F&B drives retail sales growth

By Nick Hall | 29 Oct 2018 View comments

The food and beverage sector is behind a resurgence of market growth within the retail industry, according to new research from commercial real estate services company, CBRE.

The CBRE Q3 Retail Marketview report found that retail sales have grown by 3.2 per cent year-on-year to August 2018, driven largely by a rise in sales for the food retailing sector, which saw growth of 4.2 per cent, its largest since December 2014.

The latest results indicate a return to consumer spending confidence, with retail trade recording its strongest growth since July 2017.

Leading the sales growth was Victoria, with trade up 5.6 per cent, followed by ACT, up 3.9 per cent and New South Wales with 3.5 per cent growth.

Zelman Ainsworth, CBRE retail leasing director said a rise in demand for food and beverage operators in CBD areas was boosting the sector’s overall appeal.

“We are noticing a shift in retail tenancy mix in CBD precincts across Australia and it’s evident landlords are placing a more heightened focus on F&B offerings than they previously have,” Ainsworth said.

“The demand for F&B services is surging – it’s common for the average millennial to eat out as much as four times a week – so there is room for more hospitality operators to join the market and/or occupy further retail space in the CBD precincts, particularly when other retail services are moving online.”

On the shopping centre front, upgrades to dining and entertainment precincts such as Vicinity and Scentre Group’s $90m upgrade to Roselands Mall and $21m upgrade to Westfield Woden have been integral to the formulation of retail identity and spending culture, particularly in non-metropolitan areas.

“Shopping centre landlords are incorporating a higher proportion of dining and entertainment facilities in a bid to drive foot traffic to their centres and capitalise on the strong retail spend in this category,” CBRE head of retail and logistics research, Kate Bailey said.

“Many centres are forging distinctive retail identities. We have noticed a significant investment by regional centres into entertainment, leisure and experience while neighbourhood centres are placing a heavy focus on fresh food and convenience offerings.”

While retail trade conditions improved greatly over Q3, the CBRE Retail Marketview report also showed that retail rents remained static over the period, due to instore sales regularly failing to keep pace with fixed rental increases.

In regional areas however, many landlords have offered reduced rents to avoid vacancies within centres, leading to a decline of 4.9 per cent year-on-year.