CBD Environments Can Be an Attractive Option for Some Retailers

CBD environments can be an attractive option for retailers looking at expanding their networks or increasing their brand exposure.

The major CBD’s across Australia typically have exceptionally high volumes of pedestrian activity throughout different day parts, including people working within the CBD, residents living within the CBD, and also tourists or visitors to the CBD for various retail or entertainment outings.

Based on the latest release of the Precinct Scout Mastercard Merchant data, CBD environments continue to top the lists in terms of both transaction and sales activity.  Popular CBD streets include George Street in Sydney, Elizabeth Street in Melbourne, and Edward Street in Brisbane (just to name a few).  George Street in Sydney is currently ranked the highest in the state out of over 1,400 retail precincts in NSW on sales activity.
Whilst the CBD can offer lucrative opportunities for many retailers due to the high levels of pedestrian activity, not all retailers necessarily benefit from locating in CBD environments. 

For example, many brands that have more of a family, outer suburban skew do not tend to fare as well in CBD environments, and therefore can not justify having a CBD network planning strategy due to the higher rents that are also demanded.  In this case, some of the retailers that we have worked with at Geotech have either avoided the CBD altogether, or have maintained a select number of “loss leader” stores in the CBD to assist with building broader brand presence.

In addition to this where a particular brand locates within the CBD is an important consideration, as Geotech has found that where a brand locates within the CBD can make a massive difference to sales potential.  

As an example, brands that appeal to white collar working populations would be more suited to locating in the commercial sections of the CBD’s.  On the other hand, brands that appeal to more of a young adult, cosmopolitan key target market may be more suited to locating in the main retail and entertainment sections of the CBD’s, or close to universities.  Therefore, the sales potential of a CBD location for any given brand will depend on the brands specific offering and who their key target market is. 

Precinct Scout visually displays the strength of a precinct on important measures such as transaction and sales activity, which is an invaluable tool for retailers wanting to assess CBD locations, and to determine if a CBD strategy is right for their brand.