Retail UK: Crisis and Transformation. Professor Joshua Bamfield Director, Centre for Retail Research

Transcription

1 Retail UK: Crisis and Transformation Professor Joshua Bamfield Director, Centre for Retail Research

2 Retail Efficient and Effective Retail - an important strategic asset - UK retail: 3mn employees, mn sales - Consumer choice; tourism; & leisure economy boosted by good retailing locally and nationally - In UK detailed planning regimes have controlled urban and rural development since the war. Protective of existing centres. Held back much out-of-town development, creating local monopolies for those that did get permission. Retail landscape changed. - Retail development in the UK now very political every party now has a policy on the high street.

3 Planning and Development Concerns - Objectives: Keeping the Golden Age of Retailing? - Same arguments for 50 years: - Need to regularly modernise retail facilities - Traffic and transport - Balance of convenience and comparison shopping - Mix of operators, including independents - Strict control over large foodstores, out-of-town centres and major redevelopment

4 Retail Developments Larger stores replaced smaller stores Independent share of trade fell from 65% (1965) to 24% (2014) Phase I town centre remodelling in 1950s-1970s Phase II superstores, shopping centres 1960s to 2000

5 UK Retail is Undergoing a Major Transformation The recession Changing consumer trends Online growth The traditional retail model is broken 1 in 5 stores likely to close or shift to alternative use by

6 UK Retail is Undergoing a Major Transformation Insolvent businesses: : 251 businesses; stores, staff High operating costs & tighter margins store closures Multiple retailers withdrawing from poor locations Exit creates opportunities for discounters, betting shops and money shops 2014 has been rather better - Annual sales growth 3.1%+ - Vacancy rate falling - Failure rate historically low 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Vacancy Rate Main Shopping Areas % Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Nov-13

7 UK Retail is Undergoing a Major Transformation Town centres: share of retail fell from 50% (2000) to 40% (2014). Focus on Price. Rise of discounters undercutting major food retailers. Online prices curbing in-store prices. Shopping more frequently fall in one-stop shopping But, growth of supermarkets in non-food: apparel, electricals, news, books, games (and meat and alcohol) The grocery space race ends (grocers planned to open 2.3million m ) Superstores/big box stores being downsized Multiples forcing down rents [Bamfield, Retail Futures 2018]

8 Rapid ecommerce Growth In the UK, ecommerce growth is cannibalising offline sales Online Retail Sales Online Sales ( bn) 2013 Growth 2013 Online Sales ( bn) 2014 Growth 2014 UK % % Germany % % France % % Spain % % Italy % % Netherlands % % Sweden % % Poland % % Europe % %

9 Growing Businesses - Prime sites (eg London West End or Westfield Shopping Centre) - Premium retailers - Discounters and pound shops - Convenience - Multichannel: finding ways of relating online to physical stores (eg click and collect, ASDA ecomm store supervisor) and making stores more efficient - The shift to quality

10 US Implications - Similar picture in the US and The Netherlands

11 Establishment policy Freedom of establishment within limits Need for planning permission For a change of use For any development affecting exterior Also environmental regulations, listed buildings etc Need to conform to local authority plans Legislation includes The Town and Country Planning Act, National Planning Policy Framework, Planning Policy Guidance (now Planning Policy Statement)

12 Property Use Classes - Every use given a classification. Change from one to another usually requires permission. - A1: shops, post offices, supermarkets, florists, hairdressers - A2: professional, financial (banks) - A3: restaurants, cafes - A4: pubs, wine bars - A5: hot food, takeaways - B Business, industrial; C hotels and residential; - D - leisure, schools, medicine, bingo Trends: make it easier to turn shops, offices, farm buildings to houses, schools or gyms, & pubs to convenience stores. New class for betting shops and payday loans/money shops

13 Development - Town Centre first policy - Planning Policy Statement 6: Planning for Town Centres (see www://planningguidance.planningportal.gov.uk) - Planners designate primary retail areas and a retail hierarchy (National Planning Policy Framework 2012) - planning decisions must relate to the local authority plans - refusal depends on ~ development unnecessary, contrary to plan, environmental, historic area, congestion - Retailers can appeal against any decision. Large retailers employ teams to ease process of getting favourable decisions

14 In brief The retail growth model is broken and retailers are experimenting to create new models Massive retail change in the UK produced by: slow growth in consumer spending, new consumer behaviours, high store costs and high debt. This transformation cannot be stopped. 30% of high streets are in peril and need to manage decline. Policy on retail establishment is tightening to support high streets, and loosening to allow redundant buildings to have a new use as convenience stores, leisure, or houses.

15 Thank You Prof Joshua Bamfield Centre for Retail Research Nottingham, UK NG22 9HQ Twitter: cristobel75