NEWS

WA’s retailers brace for Amazon and growth in online sales

Expansions and upgrades to reposition centres and defend market share.

A Colliers International report on the Perth retail sector found little cheer for traditional retailers who managed a small rise in annual retail turnover growth despite headwinds from online retailers, new market entrants and a sluggish economy.

The Colliers International Retail 1st Half Research and Forecast Report found total turnover climbed 0.46 per cent in the year to March with strong growth in cafes, restaurants and food helping to offset weaker growth in other spending categories.

Perth’s household goods turnover fell 5.25 per cent in the March quarter, compared with the same time a year ago while competition from online retailers and consumer belt tightening delivered a 5.12 per cent contraction in turnover at department stores.

Lacklustre turnover also impacted on employment with retail employment down 6.5 per cent, a contraction of 9,500 employees in the year to March, according to the Australian Bureau of Statistics. 

The report also shows weak demand for space weighed on CBD mall rents which averaged $3665/sqm for 50sqm to 100sqm tenancies, down from $3845/sqm at the end of December.

Neighbourhood shopping centres, one of the more durable sectors, also recorded a fall in rents with average rents at $555/sqm.

WA maintained its track record as a higher spending state with retail spend per capita declining 0.33 per cent to $3232 in September 2016 but still 3.04 per cent higher than the national rate of $3137.

Colliers International Senior Research Analyst Quyen Quach said in the short term, there were challenging conditions ahead for traditional retailers who had already seen the rise of online retailing and its partial role in the demise of dozens of shopping centres in the US.

“With Amazon planning its first fulfilment centre in Australia, WA retailers are preparing for more competition for retail sales and at the same time, the sector is dealing with weak consumer spending,” Mr Quach said.

“To shore up connections with communities and compete against the solitary experience of online shopping, major shopping centre owners in WA are proposing close to $3.95 billion in expansions over the next five years.

“These redevelopments mean that Perth’s retail landscape could look quite different in the next decade with shopping centres taking on more entertainment, leisure and tourism roles to improve or maintain foot traffic volumes.”

Mr Quach said occupancy levels remained strong at Perth’s major shopping centres with most owners confident they would be able to Amazon-proof their centres.

“Deloitte Access Economics is forecasting further soft retail conditions for WA but is expecting turnover growth to rebound in 2017-18 and surpass the national growth rate,” he said.

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