution centre.
“This partnership allows [Wing’s] brand to be seen on a new platform and this is a great opportunity for our retail partners to embrace new innovation from a leading global brand,” he said.
He expects the partnership to support further growth for Mirvac’s retail partners by providing them with another avenue to do business and greater opportunity to connect with new and existing customers.
“Many of our retail partners are hungry for progressive opportunities like this and we’re really proud to be able to bring this partnership to them,” he noted.
Conlon revealed that this pilot at Orion Springfield Central is just the beginning of its partnership with Wing.
“We are thrilled to be bringing this innovation to our Springfield community and will absolutely be exploring this and other innovations and technology that evolve the shopping experience for all of our retail partners and communities across Australia,” he stated.
Expansion on the cards
While the current partnership with Mirvac is focused initially in the suburbs around Orion Springfield Central, there is potential to explore other areas soon.
“Mirvac has a number of retail properties across Australia, so there is an opportunity to look at those locations in the future. But for now, our focus is very much on setting up the first trial at Orion,” Rossi said.
The partnerships with Mirvac and Coles are just the latest in a string of local tie-ups for Wing. It has also partnered with Roll’d and KFC, and it has already learned some important lessons.
“These partnerships have helped us to inform how we set up partnerships in the future. In the same vein, our partnership with Mirvac does provide some insights into how we want to set up our operations by better utilisation of resources,” he noted.
Using existing retail property or real estate for drone deliveries and as logistics hubs as opposed to the company’s own real estate and infrastructure is a game changer in this regard.
“We’ve had some really positive relationships with large national and international brands, and we are still having conversations with KFC and we’ve taken a lot of learnings from that six-month pilot program and its setting us up nicely for the future,” he said.
Roll’d food is now available for delivery through the Wing app in Canberra and parts of Queensland.
Reducing congestion and pollution
Rossi is most excited about the potential positive impact that drone delivery can have on communities by reducing congestion on the roads and reducing greenhouse gas emissions that are caused by vehicles and motorbikes.
The rise of online ordering and home delivery over the last few years – in Australia and many other markets – has made the topic of congestion and pollution a pressing issue.
“We see drone delivery as being something that can easily be ubiquitous in the future, and as you know, we have to find an efficient and sustainable way of doing these deliveries. So we want to cover more areas and provide that benefit to the community,” he said.
He added that Wing is working closely with the Civil Aviation Safety Authority of Australia to ensure it is in accordance with flight path regulations.
“The future is here, today. We’re really focused on this exciting announcement with Mirvac, and together, we are going to transform underutilised real estate, starting with the Orion Springfield shopping centre,” he said.