Volatility at the petrol pump has emerged as a major area of concern for shopping centre managers, due to the wild fluctuations in price over recent months.
With the fight for the retail dollar intensifying, any changes in fuel prices, mobile phone contracts and the April 1 health insurance levy rises, have put retailers on edge to come up with new ways of enticing consumers to spend.
Landlords are tackling the issue through a change in tenancy mix at their malls with more emphasis on services such as Medibank Private outlets, food, beauty salons and nail bars - all things that cannot be easily bought online but are seen as semi-non-discretionary spending.
The rise of online shopping, fuelled by the well-publicised arrival of Amazon, has added to concerns of weaker sales by managers of shopping centres, according to JLL's 16th Retail Centre Managers' Survey, done last month across 109 JLL-managed retail shopping centres nationally.
Overall, centre managers have again expressed a relatively subdued outlook for the year ahead in terms of turnover expectations.
The survey found 47 per cent of respondents expected some sales growth in the year ahead, down from 52 per cent in August 2016 and 55 per cent in February 2016.
According to JLL research, this was the first survey since May 2013 that less than half the respondents expected growth in sales over the year ahead.
Supermarket price discounting has also been particularly strong and was noted as a concern by centre managers, who saw annual neighbourhood centre sales decline 1.3 per cent.
Most of the centres in the survey were neighbourhood and sub-regional centres.
Fuel volatility
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell 0.5?? to 130.1?? a litre in the past week.
CommSec's chief economist Craig James said the petrol discounting cycle (from highs to lows) in southern and eastern capital cities has stretched to more than a month.
"In fact the last Melbourne cycle was 53 days. Petrol prices now stay at the lows for a short period and then can lift 20?? a litre in the space of three-four days before starting the downtrend again," Mr James said.
He said the volatile conditions are expected to continue as investors monitor the global supply/demand outlook.
The bright spot was that inquiry from fresh food and food catering tenants remains buoyant.
Head of property & asset management Australia at JLL, Richard Fennell, said, not only is this where inquiry is relatively strong, a quality food offering, including cafes, gives customers a reason to linger longer in centres.
"Key concerns impacting trading performance in the year ahead are competition, online retailing and fuel prices, which have fluctuated wildly over recent months," Mr Fennell said.
"On balance, the results of the latest Centre Managers' Survey mirrors recent economic and consumer sentiment results that have been reported in the market, including a 0.5 per cent contraction in gross domestic product in the third quarter of 2016."
JLL's director, strategic consulting, David Snoswell said while the survey results was similar to the same time last year, the volatility of fuel prices and the fast growth of online shopping, were having an impact on the outlook for the centre managers.
Overall, retail trade across Australia grew a modest 3.5 per cent in 2016.
"When new centre openings, expansions of existing centres and the continued expansion of global retailers such as Costco, Aldi and fast fashion labels is taken into account, competition for the retail dollar is very strong," Mr Snoswell said.
"The shift in shopping habits to online and the changes in costs, such as the volatile fuel prices, have happened in a relatively short time, making it more front and centre for the malls and the managers."
