Retail trade in Australia recorded its strongest growth since July 2017, as the food and beverage sector feeds retail growth and as landlords adopt new strategies to survive and thrive.
CBRE’s latest Retail Marketview report found retail sales in Australia grew by 3.2 per cent year-on-year to August 2018. This was largely driven by the food retailing category, which includes supermarkets, liquor and specialised food, and which recorded 4.2 per cent growth – the highest growth rate since December 2014.
Victoria was the stand out state with retail trade up 5.6 per cent, followed by ACT (3.9%) and New South Wales (3.5%).
According to Kate Bailey, CBRE’s head of retail and logistics research, the growth in trade correlates with major landlords actively repositioning their shopping centres to tap into customer demand for food and entertainment experiences.
“Shopping centre landlords are incorporating a higher proportion of dining and entertainment facilities in a bid to drive foot traffic to their centres and capitalise on the strong retail spend in this category,” Bailey says.
“Many centres are forging distinctive retail identities. We have noticed a significant investment by regional centres into entertainment, leisure and experience while neighbourhood centres are placing a heavy focus on fresh food and convenience offerings.”
Food and beverage retailing in shopping centres is also the stand-out performer in JLL’s 19th Retail Centre Managers’ Survey.
The survey of 88 JLL-managed retail shopping centres nationally, the majority neighbourhood and sub-regional, found that food operators continue to drive tenant enquiry. Retail spending on food also posted 3.2 per cent growth, year on year.
Andrew Quillfeldt, JLL’s director of retail research, says supermarkets are driving growth in moving annual turnover, with 15 per cent of centre managers “commenting on the strong performance of a supermarket within their centre”.
While F&B remains the most robust source of leasing demand for permanent stores, JLL found a “notable increase” in the proportion of centres fielding enquiries from F&B operators for short-term leases.
The demand for food and beverage offerings is surging as Millennials choose to eat out frequently, says Zelman Ainsworth, CBRE’s retail leasing director.
“Today, retailers are no longer competing on price – customers are more invested in human interaction and experiences, and that is ultimately the key to any retailer’s success,” Ainsworth concludes.