Home' The Channel Magazine : National Newsagent November/December 2012 Contents With impending rent reviews, many
newsagents say they cannot face an
increase in rent as some landlords are
According to Milton Cockburn,
executive director of the Shopping Centre
Council, there is no doubt that there
is a downward pressure on rents as
many shopping centres face increasing
vacancies. Mr Cockburn said that
shopping centres had to be proactive to
keep the tenancy levels up, following a
significant reduction in the demand for
space. "Rent follows sales," he said.
"Shopping centres need good retailers
to attract customers."
Asked if newsagencies were no longer
the draw cards they once were, Mr
Cockburn said that there were still good
newsagency operators, but the category is
Newsagency occupancy cost ratios
(OCR) in regional shopping centres, of
which there are only 80 in Australia,
are around 18 per cent; in sub-regional
centres the average OCR is 13.2 per cent
and in supermarket-based centres the
average OCR is around 10 per cent.
Newsagents could consider these
averages when renegotiating rents.
Mr Cockburn agreed that it is advisable
for newsagents to engage the services
of a reputable lease negotiator when the
time comes to sign or renew a lease.
He said we are faced with a new
paradigm and does not see a return to the
halcyon days when savings were low and
spending was high. Shoppers are more
prudent now and retailers have to work a
lot harder to convert sales.
Fred Harrison, CEO of Ritchies IGA
and Metcash's largest franchisee has
suggested a two year moratorium on
new retail development to give existing
retailers some confidence to invest.
Harrison told The Age newspaper that
the amount of floor space in Sydney and
Melbourne has increased from two square
metres to three square metres per person
in the last few years, noting that if this
level of growth is to continue it will have
"long term repercussions for competition
Mr Cockburn does not think that
Australia is 'over-retailed'. "It's all about
supply and demand," he said and there
have been very few new developments
since the GFC. Shopping strips are not
doing well---there are vacancies there.
The problem is there is no single owner to
with the issues
of the internet
taking sales away
there's going to
be an oversupply
of retail outlets,''
THE RETAILER'S UNIVERSE
Leasing specialist Stephen Spring
follows leasing trends in Australia and
overseas. He recounts the experience
at a leasing conference where one
speaker transfixed the audience with
his clarity and vision for any specialty
retailer contemplating their future. He
was aiming fairly and squarely at the
audience of large chain operators with
stores up and down the country who were,
back then complaining about stagnant
turnovers and escalating rents. "Those
were the days when average occupancy
costs were about 9-11 per cent of
turnover and most shops were profitable.
What a different market we live in today.
The demographic and location will dictate
the speed of change and the market
position you must aim to occupy and each
situation is different," Mr Spring said.
The new compressed retail cycle is
expressed in Table 1.
ARE YOU CUT OUT FOR
Stephen Spring says the last word
on retailing should go to the UK's retail
specialist Mary Portas who was asked to
report on the state of high street retailing
Ms Portas says that some retailers
quite simply should never have opened
their doors in the first place. Running a
profitable retail business is a commitment
which goes far beyond the fun of the
buy and the thrill of the sale---and not
everybody is cut out for it.
"Some opened on the back of a
shopkeeper's vision that at the time felt
hugely compelling but they simply failed
to take into consideration the needs and
aspirations of the customer.
"Of greatest concern to me are the
thousands of businesses in Britain who
once managed to make a living out of
retail but in recent years have simply
failed to adapt. Hard-working, committed
and professional people, frequently
real experts in their fields, who haven't
adapted their retail offer to meet the
increasingly demanding expectations of
"Surviving in today's value-minded,
focused market means reappraising how
As retail remains in the doldrums,
newsagents who are facing
declining sales are finding the rent
payments more difficult and the
occupancy costs rising above an
acceptable 10-12 per cent.
"There are still good
newsagency operators, but the
category is under challenge"
National Newsagent November/December 2012
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