As global retailers expand in Australia, opening new stores in Perth, suburban Sydney and Melbourne and even regional cities like Wollongong and Toowoomba, have they missed an opportunity by overlooking Adelaide?

Australia’s fifth most populous city is still waiting to be included H&M’s expansion strategy. It’s a similar story with Uniqlo, Forever 21 and Top Shop. And while not a recent phenomenon, from 2008, Apple rolled out flagship stores in five different states and territories before opening their Rundle Mall store in 2013, it does seem to be an ongoing trend. So what are the roadblocks that are discouraging these retailers from entering the Adelaide market?

Firstly, let’s take a look at demographics. Population growth in South Australia (SA) has been running below the national average for 30 years. As at March 2016, annual population growth in SA is 0.6%, less than half of the national growth rate of 1.4%. This low growth rate can be largely explained by interstate migration, which has been negative on a net basis for 54 consecutive quarters since 3Q2002.

But population growth isn’t the major roadblock. South Australians like shopping. SA retail growth was 3.5% on a rolling annual basis to August 2016 and has been running above 3.0% since mid-2014. The percentage of monthly retail spending that SA residents allocate to fashion is currently 6.6%. While not at the same level as New South Wales (9.4%) and Victoria (8.5%), it’s on par with Queensland (7.0%) and Western Australia (6.1%)[1]. So what is the main issue?The problem is that there’s not enough retail space of scale to accommodate these international fashion retailers that usually require a footprint of around 3,000 to 3,500 sqm positioned in high pedestrian traffic areas. Rundle Mall has the foot traffic covered, but due to the highly splintered ownership profile along Adelaide’s major retail precinct, creating a tenancy to satisfy the size requirement is challenging.

Meanwhile the inner city residential population is rising following a significant increase in CBD apartment development. As at 2015, over 23,000 people were living in the Adelaide CBD municipality, representing a 12.9% increase on 2010 figures[2]. And this growing number of people living in the Adelaide CBD is further supported by growth in international students, who are generally city-dwelling. The university enrolments in SA have increased by an average of 7.2% annually for the last three years, with 2016 enrolments reaching over 30,500 students[3].

This inner city population growth adds significant weight to the ongoing geographical importance of CBD retail. What the city needs now is one owner or a collective of owners with some innovation to create the space to allow these retailers to expand their Australian footprint to Adelaide.

[1] 8501.0 – Retail Trade, Australia – August 2016
[2] 3235.0 – Population by Age and Sex, Regions of Australia, 2015
[3] Australian Federal Department of Education and Training

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