The big get bigger, but Sydney shoppers get short changed

In recent domestic retail news, the Shopping Centre News (SCN) 2017 Big Guns shopping centre publication was released in mid-March. This publication includes centres with more than 50,000 sq.m of GLA.

The 2017 release showed that the biggest shopping centres are getting bigger and trading more strongly than ever. There are now four shopping centres across Australia that generate more than $1 billion in moving annual turnover (MAT). The leader, by far and away, is Chadstone Shopping Centre, which reported total turnover of more than $1.5 billion, and is still expanding further. Chadstone SC is now larger than 210,000 sq.m; the Top 10 largest shopping centres are in excess of 135,000 sq.m; and the Top 20 are all in excess of 115,000 sq.m.

These larger centres continue to attract shoppers in droves, providing new and exciting options for consumers. A rough tally of the total sales of all 85 listed Big Gun shopping centres that reported MAT in the 2017 edition, shows that they generate around $40 – 45 billion in MAT or around 15% of all annual retail sales across Australia.

Virtually every Big Gun shopping centre in Australia contains a supermarket, but they are not the primary anchor tenant and not the only reason shoppers visit such centres. For smaller shopping centres, supermarkets are very important anchor tenants, and may be the only anchor tenant.

Supermarkets are the most prevalent and frequently visited retail store type across Australia, comprising around 15 – 16% of all retail floorspace and attracting 25 – 30% of all retail dollars spent. Indeed, virtually all Australian households shop at supermarkets of varying shapes and sizes, including IGA, Foodworks, Coles, Woolworths and Aldi. Costco would be considered a hybrid format and not a supermarket per se.

chadstone_001

Chadstone Shopping Centre

Like it or not, virtually every Australian relies on supermarkets, not just to purchase groceries but also implicitly (including vehement abstainers) in the form of redistributed GST revenue collected from grocery items that help fund state government services, or perhaps Woolworths and Wesfarmers form part of their superannuation investment portfolio.

Across Australia there is around 0.34 – 0.35 sq.m of supermarket floorspace per person, or roughly around one large supermarket per 9,000 persons or so.

In metropolitan cities (ex-Sydney), the provision rate is also around 0.35 sq.m per person, while in regional areas (i.e. outside of the major capital cities) with less established street/strip retail environments, less specialty food shops and less ethnically diverse populations, the supermarket provision rate is around 0.4 sq.m per person.

In Sydney, the supermarket provision rate is just 0.25 – 0.26 sq.m per person, which is 25 – 30% below the national average and has been chronically low for decades. Reasons for this include the high density/established nature of parts of the city; more established/ethnically oriented strip retail environments with extensive food specialty retail; and high land prices which make developments more costly.

Graph for James article

However, in our view a key contributing factor is the lack of appropriately zoned sites driven by well meaning, but restrictive planning frameworks. For example, the B1 – Neighbourhood centre zone basically permits nothing of any scale. Furthermore, there were more than 40 local Councils across Greater Sydney prior to recent mergers most with their own policies/planning frameworks regarding retail and activity centres.

Perversely, policies that encourage new supermarket development ‘in centres’ can potentially lead to increased localised congestion and reduce convenience for residents. Such policies can also encourage replication of supermarket development immediately adjacent to existing supermarkets in the same centre, even the same branded operators, which is not really a major issue except they don’t help to meet major spatial gaps in ‘non-centre’ locations and often require complex mixed-use developments that take considerable time/planning to develop.

I wonder if the new District Plans and the Greater Sydney Commission will help to alleviate this chronic and significant undersupply across Australia’s most populous (only just) city.

Should you wish to discuss any retail projects or retail related requirements, please contact James Turnbull – Senior Manager, Retail on 02 9221 5211.

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