LDC’s latest bi-annual Retail and Leisure Trends Report (titled ‘The evolution of our retail landscape’) published on Tuesday 5th June, shows that the net number of leisure units across GB fell in 2017 for the first time since 2012. However, there are winners in this sector with niche cuisine types breaking through - vegan, Jamaican, Brazilian and Argentinian restaurants are all expanding.
In 2017, all retail categories (comparison goods, service retail, leisure and convenience retail) experienced decline and the GB vacancy rate increased for the first time since LDC started tracking it in 2012. However, this was only a very marginal increase at +0.2% over the entire year, settling at 11.2% – the same rate as 12 months earlier at the end of 2016.
Figure 1: GB vacancy rate H2 2012 to H2 2017 across GB (Source: LDC)
The vacancy rate for shopping centres is the highest across all retail location types(shopping centres, high streets and retail parks) and also saw the biggest increase from 2016 to 2017 rising from 12.7% to 13.2%. However, the data for 2017 also shows that shopping centres are becoming increasingly polarised with the smaller, secondary shopping centres performing significantly worse than the major ‘destination’ centres across GB.
Despite ferocious headlines about the ‘death of the high street’, the high street vacancy rate increased by only +0.2% over the year. The vacancy rate decreased across all GB retail parks in 2017, continuing the trend for increasing occupancy in this space. Retail parks have been performing well over the last five years and this is reflective of the attractive nature of this type of location to occupiers due to their easy accessibility, free parking and increased variety in retail and leisure offer enticing shoppers to shop and socialise. However, again, with some big retail park occupiers announcing CVAs and closures (Maplin, Carpetright and Toys ‘R’ Us) retail parks will be affected in the future.
Figure 2: Historical vacancy rates by location type across GB since 2012. (Source: LDC)
LDC’s latest bi-annual report, which is available to download free on Tuesday 6th June at www.localdatacompany.com/reports looks at trends across the entire retail and leisure market for both the 12 months of 2017 and the five years from 2012. Other key findings from the report include:
- The top 10, 20 and 50 shopping centres according to LDC’s Health Index all saw their vacancy rates drop, as they were able to continue to attract and retain the most sought-after occupiers.
- The shopping centres ranked 300th or lower in terms of their LDC Health Index score saw vacancy rates rise from 19.7% to 19.9%. It’s clear from this data that there is a polarisation in this market and the significantly higher vacancy rate at the less healthy centres is driving the overall GB shopping centre vacancy rate up.
- Retail parks remain the most desirable retail location, with this location type being the only one to experience growth in numbers of occupied units in 2017. The number of retail park occupiers grew by 0.85% in 2017, whilst all other location types saw a net loss of numbers of occupied units. Shopping centres saw the biggest drop in numbers, losing -1.88% despite the opening of several new shopping centres such as Westgate Oxford.
- Yorkshire and the Humber (-361), Greater London (-498) and Scotland (-520) were the three regions to lose the highest number of occupied high street units in 2017.
- The West Midlands lost the fewest numbers of high street units (-22). It also saw a decrease in shopping centre vacancy of -0.1% - the only region alongside London and the North West. However, it was one of only three regions to lose retail park numbers (-7) showing the variation across GB.
- Since 2013, the majority of GB regions have seen their LDC Health Index improve. The South West and Yorkshire and the Humber were the only regions to see a drop in their average LDC Health Index score over the five-year period. Overall, the GB Health Index score rose from 5.0/10 to 5.3/10 in the five-year period up to 2018.
- 2017’s most improved high street locations (as measured by increases in LDC Health Index scores) were Knightsbridge, Malton, St Leonards, Letchworth, Islington, Bromsgrove, St Neots, Ripley, Felixstowe and Barnsley.
- 2017’s most entrepreneurial towns across GB (as measured by net growth in independent businesses) were; Tooting, Aberdeen, Dawley, Reddish, Bromborough Rake, Liverpool, Great Yarmouth, Newcastle Upon Tyne, Folkestone and Erdington.
- 2017 was the first year that saw all classification types register a net decline in units across GB, with comparison goods retail (clothing and other non-food items) continuing to see the biggest fall in overall units with a net loss of -3,057. The loss of service retail units (banks, estate agents and travel agents) over took the loss of convenience retail (food and grocery items) in 2017, reversing the trend in 2016 which saw service retail increase by +114 and convenience retail drop by -409 units.
Figure 3: Net openings and closures by category type across GB between 2012 and 2017. (Source: LDC).
- Numbers of both multiples and independent occupiers declined for the first time since 2012, with numbers of independent business falling by -1,483 in 2017. The decline in numbers of multiples continued with -4,010 multiple units shutting up shop for the last time in 2017.
- Barbers and beauty salons saw the biggest increases in 2017, with barbers taking the top spot for growth, growing by +624 units in 2017, overtaking Tobacconists (including vaping stores) who grew the most in number in 2016 and have since moved down to 3rd place.
- The sub-category closing the most units across GB in 2017 was Pubs (-747), with their continued decline across GB just about beating the closures of Banks (-711).
- Some more niche retailers shone through and experienced growth, with Jamaican, Vegan, Brazilian, Argentinian, kosher and Malaysian restaurants increasing their presence in 2017.
Figure 6: Net change in units within the niche categories (under 100 units) across GB in 2017. (Source: LDC)
- Vegetarian is out and vegan is in, according to LDC data which shows a huge -70% decrease in vegetarian restaurants and a +61.5% increase of vegan restaurants over the 12 months of 2017.
- There was good news for some retailers though, with the top five brands experiencing growth over 2017; Lloydspharmacy (+116), Betfred (+135), Subway (+62), The Co-operative Funeralcare (+59) and Greggs (+51).
Lucy Stainton, Senior Relationship Manager at The Local Data Company commented:
“There is a spotlight on the British retail landscape like never before, with many household names struggling, if not falling casualty of cautious consumer sentiment and the constant pressure to innovate and invest. This is what makes LDC’s latest market analysis so significant – highlighting the activity taking place behind the top-line trends and giving us a glimpse into the future make-up of our high streets.
To begin with, our latest research shows that vacancy rates across GB have continued to decrease for the last 5 years to H1 2017 – meaning that the level of occupied stock has increased over that time period. However, H2 2017 does mark the first year to see a fall in the level of occupied retail and leisure stock, with a 0.2% increase in GB vacancy.
This increase in GB vacancy is perhaps more marginal than might have been expected given some of the current rhetoric. For example, our analysis shows that whilst 711 retail banks closed in 2017, 624 barbers opened. Likewise, whilst we lost 349 estate agents in 2017, we gained 388 beauty salons.
Our high streets are undergoing a huge transformation, and whilst accelerating, some of these sub-sectors have been quietly acquiring space for the past 5 years. Since 2012, over 2,000 barbers have opened up, we have 1,235 more coffee shops and a further 2,000 vaping shops.
Broadly, the sub-sectors growing across GB have services or propositions which cannot be replicated online, and those which are closing can very readily be replicated digitally. Equally, those corners of retail and leisure performing well are very much experience-led. This again tells us something about changing consumer preferences and habits.
There is no denying that retail is going through an unprecedented era of change but as our latest research highlights, it’s crucial to get underneath the overarching trends to understand the detail beneath this, giving us a glimpse of our future high street.”