For the fifth consecutive year, town centre will be the weakest performing retail channel, with sales falling by 1.4% in 2012 as the economy remains weak, and online and out-of-town continues to takes sales.
Big ticket discretionary sectors, such as DIY, electricals and furniture & floorcoverings, continue to struggle on the high street as customers remain cautious and spend migrates to out-of-town and online. The larger out of town stores can offer deeper ranges while online offers greater convenience.
The role of the town centre is set to evolve into more of a community hub. A greater proportion of vacant units will be converted into leisure space and for community use with secondary locations being used more for residential properties. The town centre will support the e-retail channel more with click and collect points and drop boxes.
UK Town Centre Retailing Market
Published: February 2012
No. of Pages: 124
- What are the Top 10 town centre locations and how they are performing against each other?
- How is the town centre channel performing as a whole and by specific retail sectors, both historically and in the future?
- Which retail sectors are set to perform well or struggle in the town centre over the next five years and what are the reasons behind this?
Here are some parts of the Table of Contents for this report:
EXECUTIVE SUMMARY
Town centre will remain the worst performing channel for fifth year
Higher levels of inflation do little to support channel as volumes fall sharply
New model emerges – flagships, satellites and online
The channel will not return to growth until 2014
While the development pipeline appears robust, little is currently under construction
Role of town centre to change
Driving footfall will be key for councils supporting their town centres
Sector held up by food & grocery
DIY has found the going challenging over the last five years
Primark main winner in terms of sales
HMV struggles
Smaller councils need to fight pull of multiple centres
RETAIL ISSUES
Economic considerations
New divide between regions in the south & east and in the north & west
Regions more sheltered from the economic conditions are able to support stronger town centres
East Midlands’ low number of town centres in Top 100 due to distribution of large centres
London has third most Top 100 town centres despite negative score due to pockets of high unemployment
Despite its negative economic index, the West Midlands has 10 town centres in Top 100
The forthcoming public sector cuts will also impact these areas greatly as well
Councils in these regions need to be proactive to support their town centres
Exeter points the way
Demographics
High proportions of DE shoppers, 16–24s and over 65s will negatively impact on town centres
High unemployment among 16–24 year olds impacts on spending
More constrained pensioner also impacts on the town centre
Situation to worsen
Adjusting the mix of non-retail will help drive footfall and encourage shoppers to stay in the town centre
Centres which stage events will increase exposure and attract footfall
Improve public transport and integrate online
Online
Over the last five years, online spend has grown aggressively
The growth of online has been to the detriment of the town centre
While it will start to slow, online is still set to take a greater share of overall spend
The town centre needs to support multichannel retail more
Space
Contraction in physical shop space a big factor even without the downturn
Surviving multiples more ruthless with underperforming space
This rationalisation of space will impact on the town centre greatly
New model for retail
Some retailers already operating such a system
Many advantages of new model
Space will be used more efficiently
Non-retail will take a greater proportion of the town centre
Manufacturers will open temporary town centre stores as a showcase
Proximity to more alternative centres offers greater threat
South Yorkshire presents an example of this pull affect
Fewer direct threats can shield a town centre and help it to grow
The consequence of being under threat from multiple centres can be severe for a smaller centre
New flagship and satellite model will make this pull effect stronger over time
To combat this threat, town centres need to become more unique and enticing to the local people
Regulation and planning
Contraction of space will lead to a large amount of secondary and tertiary space becoming available
The most likely use for these locations will be residential
Driving footfall into the town centre is the main advantage of creating residential space
Creating a good mix of outlets is essential to capitalise on this new footfall
Having more people in the town centre may lead to changes in opening hours
Councils must also maintain the surrounding area to make it an attractive place to live
Parking is also an issue which councils will need to consider
A parking validation scheme may be a way to encourage people to stay longer in the town centre
With town teams in place, specific types of retailers may congregate in a centre
Strategies for Success
Driving footfall into town centre is pivotal
TOP 100 TOWN CENTRES AND MALLS
Methodology
Top 10
Central London
Glasgow
Manchester
Birmingham
Leeds
Liverpool
Kingston-upon-Thames
Cardiff
Nottingham
Norwich
TOWN CENTRE VS OTHER LOCATIONS
More profitable locations favoured by multiples
Sales declines slow … but growth remains weaker for town centres than other locations;
Town centre underperforms as more resilient locations continue to grow;
Volumes fall as space declines continue;
Out-of-town space grows at the expense of town centres;
Town centre densities rise as unproductive space is minimised;
Store numbers overall continue to fall … but neighbourhood suffers most casualties;
Town centre’s lead will continue to shrink.
