Luxury shoppers helping spur city retail recovery

Luxury shopping has been driven by wealth creation as a result of strong gains in housing in the past few years. Picture: Getty Images

More Australians are treating themselves to expensive purchases with their accumulated savings from Covid lockdowns, propping up the luxury retail industry and helping big landlords.

The spending surge at the top end is driving revenues at centres owned by the likes of Vicinity Centres, which co-owns Melbourne’s Chadstone Shopping Centre, and Scentre, owner of the local Westfield empire.

Luxury shopping has been driven by wealth creation as a result of strong gains in housing in the past few years, although this effect may diminish as house prices drop off.

A still strong labour market with record low unemployment has kept confidence levels up, and as a result, saving levels remain above pre-pandemic levels, supported by the increase in credit card transaction activity from the first half of 2022, according to Ray White Commercial head of research Vanessa Rader.

“During a time when CBD retail has been under pressure, we have seen a strong commitment by luxury retailers to grow their brick and mortar footprint,” Ms Rader said.

She said that while tenants were hampered by lockdowns restricting non-essential shopping, and border closures cutting international tourism, some retailers took this time to improve their customer experience and in-store offerings.

“However, for some, plans were in place well before Covid-19 as activity in the luxury retail space slowly grew momentum increasing returns year on year,” Ms Rader said.

There are some signs that high inflationary pressures, paired with increasing interest rates, will lead retail trade levels to moderate for non-discretionary goods. But on – the – ground stores are opening. At Sydney’s 25 Martin Place skyscraper redevelopment, where Dexus overhauled the retail component of the former MLC Centre, a luxury fashion hub is springing up.

International brands like Missoni and Brunello Cucinelli will be joining Valentino and Dolce & Gabbana stores already at the address.

Despite disruptions from development in the area, Castlereagh St in Sydney’s CBD welcomed Robert Dubuis and Cartier’s new Oceania flagship store as well as upgraded its Dior, Fendi and Hermes locations. They will join Gucci, Prada, Versace, and Piaget along the street in Westfield.

Elsewhere, Ralph Lauren has announced its first store in WA and a new Melbourne CBD store opening later this year.

LV, Hugo Boss, Tiffany and Burberry are also all set to open stores across Australian CBDs.