FSP Retail Blog

“Socially acceptable insanity” has been defined as repeating an unsuccessful pattern of behaviour and expecting it this time to be successful. We keep on doing the same things, even when we know they don’t work, and are surprised by their repeated failure. If things aren’t working, it’s madness to keep repeating them. It’s time to make a change.

Changed behaviour is evident amongst retailers. SnapShop this month notes that Dorothy Perkins, New Look, River Island and Furniture Village are all extending their merchandise offers into a higher price range, to better serve the needs of their customers. It also reports on the emphasis the Big Four grocers are giving to their £1 offers. Asda now claims to be “Britain’s biggest pound operator”. Tesco, of course, manages to have a foot in both camps. It reports both increased sales of premium and ethical lines and has launched in-store “Pound Shop” zones.

What about retail property development and urban renewal? Are similar changes evident? The existing model, whereby anchor tenants demand substantial incentives and local councils impose heavy Section 106 obligations, is broken. For unit shops, the ratio of occupancy costs to turnover in new developments exceeds that elsewhere in comparable markets. The cost-benefit ratio of anchor stores has become unsustainable. The response of developers has been to increase the number of unit shops. With insufficient shopper demand to support the whole development, the vitality and vibrancy of neighbouring centres is endangered.

The lack of further town centre retail developments would be as unwelcome to local councils as to developers. Dissatisfied shoppers will migrate even more rapidly to edge-of-town supermarkets and to on-line shopping. Without retail driven urban renewal, conditions in British towns will return to their state in the Seventies. The need for a new retail development model is urgent.

Some point to smaller scale developments in small towns as being more sustainable, without the need for major anchor stores. Others are looking for lessons from Factory Outlet Centres which have anchors but without the scale of dominance of department stores. Still others muse on the possibilities of restoring traditional markets to their former role, noting the continuing rise of Farmers’ Markets with their implications of wholesome, local produce. Effective maybe in West London but what about Newport?

However, while a new model is urgently required, there is little sign of one emerging. FSP has much of the data required to inform the debate. FSP will be at the BCSC Conference in Manchester in November and you are invited to participate in a debate on this subject. The present seems an appropriate time to start to return to sanity.