Shopping centres have bucked the trend of a weaker retail market with turnover improving this year, according to a report into shopping centre performance by leading property consultants, Urbis.
Despite the weak economy and low growth in consumer spending in the past year, the latest Urbis Retail Averages report reveals that shoppers continued to visit shopping centres in substantial numbers.
Urbis director of economics and market research, Jeff Armstrong, says footfall held at quite strong levels, with an average 12.8 million annual visitors to a major shopping centre and 17.6 million for the 10 highest turnover centres.
“Neighbourhood shopping centres with a supermarket as the anchor were the standout retail asset for the year with turnover up by about 4.9 per cent. Consumers are continuing to channel their disposable income into household necessities and strong growth in supermarkets supported these centres,” Armstrong said.
“In fact, supermarkets and food retailers were the key drivers of growth for all categories of shopping centres, making up over half of the turnover growth in medium sized and larger major shopping centres.
“It was also a good year for retailers in the services sector. In 2013 travel agents, hairdressers, and cafes and restaurants were the best performing categories.”
Strong growth in food catering also showed that shoppers were embracing the wider range of food outlets on offer as well as enjoying the improved dining environments being developed in many shopping centres around Australia.
Food courts and new dining precincts led to spin off benefits for retailers by increasing the length of stay by shoppers and also extending the role of centres into the evening.
Armstrong said online shopping continued to have an impact on many shopping centres.
“Online retail continues to bite with significant reductions in floor space and turnover for the most vulnerable retail categories, such as books, music and games, film processing and smaller electrical stores,” he said.
“Shopping centre managers are responding to online impacts by remixing their centres in the stronger growth categories.”
Urbis found that medium sized suburban shopping centres which focus on food, convenience and everyday shopping grew by 3.4 per cent outperforming the growth of the major suburban centres (1.4 per cent).
The performance of major shopping centres was held back by further declines in department store turnover.
Encouragingly, the entry of international fashion brands, such as Zara and Topshop, have been popular with shoppers and boosted the performance of fashion turnover in centres including these retailers.
“Big brand retailers, such as JB Hi-Fi, Rebel Sport, Dick Smith, and The Reject Shop, also played an important role in retail growth, now accounting for 12 per cent of turnover within the major centres. That’s up from nine per cent seven years ago,” Armstrong said.
“Despite the growing importance of big brand retailers, department stores such as Myer and David Jones, still play a vital role in shopping centres.
“They continue to generate foot traffic and provide prestige to a shopping centre. On average, speciality retailers generate 24 per cent more turnover in a centre with a department store and are willing to pay 50 per cent more in rent.”
While specialty shop vacancy rates increased marginally, the level of 2.5 per cent for major centres and a just over 5 per cent for medium sized centres remained manageable and still low by international standards.
“It’s clear that the standout performers in the retail market are the shopping centres that have benefited from investment in improvements in recent years,” Armstrong said.
“Owners will need to continue to constantly upgrade and look for ways to offer different experiences to consumers to drive visitation and turnover growth. Leasing strategies and centre design will be critical.”
Copies of the complete 2013 Urbis Retail Averages report can be purchased by contacting Darian Ribeyre on (03) 8663 4884, or visit: http://www.urbi
