Average retail sales turnover declines slightly over past year: JLL
Average sales turnover has declined slightly over the 12 months to December 2016, according to JLL’s latest retail report.
This annual report highlights the retail market industry and the views of retail centres managers view points on how the retail industry is doing.
Turnover in sub-regional centres declined by 0.3% although specialty turnover improved marginally by 0.4%.
The continued poor performance of discount department stores (Kmart being the exception) has impacted sub-regional centre sales.
This is reflected in recent results for the first half of the 2016-17 financial year compared with the corresponding period the previous year:
- Big W comparable store sales declined by 6.3%;
- Target comparable store sales declined by 18.2%;
- Kmart comparable store sales increased by 5.7%;
- Coles food & liquor comparable sales increased by 1.3%;
- Woolworths comparable store sales increased by 1.9%.
Vacancy rates in sub-regional centres were also higher in 2016 than in 2015 despite improvement in the second half.
This may have had a slight negative impact on performance during 2016.
Annual neighbourhood centre sales declined by 1.3%.
While competition between supermarkets has been particularly strong and was often noted as a concern by Centre Managers, some centres have seen a range of non-retail services such as medical centres, financial services and travel agencies that do not report sales replace retail stores.
This change in tenancy mix may have impacted overall turnover but may have been a positive for the centre in terms of providing the services customers want at their local centre.
Retail trade across Australia grew by a modest 3.5% in 2016.
When new centre openings, expansions of existing centres and the continued expansion of global retailers such as Costco, ALDI and fast fashion labels is taken into account, competition for the retail dollar is very strong.
The key area of weakness has been department stores, which managed growth of just 0.6% in 2016.
Discounting amongst supermarkets has kept growth in the supermarket sector to a low 2.6% in 2016, despite relatively strong growth in new supermarkets as the major players fight for market share.
The level of new supply across the neighbourhood, sub-regional and regional centre markets of Australia’s major capital cities was relatively high in 2016 at 347,000sqm.
Even more supply is in the short-term pipeline, with completions expected to peak in 2017 at 416,000sqm.
This will serve to heighten competition in the retail sector.
