Traditional shopping centres will feel the squeeze over the next decade as shoppers demand more attractive experiences and increasingly move online, a property report shows.
Property market forecaster BIS Shrapnel predicts shopping centres will experience markedly lower rates of turnover growth in coming years as online retailing makes up a bigger chunk of total shopping and competition between established stores heats up.
Senior Project Manager at BIS Shrapnel, Maria Lee, said shopping centre owners would argue they had always coped with change.
But, she said, earlier major market changes had occurred during a period of very strong turnover growth, in the mid 1990s.
"It wasn't so much of a challenge to cope with change then," Ms Lee said.
"If you've got a much lower level of turnover growth and you're getting the internet taking share away, then it is a lot more difficult to cope with and certainly some shopping centres are going to get squeezed.
"It's going to be a lot tougher."
BIS Shrapnel's Retail Property Market Forecasts and Strategies 2012 to 2022 report predicts retail turnover growth of 2.9 per cent over the next five years.
Ms Lee said retailers were being hit by a double whammy as the aggregate level of turnover growth and the retail spending adjusted to a slower pace.
Online shopping would continue to take market share from bricks and mortar shops, peaking at around 15 to 20 per cent of total retailing.
While BIS expects turnover growth to strengthen through 2012/13 and 2013/14, growth would remain fairly subdued in the medium to long term.
The changing face of retail could be seen in a recent industry survey which showed 13 of Australia's top 20 retail chains in 2006 were no longer on the list.
However, Ms Lee said, shopping centres were beginning to adapt, highlighted by the growth in beauty stores, cafes and restaurants at the expense of book stores, CD and DVD stores.
BIS said it believes shopping centres will continue to experience a reasonable level of growth as long as limits are placed on the construction of new centres.
"We'll see a gradual change in the tenancy mix and, hopefully, see shops becoming a little bit more exciting, in trying to create a point of difference between shopping in a physical store and shopping online."
While high street retailing had declined in recent decades, some niche areas were still doing well, it concluded.
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