There is a noticeable increase in shoppers looking for value and lower price points, according to the chairman of Vicinity Centres, Trevor Gerber.
Speaking at the property business’ annual general meeting this week, Gerber said that the shift towards lower prices is being highlighted by a strong performance across its outlet portfolio.
Vicinity manages around several DFO malls across Australia and has a co-ownership of the Harbour Town Premium Outlets centre on the Gold Coast alongside Lewis Land.
“Despite the cumulative impact of monetary policy tightening and inflation-led, cost-of-living pressures for Australian households, the retail sector continued to show a level of resilience in FY24, particularly in the first half,” Gerber said.
“As expected however, over the second half, we observed a softening in consumer demand for more discretionary categories such as apparel and footwear, jewellery and homewares.
"We also saw an increase in shoppers looking for value and lower price points, highlighted by the strong performance of our Outlet portfolio.
“Despite the relatively flat retail sales growth environment over the year, retailer confidence to lock in leasing deals remained robust, with the team negotiating more than 2,000 deals during the year.”
CEO and managing director Peter Huddle added to the discussion, noting that the first quarter of FY25 has been a continuation of FY24, where retail sales growth remain broadly flat.
“Also akin to FY24, our CBD and outlet assets continue to outperform,” Huddle said. “CBDs have returned to their former vibrancy, as tourist arrivals near pre-pandemic levels, international students return and now a greater expectation of workers to return to offices.
“Weekend visitation to our CBD assets now exceeds pre-pandemic levels and occupancy across the CBD assets leads the portfolio, at 99.4 per cent.
“Our outlet portfolio has proven resilient through economic cycles. Outlets are discretionary retail assets, however their appeal to value-conscious shoppers makes conversion to sales much higher.
“What’s more, outlet shoppers are mission-focused, they know the brands and they visit outlets knowing what they want.”
Also supporting the strong performance of the outlet portfolio was a “clever marketing campaign” that Vicinity launched this year titled, ‘Those In The Know, DFO.’
“On the retailer side, our retail partners consider outlets to be a critical component of their distribution network. They are naturally attracted to the comparably lower-cost operating model as well as the opportunity to clear excess stock, thereby reducing waste.”
Across the Vicinity portfolio, total sales in the recent quarter were up just 0.1 per cent, driven by supermarkets, discount department stores and mini majors. This was offset by declines in specialty stores, other retail and department stores.
For apparel and footwear in particular, quarterly sales were down 3.3 per cent, with jewellery sales down 1.0 per cent.