UK Town Centre Retailing 2012

This report provides detailed ranking and information on the Top 100 GB towns and shopping centres, with analysis into the Top 10 town centres. It includes sales data and trends for town centre retailing as a whole and by retail sector over the last 10 years with forecasts to 2015. It includes comprehensive analysis of current and future town centre retail issues and strategies for growth.

Scope:

- Benchmark your performance against the total town centre sector and specific sub-sectors and identify risks and opportunities for future growth
- Shape a successful development strategy with town centre and retail sector forecasts for this location
- Identify strategies for success in this sector with Verdict's view on the town centre's future
- Develop a profitable store network using forecasts, analysis of successful region's economic & demographic profiles and top 100 town centres

Highlights:
- 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.

Reasons to buy:
- 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?

OVERVIEW
-Key findings
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
APPENDIX
-Definitions
?Abbreviations
-Methodology – Top 100 town centres and malls
-Ask the analyst
-Verdict consulting
-Further reading
-Disclaimer
TABLES
-Table: Weighting of factors determining Top 100 centres in 2011
-Table: 1–10 of Verdict’s Top 100 UK shopping centres 2011
-Table: 11–30 of Verdict’s Top 100 UK shopping centres 2011
-Table: 31–50 of Verdict’s Top 100 UK shopping centres 2011
-Table: 51–75 of Verdict’s Top 100 UK shopping centres 2011
-Table: 76–100 of Verdict’s Top 100 UK shopping centres 2011
-Table: Retail location definitions 2012
-Table: Retail spending by location at current prices 2002–12e
-Table: Sales through town centre retailers 2002–12e
-Table: Sources of growth for town centre retailers 2002–12e
-Table: Floorspace town centre vs all stores 2002–12e
-Table: Sales densities by location 2002–12e
-Table: Store numbers by location 2002–12e
-Table: Town centre summary 2005–15e
-Table: Town centre vs. total retail spending 2000–15e
-Table: Books, news and stationery in the town centre 2007, 2011 and 2012e
-Table: Clothing & footwear in the town centre 2007, 2011 and 2012e
-Table: Department stores in the town centre 2007, 2011 and 2012e
-Table: DIY & gardening in the town centre 2007, 2011 and 2012e
-Table: Electricals specialists in the town centre 2007, 2011 and 2012e
-Table: Food & grocery in the town centre 2007, 2011 and 2012e
-Table: Furniture & floorcoverings in the town centre 2007, 2011 and 2012e
-Table: General merchandisers in the town centre 2007, 2011 and 2012e
-Table: Health & beauty in the town centre 2007, 2011 and 2012e
-Table: Music & video specialists in the town centre 2007, 2011 and 2012e
-Table: Key town centre retailers UK turnover record 2007–12e
-Table: Key town centre retailers operating profit 2006–11
-Table: Key town centre retailers operating margins 2006–11
-Table: Key town centre retailers total selling space 2007–12e
-Table: Key town centre retailers densities 2007–12e
-Table: Key town centre retailers total store numbers 2007–12e
-Table: Top 12 town centre retailers by advertising expenditure 2010
-Table: Major retail developments in 2010 and 2011
-Table: Weighting of factors determining Top 100 centres in 2011
FIGURES
-Figure: Factors affecting the town centre 2012
-Figure: Economic index scores for UK regions, October 2011
-Figure: Average demographic factors by region 2011
-Figure: Proportion of overall spend through major channels 2003,06,09,12e and 15e
-Figure: Flagship and satellite model 2012
-Figure: House of Fraser click and collect Liverpool store 2012
-Figure: Meadowhall catchment area map 2011
-Figure: Benefits and consequences of converting vacant space into residential use 2012
-Figure: 1–10 of Verdict’s Top 100 UK shopping centres 2011
-Figure: Oxford Circus, London 2011
-Figure: Buchanan Street, Glasgow 2011
-Figure: Trafford Centre, Manchester 2011
-Figure: Proposed development of Birmingham New Street Station 2011
-Figure: Trinity Leeds artists impression 2011
-Figure: St David's Centre, Cardiff 2011
-Figure: Growth of retail sales by location (excluding non-store) 2002–12e
-Figure: Share of total retail expenditure by location 2002–12e
-Figure: Y-o-y change in retail space by location % 2002–12e
-Figure: Y-o-y change in retail store numbers by location % 2002–12e
-Figure: Town centre proportion of total retail sales 2005, 2010 & 2015e
-Figure: Retail spending growth vs town centre 2000–15e
-Figure: Town centre sales sources of growth 2000–2015e
-Figure: Books, news and stationery town centre sales 2006–15e
-Figure: Books, news and stationery town centre space 2006–15e
-Figure: Clothing & footwear town centre sales 2006–15e
-Figure: Clothing & footwear town centre space 2006–15e
-Figure: Department stores town centre sales 2006–15e
-Figure: Department stores town centre space 2006–15e
-Figure: DIY & gardening town centre sales 2006–15e
-Figure: DIY & gardening town centre space 2006–15e
-Figure: Electricals specialists town centre sales 2006–15e
-Figure: Electricals specialists town centre space 2006–15e
-Figure: Food & grocery town centre sales 2006–15e
-Figure: Food & grocery town centre space 2006–15e
-Figure: Furniture & floorcoverings town centre sales 2006–15e
-Figure: Furniture & floorcoverings town centre space 2006–15e
-Figure: General merchandisers town centre sales 2006–15e
-Figure: Health & beauty town centre sales 2006–15e
-Figure: Health & beauty town centre space 2006–15e
-Figure: Music & video specialists town centre sales 2006–15e
-Figure: Music & video specialists town centre space 2006–15e
-Figure: Key town centre retailers sales (adjusted to calendar years) change % 2012e on 2007
-Figure: Calendar y-o-y change in key town centre retailers sales % 2012e on 2011
-Figure: Space growth of key town centre retailers (adjusted to calendar years) 2012e on 2007
-Figure: Calendar y-o-y change in space of key town centre retailers (adjusted to calendar years) % 2012e on 2011
-Figure: Sales densities of town centre retailers (calendar years) change % 2012e on 2007
-Figure: Calendar y-o-y change in sales densities of town centre retailers (adjusted to calendar years) % 2012e on 2011
-Figure: Key town centre retailers store numbers (calendar years) change % 2012e on 2007
-Figure: Calendar y-o-y change % in key town centre retailers store numbers (adjusted to calendar years) 2012e on 2011
-Figure: London Westfield Stratford 2011
-Figure: Wakefield Trinity Walk 2011
-Figure: Newbury The Parkway 2011
-Figure: Forecast development pipeline 000sq ft 2012–20
-Figure: Forecast development pipeline breakdown 000sq ft 2012–20
-Figure: UK shopping centre development pipeline by region & status October 2011
-Figure: Dorchester Brewery Square 2012
-Figure: Birmingham Swan Shopping Centre 2012

AREA Property Partners, Arvedi Group, CMS Energy Corporation, Colliers International, Computer Sciences Corporation, Diageo plc, ERGO Versicherungsgruppe AG, Hutchison 3G UK Limited, J Sainsbury plc, Kingfisher Plc, Marks and Spencer Group plc, Metro AG, Metro International S.A., Publicis Groupe SA, Schindler Holding Ltd., Whitbread PLC, Wm Morrison Supermarkets Plc

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