Big brands and food key to city retail revival

THE CBD’s embattled fashion merchants are banking on the launch of at least three new major international apparel brands in the next year to bolster confidence and bring crowds to the city centre.

Perth’s high mix of discretionary retailers makes it more vulnerable to downturns in consumer spending, but analysts also blame the introduction of Sunday trading, online shopping and the construction activity on the City Link and Elizabeth Quay for the tough trading conditions.

Empty shops in the city’s once bustling malls and arcades, along with the never ending sale cycle point to the daily battles of many independent retailers, particularly in the fashion space.

Despite this gloomy landscape, a number of international fashion labels are planning to launch their first store in Western Australia in the coming year, including Topshop and Zara.

There is strong speculation Swedish fashion purveyor H&M is also close to signing up to its first Perth outlet, and experienced retail deal-maker Fred Clohessy said there were at least three other big brands taking a close look at the state capital.

This tale of two cities captures the fragmented nature of retailing in the CBD, which has flourished as a food and entertainment precinct and attracted a raft of big-name fashion brands in the same period that many apparel retailers have struggled to maintain sales.

Mr Clohessy is currently working with former 40under40 winner and Lease Equity managing director Jim Tsagalis to turn around the fortunes of the retail space at the base of the one40william office tower.

Their work will transform this area into a food and beverage precinct, and Mr Tsagalis revealed it was close to signing as many as six new operators to the area.

So far it has proved a difficult space for property owner Cbus, but the launch of Jamie Oliver’s Jamie’s Italian has brought a steady stream of punters to the precinct and Lease Equity is confident it will flourish as an ‘urban food and beverage village’ in the city.

Across the road, the foodhall at the base of Raine Square has also failed to attract the forecast crowds, and owner Charter Hall is currently “canvassing a number of national tenants” in a bid to rejuvenate the basement space.

The completion of the Old Treasury Building redevelopment will push another 6,000 square metres of retail space onto the market; and added to this is a significant retail component to both the City Link and Elizabeth Quay.

All these future projects are expected to have a strong food and beverage flavour, which has triggered concerns Perth’s fledgling small bar scene will not cope with too many more fresh entrants.

However Mr Tsagalis is optimistic about the outlook for city retail.

He said the maturation of the CBD’s night economy driven by new, sophisticated food and beverage outlets and the ongoing roll-out of new international brands would be key drivers for the city in coming years, along with the City Link project and eventually Elizabeth Quay.

However he acknowledged businesses such as Zara and Topshop would put pressure on other high street fashion labels, but forecast it would have a more negative impact on the suburban shopping centres than city merchants.

“There are some structural issues effecting retail; you’ve got the internet, the GFC, roadworks and then you’ve had deregulation ... but there is still a David Jones, there’s still a Myer and there is a huge amount of additional, quality food and beverage that is being added and that gives me a lot of confidence,” Mr Tsagalis said.

“My view is that we will see a rent hike in the city within two to two and a half years because there will just be an absolute lack of space.

“Let’s say four internationals come in and take 18 metres of (shop) frontage each; go and measure the mall, they’re not going to get any bigger someone has got to go, and that means there will be upward pressure on rents.”

Many city landlords have embraced the concept of pop-up retail to enliven unleased retail space, and according to Jones Lang LaSalle WA head of retail Ann Manifis it has proved a powerful tool for testing retail concepts in these uncertain times.

She said fashion and gift merchant Pigeonhole started out with two small tenancies in Shafto Lane and Bonne Marche Arcade, but the strong response to their pop-up store at the base of one40william has had a profound effect on the business.

“It just exploded and now they are looking at quite different options for their business model, so pop-ups are a really great place for retailers to be in at the moment,” Ms Manifis said.

Jones Lang LaSalle’s retail research noted that national chains were increasingly using pop-up stores to test markets before committing to long-term leases.

Ms Manifis was also upbeat about the future of CBD retailing.

She said city had reclaimed its status as a ‘destination’ and developed a unique identity and strong hospitality and entertainment culture, which the suburban shopping centres couldn’t compete with.

“I have a really positive outlook for the city... the city already is completely different to what it was 12 to 18 months ago,” Ms Manifis said.