Julian Welch, a Director of Barker Storey Matthews now part of Eddisons and a Retail Property specialist considers a recent report highlighting a “dramatic” fall in shop openings across the UK.
What Happened to the New Kids on the Block?
Research released by the Local Data Company this week highlighted amongst other things a “dramatic” fall in the number of new shop openings during the first half of 2016.
According to its report ‘only’ 20,804 shops opened on the High Street between January and June, down 15% on the second half of 2015. Their conclusion was that perception of the state of the global economy and concerns over the effect of Brexit was most likely to blame for this state of affairs.
There is no doubt that Brexit in particular was an opportunity, and in many cases a welcome excuse, for operators to ‘pause’ and reconsider their strategies. But this only came to bear in June, and for many months prior to that – even up to June itself – the majority thought that Brexit was just never going to happen. So that does not explain why store openings from January to May also stalled.
Yes, retailers are opening fewer outlets. The internet is as much to blame as the economy, with on-line sales reaching a record 20% of the total during Christmas 2015 and most likely beyond that point now. But even this became almost self-defeating for the retailers. Faced with a need for huge distribution infrastructures to cope with soaring demand from customers for home deliveries, and struggling to meet promised delivery dates, retailers realised that bricks and mortar did have its uses after all – click and collect.
So they started coming back to the high street, albeit perhaps in smaller formats. M&S in Peterborough is a good example of the need for less space in the modern retailing world. But the statistics released by LDC show a slightly different perspective when read in a different way.
Yes new store openings did fall by 15% during the period. Equally, store closures also fell by 5%. You cannot open new shop if there is not a suitable property available in which to open it.
And thereby lays the crux of the problem, a problem highlighted well by Peterborough. The City Centre has 454 retail units within the central shopping area. Research undertaken by Barker Storey Matthews this week indicates that of these just 37 are currently vacant, comprising just 8.15% of the total stock, and the 37 vacant units 14 are currently under offer to new occupiers. The true availability rate for retail units in the City is therefore just 5.28%.
This compares with 9.2% in January 2014, 6% in August 2014, 5.9% in July 2015, and 5.72% in March 2016. We have seen a steady decline in the availability of retail units in the City Centre, but still new operators have moved into the city – taking space surplus to other occupiers needs, amalgamating smaller units to form larger ones. The march of the food and beverage sector in Peterborough continues apace with openings from Cote, Wagamamas and Prevost, Kaspas fitting out and with at least two new large openings to come in the near future. Wine Bars and Micro Pubs are starting to appear, working off the back of the improved food offers.
The face of retail is changing, but it is not in need of life support just yet.
I read a blog last week from a member of the public, a resident of parts not at all far from here, who had made a rare trip into Peterborough and came away with the view that it was a ‘dump with loads of empty shops’. This is a City that has received an £8m investment in the street scene and has a 5.38% vacancy rate – half that of the UK average.
Well, sir, I beg to differ.