Retail spending has become very targeted with cash going into food courts, mobile phones and nail bars, at the cost of apparel and department stores, according to the latest data from landlords.
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CFS Retail Property Trust, which owns the Emporium, half of Chadstone and Northland malls in Melbourne, Chatswood Chasein Sydney and the Direct Factory Outlets (DFO), says the retail sector is at the bottom of its cycle.
The chief executive, Angus McNaughton, said at the full year results on Thursday, that on the operating environment, the group was cautious on retail sales in the short-term given the impact of the 2015 Federal Budget. "But expect specialty store sales to steadily improve to 3 per cent for the direct portfolio over 2015," he said.
"While there were a number of mixed economic signals, we do believe we are moving through the bottom of the cycle and our portfolio is well positioned to capture the benefits from any upturn in discretionary spend."
In the results, the group's deputy chief executive, Michael Gorman, said comparable specialty store sales grew to $10,457 per square metre at June 30, a rise of 3.9 per cent from the previous year, as underperforming tenants were progressively replaced.
The breakdown showed that department store sales were still flat to negative, although there was a skew as the measure was over 52 weeks in 2014, compared to 53 weeks in 2013.
The discount department stores, such as Target and Kmart continued to feel the pressure of lower sales, partly from the internet, which sells similar items of apparel and the rise of new outlets like Priceline, which cuts into the discounted make up sales.
Food and food catering, remained the dominant anchors for landlords, which explains the new bigger food courts in all malls.
Consumer's embrace of all things electrical, saw mobile phone and tablet device sales contribute strongly to the malls' sales, as did retail services, which include bank branches, medical centres and some beauty salons.
The use of shopping centres for things other than shopping, was indicated by the higher sales of these general retail services.
Booming house sales also lifted sales for homewares, as people sought out new soft furnishings for their new home.
"The Australian economy continues to grow, albeit at a pace that is below trend," Mr Gorman said.
"Retail sales growth also remains soft, as positive economic, income and house price growth is offset by weaker employment conditions and consumer caution following the announcement of the 2015 Federal Budget. Additionally, unseasonably warm weather in autumn created challenges for some retailers in moving their winter stock."
