FSP Retail Blog

The Retail Outlook

Posted At : 22 October 2009 19:02

Opinion about the financial outlook for UK retailers is divided. The evidence however is more unanimous:

The Red Flag early warning from business restructuring specialists Begbies Traynor shows that 125 retailers encountered “critical problems” in September, matching the level of a year ago. A significant proportion of these will begin insolvency procedures within 12 months

Global Retail Network tracks the windows of around 250 UK retailers each weekend and records the offer in one of three categories - a full-blown Sale, a promotional offer or regular trading

The chart below shows the percentage of monitored UK retailers on Sale or with a promotional offer in the 20 weeks from June to the third week of October for the last 3 years.

While the Summer Sales were little different in 2009 from the previous two years, the on-going level of discounting is significantly higher and in October is exceeding the crisis levels of last year.
In this environment, an increasing number of retail property owners and managers are turning to FSP for advice about the financial health and performance of retailers. As turnover rent becomes mainstream, knowing the likely sales and sustainable rent of a prospective tenant is invaluable for business planning.

FSP advice is based both on extensive databases of information and analysis and on experience and feedback. The more you do, the better you become.

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With so much conflicting information coming out of the marketplace in relation to green shoots and recovery, it's good to get some hard facts that spell out the picture to owners of what we call second-tier shopping centres (those independently owned or managed). It's easy to think that with the half decent news from M&S, Next, the supermarkets and so on that there's good news just around the corner.

Seems to me that if you are a landlord of an out of town retail investment, or a top 50 city location, then you will get by.

If however, you are in a second tier location, I think things are going to get tougher. And this data just reminds me to continue trusting my instincts which emanate from conversations with experts like FSP.

Would appreciate the grasshoppers thoughts here please :)