Retail sales by location
Sales declines slow … but growth remains weaker for town centres than other locations
Retail spend by location
Town centre underperforms as more resilient locations continue to grow
Sales and sources of growth
Volumes fall as space declines continue
Space by location
Out-of-town space grows at the expense of town centres
Sales densities by location
Town centre densities rise as unproductive space is minimised
Store numbers by location
Store numbers overall continue to fall … but neighbourhood suffers most casualties
Forecast
Town centre’s lead will continue to shrink
SECTOR SUMMARIES
Books, news and stationery
Pace of sales decline to slow
Books, news and stationery has been a challenging market for the town centre
Market contraction to ease in 2012
Space contraction levels ahead of steeper decline once more
Looking ahead, sales densities will improve as space contraction accelerates
Clothing & footwear
Inflation drives sales while space growth recovers at a more gradual rate
Space growth returns to positive territory – aided by Westfield Stratford
Click & collect will bring shoppers into town centres
Department stores
Struggle in 2011
2012 also to be tough – but should benefit from tourism
Space shrinks in 2012
Exploring new store formats and locations
DIY & gardening
Share of town centre spending continues to fall as out-of-town dominates
Housing market recovery set to halt accelerating declines
Space continues to contract as out-of-town dominates
Electricals specialists
Spending spreads across other locations as specialists struggle in town centres
Sales declines continue as online pulls customers away
Grocers provide tough competition
Games consoles provide downward pressure
Space declines gather pace as multiples cut back
Food & grocery specialists
Grocers dominate in diminishing space
Ongoing consolidation sees independents continue to drop out
Grocers continue to expand
Opportunities for growth still exist for some …
… but are more limited for others
Furniture & floorcoverings
Will remain weak on top of poor comparatives
Downturn impacts on furniture & floorcoverings severely
Despite soft comparatives, furniture & floorcoverings continues to contract sharply
Space contraction will ease in 2012 but remain negative due to administrations and the harsh conditions
Sector recovery will not gain traction until 2014
General merchandisers
Hit by administrations and shift to out-of-town
Pound shops thrive …
… but could suffer reverses after market improves
Prospects remain weak
Health & beauty
Remains resilient despite the tough economic climate
Space growth will be minimal
Music & video
Demand for physical product drops
Online becomes increasingly important
Little need for physical space
WINNERS AND LOSERS
Current economic conditions emphasise successful and less successful retailers
Key findings
Primark closes on Top Four for revenue;
Alliance Boots stays top for profit – thanks to own brand;
Shift to out-of-town and administrations slow town centre space growth;
Biting economic climate makes improving sales densities harder;
Advertising spend increases as retailers aim to improve awareness of offers.
Total sales
Top Four remains unchanged but Primark is charging hard
Operating profit
Developing own brand offer helps Alliance Boots remain top
Operating margin
WH Smith only profiled retailer to improve margin over the last five years
Space
Shift out-of-town and administrations slow town centre space growth
Sales densities
Biting economic conditions make improving sales densities harder
Store numbers
Retailers remain cautious when it comes to opening space
Advertising media expenditure
Desire to increase consumer awareness leads to greater advertising spend in downturn
NEW RETAIL DEVELOPMENTS
Major retail developments 2010–11
Economic uncertainty contributes to slowdown in pipeline
Westfield Stratford
Largest urban shopping centre in Europe opens ahead of London Olympics
Wakefield Trinity Walk
Completed following downturn delay
Newbury The Parkway
John Lewis at Home opening should repair vacancy rate
Developments in the pipeline
Expect downsized applications
Dorchester Brewery Square
Work restarts following delay due to administration
Birmingham Swan shopping centre
Set for completion following long running litigation
