Australian retailers pay significantly more than their counterparts overseas according to research by Morgan Stanley. The investment bank compared retailers with similar sales densities rather than make, what they called, futile across-the-board comparisons.
The biggest gaps in rental costs are to be found in the speciality retail sector, where Australian retailers pay rents about three times higher (and sometimes more) than similar US business. Australian retailers Westfield Specialty pay US$1428 per square metre, Just Jeans Portmans etc. pay US$1202 while their US counterparts pay US$424 per square metre.
A smaller gap appears with department stores where Myer pay US$227 per square metre while the upmarket Saks department store pays US$149. Other Australian retailers –
David Jones – US$206/sq.m.
JB Hi-Fi – US$512/sq.m.
Super Retail Group – US$238/sq.m.
Reject Shop – US$438/sq.m.
In its submission to the Productivity Commission, the Westfield Group defended the rents it charges retailers, saying they are a product of market forces.