Specialty Fashion Group has confirmed up to 120 of its stores will be closed over the next few years, adding to the 360 retail closures already announced by companies including Woolworths, Luxottica, Fletcher Jones and Billabong since the start of 2012.
Also at risk is Sleep City, with 64 stores across the country, while last year Colorado, Angus & Robertson and Borders also announced nearly 200 closures.
Managing director of Leasing Information Services, Simon Fonteyn, told SmartCompany this morning the sheer number of closures will have a substantial impact on the structure of the retail industry itself.
“This is much higher than normal. You wouldn’t expect to see that many closures in that many industries. It’s across fashion, footwear, electronics, accessories, homewares and so on. It’s all these sectors that are being affected right now.”
As a result of all these closures, Fonteyn says we’ll start seeing property groups paying higher incentives to win tenants.
“Basically when a company is bringing in a new tenant… they’re paying an incentive, and that could be a contribution to fit-out, or it could be a rent-free period, or some sort of combination of both of those.”
“Landlords don’t want vacancies. And in the bigger centres there is still demand for stores, but in the smaller sub-regionals you’re starting to see a trend where vacancy rates are ticking up, and that’s probably going to continue.”
The latest closures were confirmed by Specialty Fashion Group yesterday, although it had originally announced the closures last month. That announcement came alongside a 64% plummet in profit, with the retail industry continuing to suffer under poor conditions.
Fifteen of the 130 stores earmarked for closure will be shut by the middle of the year, but the company promises to start spending more money on its online sales channel – it wants 15% of sales from online within the next three years.
But conditions are still rough. And Fonteyn says the industry will continue to shift over the next few years.
“There are still a lot of problems to come, because we haven’t even seen the fallout from poor Christmas trading yet,” he says.