How Can Commercial Property Investors Make Any Sense of the Retail Scene?

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What's needed is some Retail TherapyACCORDING to the Australian Retailers Association, its members are projecting $39.5 billion in sales from mid-November until Christmas — reflecting an overall increase of just 2% on last year.

Many shoppers still remain extremely hesitant, despite the RBA’s recent interest rate reduction.

Although, with household savings at record levels … people may simply be holding back on their main splurge splurge, until the post-Christmas sales.

It’s a Balancing Act

Either way, the Retail sector is delicately poised at the moment.

Retail Property it is delicately poised at the momentMost fashion and other specialty shops are finding things really tough. Although restaurants, wine bars and other “entertainment” outlets have been reporting steady business.

Sure, online shopping has grabbed the headlines over the past 12 months.

However, it seems there is also a growing number of people using the larger regional shopping malls to carry out their initial research. And then, they return to their neighbourhood strip centres — where they can browse in relative peace AND receive far more personal attention.

Apparently, if they are going to part with their hard-earned savings … shoppers appear to the wanting (and now expect) some old-fashioned service.

In other words, shopping now needs to offer an enjoyable experience — and not merely be an endless selection of basically the same products … simply in different stores.

For many, discounting alone will no longer motivate them to buy. Most shoppers are now seeking out friendly interaction, together with genuine personal service.

Store Loyalty is Returning

Originally, discounting destroyed store loyalty — as people focused on obtaining that product as cheaply as possible, from whoever was offering them the best price.

But slowly, the wheel is turning … mainly because people are feeling rather “discounted out”.

Don’t misunderstand … everyone still loves a bargain. But this now seems to be mainly related to generic fashion items.

Whereas for anything a little more intimate, and portraying your personality … you will find shoppers gravitating towards stores providing them with one-on-one guidance, in making their final choice.

Bottom Line: While this emerging trend is certainly interesting … as a Commercial property investor, you will find it almost impossible to pick between the good and bad Specialty traders — when choosing who will be the stronger tenant over the next 3 to 5 years.

As such, you should stick with the “entertainment” group for your tenants — if you do wish to invest in Retail property at the moment.

Alternatively, seek out shops with quasi-retailers like … banks, travel agents, solicitors, accountants or real estate agents — all of whom are far less dependent upon passing traffic.

 

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