Need for omnichannel rises as retailers look to stay ahead of the curve
Australia’s retail landscape is entering a period of stabilised growth, with turnover in the sector growing 3% in the third quarter of 2017.
16 Jan 2018
CBRE’s Q3 Retail MarketView report highlights this is the fourth consecutive quarter of growth around 3% following declines since the beginning of 2016.
Growth in Australia’s retail sector is being underpinned by improving household goods sales in NSW, VIC and the ACT.
CBRE Senior Research Manager Danny Lee said momentum in food and beverage also continued to build, with cafes, restaurants and takeaway food the only category performing consistently above 4%.
“Food and beverage maintains a defensive advantage against online retailing, which has helped ensure its strong continued growth, in conjunction with ongoing innovation in the sector,” Mr Lee said.
“The rise of online retail is expected to continue at double digit growth, as has been the case in Australia over the past decade. This will continue to place pressure on Australian department and discount department stores – making it imperative for retailers to get ahead of the curve in innovation.”
The report highights the increasing need for an omnichannel strategy, as retailers look to leverage multiple channels in order to maximise sales and customer reach.
CBRE’s Head of Retail Leasing for Australia, Leif Olson, said while the incrasing demand for convenience would continue to drive growth in online sales, bricks and mortar still plays the most vital channel in retail. We are seeing a trend of retailers becoming more focused on design/store efficiency and placing those stores in prime locations.
“Retailers need to be flexible and adapt their strategies to capture maximum audience reach. With consumers increasingly wanting a balance between experience and online retailing, omnichannel offers both worlds and therefore finding a balance between the two will help further position retailers for success,” Mr Olson said.
The report highlights Cotton On Group as being one retailer that has adapted its business model through innovation, with it working on rolling out ‘megastores’ that offer multiple brands under one roof. It has also relaunched its online platform, enabling consumers to make purchases across multiple brands.
The focus on innovation is also highlighted by the entry and exit rates of retailers in Australia, with some sectors having a higher exit rate due to technology and experience driving new concepts, and replacing older ones.
Some sectors, such as cafes and restaurants, are more defensive however, with a net entry rate of 13.5%.
“This is a trend we are seeing across the Australian retail landscape. Shopping centres are also remixing centres and adding significant portion of floor space to new food & beverage precincts,” Mr Olson added.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at https://www.cbre.com.