Population shrinks curb retail sales and store growth

Over the last two decades, the Australian population has grown steadily around 1.5 per cent per year, backed by the ongoing natural increase in population and a strong net overseas migration. 

This trend has changed at an instant due to the closure of international borders in early 2020 resulting in shrinking population and immigration. In other words, Australia’s population will be smaller, and older than projected prior to the pandemic.

To save you digging, population growth is forecast to dip 0.1 per cent 2020-21, 0.2 per cent in 2021-22 and 0.8 per cent in 2022-23. By the time we get to the end of 2022, we will have 1 million fewer people than the 26.98 million forecast in the 2019-20 budget. And if we’re not too far ahead of ourselves, we will have 3 million fewer people than the previous estimate in 40 years from now. 

If you think “Just because there will be a lot less people, doesn’t mean anything bad is going to happen”, just think of the ripple effect that has on retail sales and retail space demand for a second. For retailers and investors, this decline has already rattled their foundations.

An Immediate Economic Effect

According to a report by network planning company GapMaps Advisory, demand for retail floor space, rental growth, retail sales and growth opportunities will slow. Retailers won’t be able to open stores at the same rate as they have in the past as population per store falls. 

“The retail sector has been very strong for two decades and the single most important thing that’s driven that is population growth,” said GapMaps head Tony Dimasi.

“The rough rule of thumb is we have two square metres of retail space per person [so] 2 million fewer people means about 4 million square metres less in retail floor space needed.”

“There will be generally less floor space built than we’ve seen in the last two decades,” he said.

Coles also warned gravely in February that the food and grocery sector might struggle to achieve the sales growth it once enjoyed, with immigration generating a third of its annual growth before pandemic. 

From Brick and Mortar to Click and Order

And then there’s another thought: The society has moved on to online shopping and delivery, accelerated by the pandemic. It’s safe, quick, easy and efficient! It would continue to outpace bricks and mortar sales growth in the next decade. 

Businesses are quickly movi