Spotlight’s new Anaconda will teach shoppers to fish

It’s a $92 million bet – which the Spotlight group will near double with a second, 15,000-square-metre stage planned for the development – on the fast-growing population of south-east Queensland.

But it’s also a clear play on the evolving power of retail as an experience to draw in customers and sell to them.

“It’s just a retail store on steroids,” Fried told The Australian Financial Review.

“By having the fishing tank, by having the dock, the pier, walking around, looking at the boats, it’s a different way of shopping.”

It also marks a full circle return to a point from which the company started Anaconda two decades ago. It fitted the original Anaconda large-format retail stores with rock-climbing walls and test pools for kayaks. But they didn’t work.

“What we found back then, 20-odd years ago, is experiential wasn’t top of mind,” Fried said. “It wasn’t conducive to retail. So we actually removed all of them. It’s not until about 2022, that we’ve started to introduce [them]. It’s probably a post-COVID thing.”

Development of the new shopping centre – the first Spotlight has built after converting a former Masters store in Sydney’s Chullora to the format in 2022 – kicks off as the outlook for retail property asset values improves.

A new report from commercial landlord GPT Group says with the population growing faster than new assets are developed, and improving consumer spending, per-square-metre retail sales growth will accelerate to 3.3 per cent a year by 2030 from 2.5 per cent average growth over the decade to 2024.

“Factors fuelling retail sales growth include the supportive macroeconomic environment, consumer health, and retail industry recovery, with several trends pointing toward an optimistic outlook for Australia’s retail sector,” GPT’s head of retail, Chris Barnett, said.

“While the impacts of the global tariff reset are still emerging, Australia is likely to see less volatility than other economies, improving its credentials for offshore capital investment. A shift to defensive investments will benefit real estate, particularly retail, which has low supply and solid fundamentals.”

The retail recovery, which also includes a growing role by bricks and mortar retailers in the physical fulfilment of online purchases, is driving renewed investment in the asset class.

A further boost to existing retail assets comes from high so-called replacement costs, reflecting that higher materials and land costs make it more expensive to build a centre than buy an existing one.

“There’s definitely less development going on in the large-format retail space,” Fried said.

“You’ve only really got a handful of developers doing it, besides us, Harvey Norman and Bunnings and one or two others. Gone are the days you could buy LFR [large-format retail] land for $200 a square metre. Now everyone wants $1000 a square metre.”

Construction costs had also gone up, he said. “Three thousand dollars a square metre is the ballpark. It used to be $1500 a square metre. You’re talking over a 50 to 60 per cent increase since about 2018-19, and rents haven’t gone the same way,” Fried said.

A further disruption hanging over the company that imports more than 95 per cent of the products it sells comes from global supply chains. Prices would go up in the short term, Fried said.

“There was a big rush to get products into the US from China, pre-Trump and pre-tariffs,” he said.

“Now it’d be very interesting to see what happens in the next six months, but prices will go up slightly compared to the last six months.”

But the biggest impact on selling prices in Australia came from the relatively weak value of the Australian dollar to the greenback, Fried said.

“With a low US dollar at the moment – 60 odd [US] cents [for $1], products we buy are more expensive today, compared to if they were 70¢,” he said.

“It could be 15 per cent difference, right? That’s probably the big thing.”

But however uncertain the global trade environment, the growing market in south-east Queensland was an increasingly sure bet for retail, Fried said.

Spotlight Group was building six stores in the Moreton Bay Regional Council area for a total cost of $120 million over the next 12 months, he said.

“It’s a great growing catchment. That’s given me a lot of confidence to invest this type of money into this city because I know that the benefits will be there in the years to come.”

At the shopping centre with 450 car parking spaces, the new Anaconda store will also have a cold room for Brisbane locals to try on puffer jackets, something the company’s Melbourne stores are unlikely to need.