Australians return to the malls despite a plunge in consumer confidence

Australians are returning to shopping malls as Covid fears subside with Scentre Group reporting customer visitations up 12 per cent on 2021 levels during the first quarter. 

In an operational update filed with the ASZ, Scentre Group CEO Peter Allen said the mall operator saw “a significant increase in sales for our business partners, above pre-pandemic levels”.

Excluding CBD-located centres, mall foot traffic is up by 16 per cent. 

“We are seeing week-on-week improvement across our suburban and CBD based centres,” he said. Comparable sales of major retailers and specialty stores were up by 11.2 per cent in March compared to the same month in 2019, pre-Covid, and for the quarter were up by 7.1 per cent.

Scentre group’s figures came out on the same day as the latest consumer confidence data from Westpac shows a decline of 5.6 per cent to 90.4 points in May, which is back to lockdown levels, less than two weeks out from an election. It’s the worst figure since August 2020 when Victoria was suffering from Covid-related lockdowns. 

The confidence slump has been attributed to rising inflation caused by Covid and the war in Ukraine disrupting global supply chains, along with the Reserve Bank’s recent increase in interest rates, its first in 11 years.  

Meanwhile, Allen said Scentre Group’s portfolio occupancy remains strong at 98.7 per cent and demand from existing and new businesses looking for space was holding up. 

“We are confident about the future of our business, the sustained economic recovery across Australia and New Zealand and people’s ongoing desire to gather in our destinations, socialising with each other and interacting with businesses and brands across our platform,” said Allen.

“During the three months to March 31, the group completed 536 lease deals, including 237 new merchants, welcoming 50 new brands to the portfolio,” he said.

At the group’s Westfield Mt Druitt, a $55 million rooftop entertainment, leisure and dining precinct opened during the quarter. Over the first month of trading, customer visits and dwell time increased by 56 per cent compared to the same period last year.

Allen said the $355 million investment in Westfield Knox in Melbourne was progressing well with demolition complete and construction of the new structure underway. Pre-leasing progress was in line with expectations. 

“In light of the improving conditions and strong performance of our business, earnings are expected to grow in excess of 5.3 per cent in 2022.”

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