The dramatic growth in food retailing in Australia, a consumer trend not being replicated anywhere else in the world, is helping to shape the big expansions planned for WA’s shopping centre industry.
In an address to the Property Council, MacroPlan retail managing director Tony Dimasi said in the past 20 years, retail spending valued at $20 billion had moved out of non-food and into the food sector with take-home food and catered foods in now accounting for 55¢ in the retail dollar, up from 48¢.
“This is a peculiarly Australian thing and you don’t see this anywhere else in major comparisons of shopping centres where food plays such an important part and an increasingly important part,” Mr Dimasi said.
Planning restrictions that stymied WA shopping centre expansions were lifted six years ago and planned building projects to add 400,000sqm of floor space across major centres during the next four or five years will require about $3.5 billion in capital expenditure.
“Retail sales are being held up in the whole country by the manic growth in food sales. The food story is amazing, particularly in retail developments and in shopping centres,” Mr Dimasi said.
Despite the downturn in retail sales and the food sector, Mr Dimasi told the gathering there was not a strong correlation between the mining boom and the health of the retail sector. “In WA, retail sales recorded growth of 6.2 per cent per annum in the 12 years before the mining boom, 6.5 per cent per annum during the boom,” he said.
In the seven months to January, WA saw growth of 2 per cent in total retail sales, which was made up of 3.5 per cent growth for clothing and apparel, 5 per cent for furniture, floor coverings and the homeware sector, 3.7 per cent for liquor, while cafes and restaurants declined 5 per cent. “Overall, the fortunes of retailing are not as directly linked to the mining sector as some would have you believe and even during period of adjustment, which I think we are in the middle of, retail is still growing,” Mr Dimasi said.
Shopping city: An artist’s impression of the proposed expansion of Westfield Innaloo centre
While the influence of traditional retailers was waning, Mr Dimasi said the supply of retail floor space had been given a shot in the arm from the arrival of international retailers.
“These fast-fashion retailers have been the most dramatic change to retail supply in this country for quite some time,” he said.
“Traditional retailers had been the backbone of major shopping centres during the 1990s and pre-GFC but had been hit by a perfect storm, deflation in apparel prices, entry of very sexy new global entrants, and of course, post-GFC, the downturn in demand.”
The industry gathering was told Australia’s biggest shopping centres in the Eastern States had doubled in size in the past 20 years, from an average of 67,000sqm to 134,000sqm.
“The bigger shopping centres are able to react in all sorts of ways, they are able to stay relevant to consumers, food and international retailers,” Mr Dimasi said.
The total investment proposed for the three Westfield centre expansions in Perth — Carousel, Whitford City and Innaloo — is more than $1 billion.
AMP Capital divisional development manager Scott Nugent said plans were being finalised for expansion of Garden City and Karrinyup shopping centres. When finished, the average size of specialty shops would increase from 80sqm to 120sqm.
“We are not going to see more shops but we will see shops providing a bigger range,” Mr Nugent said.
See the presentation here: