CONSUMERS will see less variety in shopping centres, with food and personal services, including medical centres and beauty therapists, replacing fashion, books, homewares and electrical stores as retailers close underperforming stores.

Even in the Melbourne CBD, where fashion dominates the retail mix, clothing and fashion retailers are being replaced by casual eateries.

Retail analyst Kevin Stanley said the trend in central Melbourne was amplified in the suburbs. He said shops were feeling the brunt of lower consumer confidence and the rise of internet shopping, while service industries remained buoyant.

”We are seeing more shops changing hands, more shops under refurbishment,” Mr Stanley said. ”I think what shoppers will notice is that one week there will be one retailer and then the next time they go there, there will be a dentist or manicurist.”

Figures compiled by the Bureau of Statistics in July showed footwear retail was down by 1.5 per cent and clothing down by 0.5 per cent on the previous month, while cafes, restaurants and takeaway food outlet trade was up 1.7 per cent.

On Friday, discount chain Payless Shoes became the latest major retailer to enter voluntary administration. It has 227 stores, including 44 in Victoria.

The head of the Australian Retailers Association, Russell Zimmerman, blamed some of the struggle by retailers on unrealistic rents in shopping centres.

A Morgan Stanley report last year found Australian retail rents were among the most expensive in the world per square metre, even higher than Fifth Avenue in New York.
Some retailers, including Premier Investments, whose brands include Portmans, Jay Jays and Just Jeans, are renegotiating the terms of their leases. Premier has closed 21 of its underperforming stores and has threatened to close more.

Mr Zimmerman said the retail sector’s woes were forcing shopping centre landlords to lower rental costs or offer rent-free periods of up to six months, marketing budgets of $1000 a month, and free shop renovations.

Michael Di Carlo, Savills Australia associate director of retail services, said Savills’ research showed Melbourne’s retail rents had been virtually stagnant for the June quarter, rising less than 1 per cent across all types of shopping centres. These centres include the CBD, regional shopping centres such as Chadstone and Highpoint, and smaller centres anchored by supermarkets or discount stores.

Rent rises in regional shopping centres have slowed. In the 2010-11 financial year, rents rose by nearly 14 per cent, but last financial year they rose by less than 5 per cent.

Melbourne retail vacancy rates remain below the national average, except in smaller centres such as Barkly Square, in Brunswick, and Northcote Plaza, where vacancies are closer to 4 per cent.

Date September 23, 2012

Deborah Gough