This week has been a very busy week. It started with our 9th Retail Summit, which was held at Freshfields in London. Over 160 people turned out to hear how whilst vacancy rates have started to slowly come down we are seeing this only in the ‘South” but in the ‘North” the opposite is true. So the north/south divide is certainly very evident and growing when you look at vacancy rates. London and the South East are c.10% and the North East and North West are 17%!
The other reality is that secondary towns, the Stockports, Walsalls, Boltons, Prestons, Wolverhamptons, Bootles, Aldershots, Rochdales, Swanseas and Kirkcaldys are also struggling with high vacancy rates as a result of oversupply in the number of retail and leisure units which is acerbated by being within ‘visiting distance’ of major centres such as Leeds, Manchester, Cardiff, Edinburgh, Birmingham, Bristol or London which have the modern day mega malls where shopping is secondary and experience, entertainment and eating lead the way!
The full report (41pages), which covers the macro economic factors all the way down to performance of towns within regions, is available to buy (£250+VAT) from www.localdatacompany.com . My video summary can be found here http://www.localdatacompany.com/knowledge
As ever we were fortunate to have an excellent panel and chair for the event, details of which I covered in my blog last week. The main messages that came out from the panel were;
- A strong online offering as increasingly important as consumers leave it very late to purchase goods and therefore fulfillment is key. Just look at how Next do their order before 9pm for next day delivery.
- 20% of non-food sales are now online but it is not for everyone as Primark has shown.
- Technology, not just in the consumers hands, but in the warehouses up and down the country are key. These warehouses are growing in size and many have more floorspace than small towns. For example ASOS has a 600,000 sq. ft. distribution unit. If you assume the average shop is 2,000 sq. ft. than that equals 300 shop units = Dartford, Aberystwyth, Rochdale or Ashford!
- Retailers post administration that survive typically have roughly half the number of shops they entered administration with when they exit. Game are being taken to the High Court for this very reason by their ex landlords who were the ditched 50%.
- Fragmented ownership of the High Street is a big issue as there is demand for space but the existing space is poorly configured and not fit for modern retailing.
- 2000-2008 saw the democratisation of ownership (more owners) but when the music stopped in 2008 many properties were held by the wrong type of owner who could deal with the recessionary impacts. As a result many banks are now reluctant landlords.
- Marketing and social media is a big aspect to retailing and in some cases landlords are leading the way but what of these small high street SMEs?
- Business rates are a big issue (as discussed in previous blogs) but on one hand they have created business closures and empty units and on the other hand the legislation has forced landlords to fill them with anything in order to cover the business rates costs. This has led to a fundamental change in ‘tone’ of high streets that is not necessarily to their long-term advantage. For some retailers moving into space is a big capital outlay (£500k for M&Co) but for others it is very little such as £ shops.
- The planning system is not capable of responding to the issues retail faces in 2014 and needs to be more flexible but also our MP, Priti Patel, made a very valid statement that many councils have no idea how to build and sustain a vibrant local economy!
Moving on I am delighted to say that ‘Junk AND Disorderly’ in Chesterfield got the most votes in our 2013 Pun of the Year competition. You can see them here – http://www.localdatasearch.com/chesterfield/town_centre/secondhand_shops/junk_disorderly-12434432
LDC will give a £100 cheque to Prostate Cancer, which is the charity of their choice. They have recently raised £100 through an event so it is great to se that we can double it for them and the charity.
Finally, travel hubs. Those of you who travel will have discovered that increasingly airports and train stations (sadly not bus stations as yet) are increasingly becoming nice places to spend time and money! It is not just a London thing as recently Nottingham’s station had a major refurbishment. These locations by the very nature of their footfall are becoming increasingly significant retail and leisure destinations. Fortnum & Mason have opened in St Pancras and Zara has just opened a 4,500 sq. ft. in the newly refurbished Gatwick. This is the largest airport store in the UK. Forget more runways it appears we need more shops!
Work has now begun on the retail and leisure Openings & Closures of 2013. Which sectors are thriving and which are just surviving or indeed dying and where? I will present these findings and our report on Openings & Closures in 2013 at Hogan Lovells on 25th March in London. Shortly, on the LDC website you will be able to register to come. It is free, has a great breakfast and should be a fun and insightful start to your day!