The word around town is that the luxury end of Melbourne’s fashion retail sector is doing quite nicely, with luxury retailers at the Chadstone shopping centre enjoying unexpected growth. Exclude the luxury end of the market and, despite the gloss that the opening of Australia’s Topshop seems to provide, things aren’t so positive. In fact, they’re almost archaic with Australia’s retail sales growing at only 2.8%, the worst growth since 1962, and Victoria’s retail sales growing at just 0.6%.
Melbourne’s retail sector is struggling through its toughest period since the 1960s, according to the December Herron Todd White property market report, with retail landlords letting outside the main retail strips the most affected.
According to October ABS statistics, the national annual growth rate in retail sales is 2.8%, equating to the worst growth since 1962. Retail sales rose 0.6% in Victoria on a seasonally adjusted basis in October, having registered no growth in September, increases of just 0.3% and 0.5% in August and July and decreases of 0.3% and 1% in June and May.
“It appears that retailers who are positioned outside the main retail strips with limited exposure are most affected when there is a downturn in retail trade levels,” says HTW.
The report warns that should consumer spending continue to weaken rents might fall, which could lead to a softening in capital values into 2012.
Among the retail strips outside Melbourne CBD hardest hit has been Bridge Road, Richmond, where the vacancy rate has risen to 10.6% by mid-2011.