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News release

AUSTRALIA

JLL Retail Survey:  Sentiment down despite positive turnover growth

The economic outlook remains the number one retailing concern


AUSTRALIA, 5 JUNE 2013 – The results of Jones Lang LaSalle’s Retail Centre Managers’ Survey for May highlighted the need for further stimulatory action to build consumer confidence, as sentiment in the survey dropped further after a glimmer of optimism in the results 3 months ago.

The Survey, conducted quarterly across Jones Lang LaSalle’s managed portfolio of 173 centres, noted that the RBA’s decision to cut the cash rate in early May was just prior to the survey being taken but has not yet led to a greater level of confidence in centre managers.
 
The May survey found that recent consumer sentiment data mirrors the sentiment of centre managers, with consumer sentiment falling by 7% in May and 11.7% over the past two months, to now sit at 97.6 which is below the 100 neutral mark.
 
Australian Head of Property Management, Richard Fennell said, “The retail market remains challenging.  The improved sentiment of centre managers reported in our February 2013 survey was short-lived.
 
“However, despite this drop in sentiment by centre managers, the positive recorded in the latest survey was that annual sales turnover growth across our managed portfolio was surprisingly strong, averaging 4.4% for sub-regional centres who took part in the survey and 5.2% for neighbourhood centres,” said Mr Fennell.
 
May Survey – Food retailing continues to outperform while clothing remains the concern
 
Mr Fennell said ABS figures show that food retailing and food catering (cafes, restaurants, take-away) continue to outperform the total retail market. 
 
“Our May survey highlighted the poor performance of apparel in larger sub-regional centres as a major concern for centre managers.
 
“Getting the tenancy mix right is paramount.  Traditional views to the optimal tenancy mix are being challenged with many centres now focusing more on providing a greater mix of services, often at the expense of the fashion offer.
 
“However, improved ABS sales figures in department store retailing and clothing, footwear and personal accessories are starting to come through, even if they are coming off a low base,” said Mr Fennell. 
 
May Survey - Number 1 concern for Centre Managers:  Economic Outlook
 
In the May survey, centre managers were asked what factors were impacting turnover performance in either a positive or negative way.  The economic outlook remained their number one concern, with 50% expressing negativity about the year ahead compared with 46% in February’s survey.
 
Director, Research and Consulting Australia, David Snoswell said, “The political environment continues to be an area of concern.
 
“However, there are now more centre managers expecting a positive improvement in trading prospects in the year ahead due to the political environment compared with three months ago.  This may reflect a decisive election outcome for September.
 
“Certainly there are now fewer ‘fence sitters’ in judging the impact of the political environment on trading as the election gets closer.  Those surveyed expressing the political environment as having a ‘neutral’ impact on turnover performance dropped from 77% in November 2012 to 56% in February and then 47% in May,” said Mr Snoswell.
 
Mr Snoswell said, “Some positive signs in retail trade began to emerge in early 2013, but more recent data suggests that consumers are still nervous and a sustained recovery in the retail market may not occur until later in 2013 or in 2014.
 
“The results of the May 2013 Centre Managers’ Survey highlighted the need for further stimulatory action to build consumer confidence and the RBA’s decision to cut the cash rate in early May supports this.
 
“In total, the cash rate has been reduced by 200 basis points in the current cycle (since November 2011).  We would normally expect the latest cash rate cut to provide the impetus for a greater level of confidence in consumers and centre managers, and this may still occur in coming months,” said Mr Snoswell.