Retailers weary but ready to expand

NATIONAL: The prospect of another interest rate rise has taken its toll on the Australian retail sector, with sentiment declining for the first time in 15 months.

According to the Jones Lang LaSalle October Retailer Sentiment Survey, the sentiment index slipped to a net balance of 26 per cent in October, compared with 38 per cent in April 2007. The decline follows three consecutive rises since March 2006 with the index now four per cent lower than the same period last year. 

Jones Lang LaSalle retail research and consulting director David Snoswell said areas of concern to retailers include occupancy costs, interest rates and petrol prices.

"The fall since the last survey can be attributed to the 25 basis point interest rate rise in August and predictions of further rises that have recently come into fruition," he said. "In addition, the global credit crunch also surfaced during this time which has triggered some instability in world finance and share markets."

Sixty per cent of respondants expected to see an improvement in gross turnover, while 48 per cent expected the same profit margins. Jones Lang LaSalle Australian head of retail Tony Doherty said retailers were generally optimistic about their trading prospects over the next twelve months with many continuing to expand and increase store numbers.

"This growth is through natural new store openings as well as the acquisition of other retail chains, which is also proving a popular growth strategy. However most expect to run into difficulties locating suitable sites with availability of space being the main challenge."

Doherty said that in terms of preferred future supply, retailers were keen to see more 'main street' style shopping precincts, 'green' shopping centres and lifestyle centres but were less enthused about super-regional centres and factory outlets.

"Incorporating some of these desired features into an expanded regional centre as themed precincts may prove attractive to both retailers and consumers."