After a surge in online retail sales, customers have begun to “flock back” to in-person shopping, with experts suggesting bricks and mortar stores are far from dead.
Ray White Commercial Head of research, Vanessa Rader said customers have quickly returned to physical storefronts.
“While there is a large portion of the market who continue to support online retail sales, we have seen customers flock back to their local centre to re-acquaint themselves with the in-person shopping experience,” Ms Rader said.
“Delays in shipping have been a large deterrent for some shoppers, while the lure of quality food offerings and entertainment has brought vibrancy back to centres and strips.”
According to the ABS, in 2019 online sales only represented approximately 6.25 per cent of all retail turnover, before jumping to 14.36 per cent in August 2022 during the Delta Covid lockdowns.
The latest data from the ABS for May 2022 highlights that this has shown a steady decline and now only represents 10.68 per cent, which is below the initial COVID-19 jump in April 2020.
Ms Rader said the move towards online shopping has been gradually changing the retail landscape for many years prior to Covid.
“Prior to the pandemic we saw vacancy rises in some markets as a precursor to this online changing of the guard and, as a result, many segments of the retail market saw rental adjustments after many years of strong gains,” she said.
“Our changing shopping habits also resulted in an overhaul of the retail mix in our strips and shopping centres.
“For larger centres the focus moved to food and entertainment as department stores reduced their footprints, while smaller centres pivoted to providing greater convenience with a focus on food.
“Many retail strips saw a move away from fashion and soft goods, making way for greater food offerings and services such as beauty and medical.”
While the pandemic may be behind us, the remaining retail vacancies can still be seen, according to Ms Rader.
“Despite demand to purchase retail assets being high over the last 18 months, concerning occupancy levels has resulted in rental discounting as well as some churn across retail tenancies,” she said.
“We are also seeing more service providers look to retail assets as an alternative to office or specialised spaces, giving their customers a better experience in locations with parking or transport options.”
Ms Rader said medical and childcare are all examples of uses now seen in centres and strips which were unheard of many years ago.
“This is likely to be a growing trend as these are all services which cannot be provided exclusively online, however will impact rents,” she said.
“Entertainment and food will continue to be a growing segment in our retail centres with new options emerging including sporting venues for Esports, VR, golf, climbing etcetera.”
Ms Rader said savvy retailers have used their bricks and mortar stores to provide an immersive experience which translates into online sales, still capturing the sale but in a different format.
“While for some there is still uncertainty surrounding physical retail shopfronts, they are certainly not dead,” she said.
“A continuing change to the retail mix is inevitable, adaptive reuse for some vacancies and moderation on returns for landlords is likely, however, the reducing proportion of online retail sales continues to point to our want to be in store, which is good news for the future of retail.”