Consumers favour services and entertainment rather than traditional retail goods
Retail sales growth has eased further at the expense of traditional major anchor tenants, according to Dexus Property Group’s latest quarterly report.
Consumers continue to limit spending on traditional retail goods in favour of retail services and dining/entertainment experiences.
Retail turnover growth eased to 2.6% for the year to August 2016.
NSW and Victoria continue to lead other states, but Queensland has been improving, having now recorded four consecutive months of increased growth.
WA is weak with mildly negative growth over the year.
At a category level, ‘clothing, footwear and accessories’ and ‘cafés, restaurants and takeaway’ are currently the best performers. ‘Household goods’ growth has eased and ‘department store’ sales are contracting.
There is significant development activity particularly in regional centres, as owners seek to expand their entertainment/leisure precincts to cater to new consumer preferences. The evolution of shopping centres is continuing to shift the balance from traditional anchor tenants, e.g. department stores to mini-majors/specialties.
Dexus noted the key themes included:
- Consumer confidence has remained steady in the last few months
- Several retailers have announced expansion plans including Costco, Harris Scarfe (13 stores with a focus on NSW) and David Jones’ high-end food offer (commencing with Market Street, Sydney)
- The UK department store Debenhams has announced their first Australian store will be at St Collins Lane, Melbourne in September 2017
- Consolidation of major retailers is increasing with JB Hi-Fi acquiring The Good Guys, Home Consortium purchasing Masters and Steinhoff’s planned takeover of Fantastic Holdings
- As part of its restructure, Woolworths has announced a review of existing and planned stores, with 30 stores targeted for closure