Scentre sales hit a record $26.7 billion as shoppers flock back to malls
Australia’s largest retail landlord, Scentre, has recorded its highest ever level of sales of $26.7 billion, as shoppers return to malls with gusto to spend more and linger longer.
Scentre owns and manages 42 Westfield shopping centres across Australia and New Zealand. A deliberate decision to make them community hubs to work, eat, shop and see a movie has paid off, with 480 million customers visiting last year, up 67 million on 2021.
And the momentum has continued with up to 70 million customer visits since the start of 2023, an increase of more than 10 million compared to the same period in 2022.
Scentre is an ASX-listed retail landlord with a market value of $15.6 billion, and with its size and innovations over the years is considered the retail market’s bellwether.
Scentre’s newly appointed chief executive Elliott Rusanow said in the past 12 months the malls have held more than 15,400 events. That’s set to increase with a new year-long collaboration in celebration of The Walt Disney Company’s 100th anniversary, including pop-up stores with Lego and Disney merchandise.
“It is a deliberate practice strategy on our behalf to drive that visitation because we know that the more people who come, the more often they come and the more times they come, the better opportunity we provide our business partners to interact with those people,” Rusanow said.
“And on the back of that, in 2022, our business partners saw sales of $26.7 billion in aggregate which is the highest number of sales ever transacted in Westfield’s history across Australia, New Zealand.”
He said luxury retailers performed strongly, and that augurs well for the current redevelopment at 111 Castlereagh Street site in Sydney. The former David Jones Market Street store is being transformed into a luxury destination, to join the big brands at Westfield Sydney mall on the opposite corner.
To keep the malls relevant, Scentre completed a record 3409 lease deals during the year, an increase of 912 on the year prior. This included 2232 renewals and 1177 new merchants, of which 288 are new brands to the portfolio.
For the year, the retail landlord reported funds from operations (FFO) of $1.04 billion, up 20.6 per cent on the 2022 year, and a final distribution of 8.2¢, taking the annual payment to15.75¢, payable on February 28.
Total occupancy was 98.9 per cent, with dining, fashion, health and beauty and jewellery tenants all recording sales growth of close to 30 per cent over the year. The much-maligned department and discount department sales were also stronger at 17 per cent and 21.1 per cent respectively.
Scentre Group also has a hefty development pipeline, and in the past year completed Stage 1 of the $355 million investment in Westfield Knox in Melbourne, including new Woolworths and ALDI supermarkets which opened in December 2022.
There has also been upgrades at Westfield Mt Druitt, including a new rooftop dining, entertainment and leisure precinct, and at Westfield Penrith, with a new fresh food precinct featuring Coles, ALDI, and a Tong Li supermarket.
Rusanow said there was also evidence that shoppers prefer to come back to bricks and mortar stores, and tenants are responding by offering interactive experiences and a wider range of goods that can’t be bought online.
“What we saw during last year is that that level of penetration of online actually reduced back to pre-pandemic levels. And people are happy to leave their homes and come out and interact on a physical level,” he said.
In a recent survey of retailers by CBRE, it reveals there are new store openings on the drawing board amid a renewed focus on bricks-and-mortar outlets.
Of the Australian retailers polled for CBRE’s APAC Retail Flash Survey, 83 per cent plan to open more stores this year, with just 6 per cent planning to decrease their network size.
CBRE head of retail research, Australia, Kate Bailey said one-third of the retailers polled also plan to increase the size of their store footprints, to build more experiential elements into their stores and to capitalise on the easing in rents that occurred over the past three years.
“The survey also highlights retailer confidence in bricks-and-mortar retail outlets, with 58 per cent of respondents planning to increase their number of stand-alone stores.” Bailey said.
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