Food retailing the secret to success

As the retail sector faces headwinds, shopping centre owners are changing their retail mix to include more food and beverage offerings, reveals new reports from JLL and m3property.

JLL’s 17th Retail Centre Managers’ Survey, undertaken in August across 119 Australian shopping centres under JLL management, finds food-based retailing strategies are “top of mind” for shopping centre managers looking to improve the performance of their centres.

Retail vacancy rates in neighbourhood shopping centres, which strongly feature food-based and non-discretionary based retailing, increased in the first six months of 2017 – from 2.6 per cent of vacancy in December 2016 to 3 per cent in June 2017.

However, vacancy rates remained below the long-term average of 4.5 per cent.

“Shopping centre owners are reconfiguring and refurbishing centres to provide upgraded and expanded services to attract customers,” says Richard Fennell, JLL’s head of property and asset management in Australia.

While consumer sentiment remains weak, the Survey also revealed a slight improvement in sales growth expectations, with 53 per cent of respondents anticipating some sales growth in the year ahead, up from 47 per cent in February 2017. 

But most respondents expected growth to be no more than three per cent per annum.

Competition from other centres, online retailing and the economic outlook were the three biggest factors influencing turnover performance.

Meanwhile, the m3property Shopping Centre report finds retail trade, while positive, has slowed over the year to July 2017.

The m3property Shopping Centre report focuses on retailer and investment activity in regional, sub-regional and neighbourhood centres in Australia.

All sectors experienced growth except department stores, which fell by 2.0 per cent. The strongest growth was recorded in the cafés, restaurants and takeaway sector, up by 5.5 per cent.