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REIQ Journal : July 2008
44 Commercial & Industrial Fuel prices hurt Australian retailers By Dino Siswadi, National Retail Analyst, and Tony Doherty, Head of Retail, Jones Lang LaSalle Retailers feel that rising fuel prices and interest rates are the factors having the greatest negative influence on future trading prospects, according to Jones Lang LaSalle’s 18th Retailer Sentiment Survey. THE SURVEY SHOWED that sentiment amongst Australia’s retailers plummeted from a net balance of 26 per cent in October 2007 to -54 per cent in April 2008. This is the lowest recorded sentiment since the survey’s inception in 1999 and is only the fourth time it has been in negative territory. The dramatic decline in sentiment in April was the result of economic factors affecting the retail environment since the last survey was conducted six months ago. Interest rates have risen three times since October 2007 and ABS statistics show that petrol prices have increased 13 per cent in the six months to March 2008. The low sentiment amongst retailers is not the result of one event but the culmination of many factors; rising interest rates, surging petrol prices, a weaker global economic environment and the effects of the global credit crunch. The confirmation of tax cuts in last month’s Federal Budget and recent decisions by the RBA to leave interest rates on hold have brought some welcome news for Australian retailers. Market conditions were making trading harder for Australian retailers but the fundamentals of the Australian retail market remain sound. The good news is that the survey revealed that even with the negative sentiment the vast majority of retailers (77 per cent) remain committed to expansion plans, with 64 per cent of respondents wanting to increase store numbers. What has changed is the degree of expansion. From the 77 per cent of those with a desire to expand, 74 per cent wish to do so moderately or marginally while only 3 per cent wish to expand rapidly, suggesting a more cautious approach to expansion. Vacancy rates in shopping centres around the country remain at record lows. The last vacancy count conducted by Jones REIQ Journal July 2008