Retail thriving despite tight-spending environment


Despite the cost-of-living crisis, retail properties have experienced a revival this year, with rising interest in discount stores, liquor and affordable products.

According to Ray White Head of Research, Vanessa Rader, transaction volumes in the retail sector have increased, driven by population growth, limited new development and increased spending in certain areas.

“Overall retail trade has actually grown, thanks to population increases,” Ms Rader said.

“May saw a 0.6 per cent monthly rise, or 1.7 per cent annually, with Western Australians leading the spending charge, up 1.3 per cent for the month.

“In contrast, NSW and South Australian consumers have reined in their spending, with a 0.1 per cent decrease this month.”

Ms Rader said consumers had spent more on liquor and furniture.

“Large format retail is likely to continue benefiting from this trend,” she said.

“Meanwhile, standalone liquor stores, especially those with secure leases to brands like Dan Murphy’s, BWS, and Liquorland, are expected to maintain tight yields.”

Ms Rader said the clothing and soft goods sector saw continued growth this month. 

“While annual figures remain down, footwear demand persists, making it an attractive retail mix for small neighbourhood or sub-regional centres,” she said.

“The pharmaceutical and cosmetics sector has shown growth over the past year, despite reduced discretionary spending. 

“Low-cost indulgence items remain popular, with brands like Chemist Warehouse now rivalling supermarket sales.”

Ms Rader said that many consumers had targeted cheaper options, like discount chemists, and this had hit supermarket profits.

“Additionally, ‘big box’ stores like Bunnings now stock pet food and cleaning supplies, traditionally supermarket domains,” she said.

“While this doesn’t spell the end for supermarkets, it reflects changing consumer behaviour during high inflation, benefiting retail owners who can adapt.”

In recent years, food retailing has bolstered strip retail and small centres in maintaining high occupancy she said, however, this trend has started to shift. 

“Belt-tightening has led to stagnant restaurant and café spending this month, with only a 0.6 per cent annual increase, potentially pressuring these retail shops,” Ms Rader said.

“Fast food, previously benefiting from reduced spending, has also declined, down 0.3 per cent this month and up just 1.5 per cent annually. 

“Department store activity continues its year-on-year decline, resulting in fewer stores nationwide. 

“However, the quest for cost-effective items has driven consumers towards discount department stores like Kmart, making sub-regional centres attractive to property investors.”



Source link

About The Author

Scroll to Top