Consumer habits and e-commerce hurting retail
The Retail Property Market report finds that while each of these trends on its own presents a formidable challenge to retailers, shopping centre owners and developers, putting them together with the cyclically weak retail environment “threatens retailer survival”.
“The share of household expenditure on clothing and footwear has more than halved since 1984, from 6.5 per cent to 3.1 per cent,” said report author Maria Lee, senior project manager.
“Not only that, but the dollar amount spent actually fell between the 2009-10 ABS Household Expenditure Survey and the 2015-16 survey.”
The report also points to the rise of online shopping, a market that currently commands 8 per cent of the Australian market, at a growth rate of 15 per cent per year.
“It’s a real possibility that a growth rate of 15 per cent per annum could be sustained for some time,” continued Lee.
“If so, this would result in an online market share of 22 per cent within 10 years. That’s a sobering thought.”
Lee said there’s also another key threat to retail property returns – the risk of softening investment yields.
BIS Oxford Economics forecasts that shopping centre incomes will see muted growth over the coming years as a result of these challenges, with a return to stronger economic conditions should bring with it a rise in consumer spending early next decade.
The next 10 years, however, will see modest retail turnover growth on average, according to the report, with shopping centre net income forecasted to stay only just ahead of inflation.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.
Inside Retail Polls
Staff levels to be cut as part of $100 million cost savings initiative, as retailer outlines turnaround initiatives… https://t.co/t882PIWxtg9 hours ago
Changing demographic and societal pressures facing DIY retailer fuels investment, seeking to capitalise on the "nex… https://t.co/IGRJ0ackiF11 hours ago