NewsBite

Advertisement

This was published 5 years ago

'Striponomics': The reason Perth's main streets are struggling is no big secret

By Nathan Hondros

Perth's 'main street' depression has been blamed on everything from local government red tape to greedy landlords, but the message from property economists, researchers and the industry itself is that economic and competitive pressure is behind business failure on retail strips around the city.

A number of high-profile closures over the past few weeks on Mount Lawley's Beaufort Street, where there are about 33 vacant shopfronts, have sparked a new wave of introspection about WA's retail trading sector.

Beaufort Street in Mount Lawley is facing a downturn as several businesses close their doors.  It's the same story on 'main strips' across the Perth.

Beaufort Street in Mount Lawley is facing a downturn as several businesses close their doors. It's the same story on 'main strips' across the Perth.Credit: Emma Young

This comes on top of retail trading figures showing growth in the sector has been stagnant over the year to March and has lagged behind the rest of the country since spending collapsed in 2013.

But while local governments such as Vincent, which oversees Beaufort Street, roll out action plans and rescue packages, some are warning of more pain ahead for independent retailers.

At the end of the day, it seems it's just business; unemployment, the rising cost of living and Western Australians spending their hard-earned in suburban shopping centres.

Curtin University property economist J-Han Ho said a combination of underemployment – related to the rise of the gig economy – and a scheduled program of massive investment in shopping centre renovations would keep the pressure on the main streets.

"Since 2018 and until probably the end of 2022, you've got the major retail shopping centres and big developers coming in with about $5 billion worth of investments on redevelopments of shopping centres," he said.

"That is a massive push on retail."

Advertisement

Mr Ho said some owners had postponed developments, which would take some pressure off, but there was still a lot of new stock coming into the market.

Retailers in the high-traffic retail areas were also finding it tough.

"They're making just enough to pay the rents, pay the bills, but they're not really making much of a profit," he said.

"If that's on the new, trendy spots, the problem and the pressure on Subiaco, Fremantle, Mount Lawley, and all those areas would be tremendous.

"For a lot of these businesses, which have been operating there for 10 or 15 years, if they've not been adapting and changing with the times, and adjusting their prices to compete with all these one-stop-shop locations where the shopping centres are going for the experience where people go and spend half a day, you're going to lose all these customers."

Mr Ho said restaurant chains and bigger businesses had introduced quality food at a better price point and could provide no-frills casual dining.

Sandra Brewer, WA executive director of the Property Council, said the economy was still "pretty shaky".

She said there were many people paying down large mortgages and coping with negative equity.

Meanwhile, the increased investment in food and beverage retail across the metropolitan area over the past few years was a source of competitive pressure.

"There were some good policy decisions that caused that, so there was the change in liquor licensing [such as] easy to get small bar licences; shopping centres have completely changed the way they deliver their product to the community now," she said.

"They've gone from being places to buy things, to being places to go and have an experience.

"They have just put all their efforts into creating fantastic food and beverage outlets.

"If you've got to get the grocery shopping done, plus you wouldn't mind having lunch with your family and your husband, a shopping centre is just ticking all the boxes so that's a convenience driver, I suppose."

Property researcher Damian Stone, the head of Y Research, has been looking at retail in Perth for the past few years.

He said the full force of investment in shopping centres on trading conditions was yet to be felt along the strips, because much of it hadn't happened yet.

That could put more pressure on retailer in 2021, 22, and 23.

Loading

Mr Stone said economic issues on the main streets were more about how small businesses can run with few employees, including the owners, without time for effective marketing. They instead just relied on foot traffic.

"And if people aren't coming out to spend because they don't have the disposable income, then they're not going to find these hidden gems, because they rely on their brand name or their Google ratings," he said.

"If you look at the strips, there's kind of a natural evolution.

"These things start off independent, and draw people in, but then what's attractive is that the rents for a main street are still significantly below a shopping centre.

"So then the chains start coming in because the people are there, but then that turns people off because they want independent retail.

"It's exacerbated by the economy, but a lot of these strips are restaurants and the same people who are complaining are probably the same people who are using Ubereats or Deliveroo."

Most Viewed in Politics

Loading

Original URL: https://www.smh.com.au/link/follow-20170101-p51usf