Weak sentiment hits specialty retailers
Specialty retailers have been hit hard as they pay the most rent in shopping centres while also being at the front line of changing consumer sentiment.
For the February reporting season, the average growth in sales for specialty stores was close to the inflation rate of about 1.5 to 2 per cent.
Apparel, which includes footwear, was category hit hardest, with some sales in negative territory. The declines were offset by a galloping rise in sales of mobile phones and other smart devices and better performances by beauty salons and services such as dental, general medical and banking.
Westfield said rents for new leases in specialty stores, covering about 15 per cent of its tenancies, were expected to drop by up to 5 per cent in coming years.
In the latest "Big Guns" survey by Shopping Centres News, of the 89 ranked centres in the survey, the range in specialty shop turnover spreads from a top of $15,660 a square metre to $6055 a square metre.
The publisher of SCN, Michael Lloyd, said 28 of the ranked centres had an annual turnover per square metre of more than $10,000.
On the basis of sales per square metre, Mirvac's Broadway Shopping Centre took out the honours this year as No. 1 with sales per square metre of $10,390. Westfield Bondi Junction came second with $10,016. These were the only two centres in Australia recording sales of more than $10,000 per sqm.
"It's the specialty shop performance which many analysts insist is the real performance measure, as this is where most of rental revenue comes from," Mr Lloyd said.
"Westfield Sydney - which this year combines the new centre with Sydney Central Plaza, so both sides of the Pitt Street Mall - showed specialty sales of $15,660 per sqm. This means a shop of 100 sqm in Westfield Sydney, trading at the 'average' rate, would have a turnover of $1.56 million for the year. At a size of some 167,000 sqm, it places it as one of the world's best performing large centres."