Over recent years disruption in retail has had a significant impact on the retail property sector, according to the latest retail research from Colliers International, Game On: Retail’s new entrants flex muscle as competition grows.
“Australia’s retail industry has been heavily concentrated and characterised by fierce competition between a few established players,” said Michael Bate, head of retail at Colliers International.
“Our industry is undergoing an unprecedented period of disruption, as these established players have been forced to evolve in order to meet the changing demands of the consumer and revive profitability. These changes are opening up new opportunities for the many emerging brands in Australia, who are looking to gain a foothold in an established and well-heeled market.”
According to the research, supermarkets and department stores are the two retail segments which have undergone the most significant disruption.
“The purchase of David Jones by the South-African based Woolworths chain last year has prompted a period of significant change,” said the report’s author, Daniel Lees, associate director of research at Colliers International.
Myer has decreased its property footprint in several key areas, such as Top Ryde where they are withdrawing completely and has stated around 20 per cent of its property portfolio is “not well aligned to Myer strategy”.
According to Colliers International, David Jones could fund a significant investment in fresh food by rationalising its property portfolio in Sydney and Melbourne CBDs, potentially raising up to A$1 billion if air rights are fully exploited.
“Myer and David Jones have been two of our most significant retail occupiers for decades,” said Bate.
“They have controlled a huge portion of the most sought-after, highest visibility retail space across the country. With their rationalisation of space, comes a huge opportunity for the emerging brands to establish themselves in well-located retail spaces with good foot traffic and exceptional visibility.”
Bate said the changes to Australian retail are set to continue in the coming years.
“The march of international retailers into our country is nothing new, but the second, third and fourth wave of these will continue to come. Australia’s savvy consumers know these global brands, making their move into the Australian market an easy one,” he said.
Brands such as H&M are only making the move into the Australian market when the right floorspace opportunity comes up. H&M’s new Sydney CBD store, in Pitt Street Mall, spans 5000sqm and has strong visibility in a high traffic area. According to Mr Bate, such global retailers will form an important part of the future retail landscape.
“Only 10 years ago, our major department stores occupied tens of thousands of square metres in our CBDs, limiting the options for other retailers. These department stores are now savier with their space, and embarking upon multi-channel strategies to appeal to changing consumer needs. This is opening up our retail industry to new players, and providing our consumers with an increased choice.”
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