We’re all foodies now: Why food retailing is hitting the sweet spot

It’s been a tough year for the retail sector, which ASIC figures show has had no shortage of insolvencies.

But there is one bright spot.

According to commercial property firm Colliers International, the year to September saw food retailing sales grow 3.7%. Total retail turnover grew 2.9%.

It’s not a new development. Over the past 10 years, food retailing has grown at an average of 5.3%, compared to just 4.2% for total retail.

Colliers says it’s seen strong interest in property in the sector, even though it offers relatively lower government incentives than a lot of other retail categories.

“This demand is coming from both domestic and international retailers who are keen to get a slice of Australia’s growing interest in food,” Colliers noted.

Michael Bate, head of retail at Colliers, tells SmartCompany that Australia has fallen in love with food.

“Reality TV might have had something to do with that,” he says. “We’ve all sat around and thought, if they can do it on TV, so can I.

“You look at shows like Paddock to Plate, which are fantastic.”

There has been no shortage of hit shows involving food in recent years – prominent examples include Ten’s MasterChef and the ABC’s Kitchen Cabinet.

Food retailing is a broad church, but all sectors have enjoyed strong growth in recent years. There are more supermarkets, restaurants and speciality food retailers than ever.

The ones who do well are emphasising fresh food, appealing to a growing class of Australian consumer who’s pickier than ever about what goes on their plate.

Australians aren’t just demanding quality, but variety. Fusion food has thrived in cosmopolitan Australia.

“If I told you a few years ago that we should go out for tapas, you would have said, ‘What?’,” Bate says. “We’ve become very sophisticated with our food here in Australia.”

Woolworths may trade on their ‘Fresh Food People’ tagline, but they’re not the only ones. Recent years have seen international supermarkets changing their strategy when going into Australia.

“When Aldi came into Australia, at first it didn’t do perishables,” Bate says. “They very quickly changed their whole format to suit the Australian market. We’re one of the few countries where they’ve done that.

“Similarly with IGA – they’ve been very deliberate and calculated with their fresh food component.”

“We also have all these smaller fresh food retailers complementing the supermarkets. Butchers, for example, have changed to become very good at providing added value you can’t get in the supermarkets.”

Fast food is changing too.

Colliers has sold several developments that have spurned food courts in favour of what Bate dubs ‘restaurant courts’.

“There’ll always be a role for the gobble-and-go food court,” he says. “But more and more, we’re seeing examples emerging of restaurant courts.

“They’re groupings of food outlets in a mall, but it feels like you’re in a restaurant area because of the intimacy and the design. The best example is Westfield Sydney – that’s a world-class example. You have each of the retailers inter-fuse with each other, so you feel like you’re part of an upmarket establishment rather than a food court.

“Once upon a time, food courts lined everyone along the outside and had seats in the middle. It’s become a lot more sophisticated now.

“Sure people still want the convenience of a mall. But they’re demanding higher standards for a lot of things, especially food. And they’re willing to pay for it.”

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