Mall giant Vicinity says shoppers are staying for longer and spending more
Australia’s second-largest retail landlord Vicinity Centres says shoppers are spending more money on each visit to its centres, an early sign of recovery for the nation’s hard-hit shopping malls.
But Vicinity, which owns and manages 60 malls nationwide, said retailers’ confidence is still “fragile” and retail sales for the March quarter were down 7 per cent on the previous corresponding period.
“After a challenging 12 months, we are seeing signs of recovery, with improved centre visitation and retail sales during the quarter. Whilst overall retailer confidence remains fragile, retailers are increasingly committing to new leases versus previous quarters which is encouraging,” chief executive and managing director Grant Kelley said.
Vicinity’s large portfolio includes a half share of Australia’s biggest shopping centre, Chadstone, and Sydney’s prestigious The Strand Arcade.
Mr Kelley said sales across the group’s malls reflected a “subdued but improving retail sales environment.”
Consumers are spending more per visit with the average spend increasing 23 per cent in March, a positive lead indicator for continued recovery, he said.
Discount department store sales are up 11.7 per cent, outperforming department store sales which slumped 22.4 per cent over the quarter.
Combined mini-majors and specialty stores reported a 5.7 per cent decline in sales as shoppers’ spending on discretionary goods fell away.
However, total portfolio sales across the group for the March quarter climbed close to pre-COVID levels, down 2.3 per cent relative to the 2019 March period, underpinned by solid supermarket and fresh food sales.
Mr Kelley said a lack of tourists and office workers in CBDs and the risk of further snap lockdowns were weighing on the business.
Most Australian malls stayed open during the pandemic, but shoppers were forced to stay home under lockdown laws, and foot traffic and revenue across the sector plummeted.
The ill-effects were felt most in Vicinity’s Brisbane, Sydney and Melbourne CBD centres.In March, the number of visitors across the group’s portfolio was 77 per cent of pre-COVID levels but, if CBD centres and the group’s poorer performing Victorian malls are excluded, that figure jumps to 91 per cent.
Importantly for the landlord, it collected more gross rental billings (82 per cent) than in previous quarters.
“With improved trading conditions and as Vicinity moves towards completion of outstanding COVID-19 support agreements, particularly with SME retailers, an improvement in cash collections is expected,” the group said.
Shares in the group traded down slightly, to $1.58, the lowest close in two weeks.
