Influx of food retailers ratchets up competition

An influx of food and beverage retailers into the tenancy profiles of Australian shopping centres has driven up competitive pressures for existing traders, JLL’s latest centre manager survey has found.

Overall tenancy enquiries have increased but more than two-thirds (73 per cent) of centre managers have reported weak or very weak levels of tenancy enquiries from clothing & footwear retailers in JLL’s April retail centre manager survey.

In comparison, most centre managers reported at least a moderate level of enquiries from such businesses, including 16 per cent who reported strong or very strong interest.

None of the managers surveyed reported strong or very strong interest for clothing, footwear, accessories or jewellery retailers.

It comes as centres look to adjust their offers to increase their exposure to tenants whose offers are unable to be replicated online, although the shift has come at a cost.

JLL’s Australian head of property and asset management Richard Fennell says that competitive pressure on food and beverage retailers has increased as landlords adjust their focus.

“A number of centres are shifting their offering to food, services, entertainment and leisure uses and focusing on marketing initiatives to drive customer traffic,” Fennell said.

“In addition to food and beverage operators, it’s health, gyms, medical centres, other medical-related services and insurance that are expanding in shopping centres.

“However, in some centres the amount of food and beverage tenancies has begun to create competition for existing operators. And the expanded offering of the supermarkets has started to result in lower demand from speciality food retailers,” he continued.

Concern over the impact increasing levels of food competition has had on the QSR sector in recent years is longstanding, with health food chain Sumosalad last year opting to put to of its leasing entities into administration amid a dispute with Westfield ANZ owner Scentre Group regarding elevated competitive intensity.


Article published by InsideRetail/Matthew Elmas