FSP Retail Blog
FISH
- the consumer’s own ‘thinking age’: i.e. how young or old do I feel?
- the image the consumers wishes to project with the merchandise they are seeking to buy: i.e. stylish or safe?
|
Young |
Assured |
Family |
Classic/Old |
|
| Town Centres |
14% |
20% |
51% |
15% |
| Shopping Centres |
24% |
20% |
46% |
10% |
| Regional Malls |
20% |
31% |
40% |
10% |
The classification of individual retailers' predominant customer group is available through FSP’s SnapShop on-line directory or FSP consultancy projects. For more information, please Contact Us.
Geoffs View - The Retailing Outlook
Unless landlords take the initiative, town centre retailing will die out within a generation in a large number of middle sized UK towns.
The migration of shopping away from town centres is accelerating. It is going to the more efficient and convenient supermarkets, to out-of-town retailing and to the internet. Without action, the UK will follow the United States into suburbanisation with largely lifeless town centres. To be vibrant and viable, town centres need to find a new role providing an enjoyable experience that cannot be matched on-line or by the grocers. In towns that fail to do so, retail rents will continue to decline.
Meanwhile, the grocers are expanding aggressively. Tesco plans to add 2.4m sq ft, 26 additional Tesco Extras and 181 Tesco Express. Asda hopes to add 3.75m sq ft of non-food space in 150 new Asda Living stores. Not much of this additional 6m sq ft will be in town centres.
The internet is getting more powerful. In the UK, according to FSP research, more than 50% of shoppers already make some use of the internet in their shopping. In the US, more than 40% of US retail sales are influenced by the internet. This is expected to reach 50% by next year.
A recent survey of comparative high street and internet prices emphasises the web’s cost advantage. On a basket of 10 fast-moving consumer goods, including an i-Pod, trainers, a watch, coffee maker and a TV set, the average cost in 11 town centres, that included Manchester, Nottingham, Sheffield, London and Bristol, was 31% higher than the lowest on-line price. Not a very balanced comparison but in price conscious times, the difference is striking.
Retailers meanwhile are under the pressure of an uncertain outlook for consumer expenditure. The common response has been to move towards a multi-channel offer, exemplified by John Lewis and Next. The Partnership has made the Commercial Director responsible for both store expansion and the multi-channel offer. Next has announced that its further expansion overseas will be solely via the internet, not through stores.
The current focus for most retailers is to cut operating costs. The opportunities to enhance gross margin through the globalisation of the supply chain are largely exhausted. Staff and occupancy costs are their two largest operational costs. With excellent customer service the key advantage over on-line retailers and grocers, training and retaining good shop staff is essential. It is therefore no surprise that the pressure to contain occupancy costs is immense. The shedding of uneconomic stores through pre-pack administrations and CVAs is an alternative way to reduce operating costs.
With retailers having no overwhelming need to trade from town centres, landlords and the local authority have the responsibility to maintain town centre vitality and vibrancy. A new environment calls for a new form of response and perhaps the BIDs vehicle will be sufficient. Let’s hope so.
Future of town centres hinges on planning policy
Managing Director Geoff Nicholson comments in Retail Weeks' Letters To The Editor on an article from issue 12th March 2010. Link unavailable.
The recession was triggered by failure to control market trends, which are driven by often short-term investor interests, not by consideration of longer-term social benefits. So Catherine Tobiasinsky’s plea (RW, last week) that planning policy should not subvert market trends in breathtakingly short-sighted.
Yes, in-town retailing has been under pressure from out-of-town locations. But the economic and social costs of allowing town centres to die are incalculable. The Preston Tithebarn issue is nothing to do with its in-town location and everything to do with its potential impact on neighbouring towns.
It is the charge of the planning system to reconcile the demands of the market and social need. It makes sense, for the interests of society, to flavour in-town development. This is not to claim out-of-town schemes are never appropriate: the two are not mutually exclusive.
The bleak outlook for in-town retailing reflects the historic failures of planning policy. But to advocate its abolition is to remove all hope for a better future for town centres.
Geoff Nicholson
Managing Director
FSP Retail
Why not add your comments below?
Don't Panic Captain Mainwaring!
There have been several hysteria-inducing reports released in the press over the last few weeks. About certain high streets being at risk of demise, sales feeling the pinch because of swine flu (!!) and discounting reaching dangerous levels. Most of this is old news and the rest hyperbole, so a bit of real perspective should be applied to make sense of it all.
Several industry journals have been quoting a recent report by PricewaterhouseCooper, claiming that 90% of retailers are currently ‘on sale’. While this may be true, it is not enough to simply use this figure as a shock tactic, for in actual fact, the proportion of retailers “on sale” compared to those trading at full price remains mostly unchanged from last year.
Using Global Retail’s Compshop trading stance trend figures, it is clear that although levels are slightly ahead of 2007 and 2008, the number of retailers currently discounting is by no means anymore ‘dangerous’ than in previous years. (See fig 1).
Moreover, it is clear that retailing plays to seasonal trends, and that although long-term discounting can do more harm than good, it is natural for retailers to clear stock with end of season sales – as traditionally seen throughout July (see fig 2).
Whether heavy discounting will continue unbroken through to 2010 remains to be seen, however there is little to be gained from speculation – especially when past trends suggest the opposite. So let’s wait and see what happens before running to our panic stations; we may be pleasantly surprised.
Home, Clone or Ghost Town
The BRC this week issued their report, 21st Century High Streets: A Vision for our Town Centres, which, in its introduction states “Good retailing is all about great products supported by great people giving great service. It’s down to retailers to provide all of that for their customers. It’s something British retailers, large and small, excel in. But to trade profitably we need customers, drawn in by a pleasant, safe and accessible High Street offer”. Sensible. Indeed the whole report is essentially common sense, but someone needs to drive the message home.
It’s something FSP has been banging on about for some time. Regular readers of Geoff’s View in SnapShop Monthly (repeated as a news item here), will know that FSP would like to see town centres having their own identity, based around the needs and expectations of their catchment population. Indeed, a year ago, Geoff said “the prospect for town centre retailing is not for a difficult period, but for a sea-change. There will be a permanent diminution of its market share unless the offering in town centres is made more attractive to shoppers”. Indeed, we want towns to feel like home, not a clone of every other one up and down the country. We expect the government to do their bit, as Geoff argues in A Paradigm Shift for Town Centre Retailing, and we agree with the BRC in assigning responsibilities to Local Authorities, Regional Development Agencies and the Retailers themselves, but what about the property owners, whether institutional, private or local authority? The relationship between the in-town Shopping Centre and the High Street is inevitably competiitve but the competition can either be healthy and constuctive or destructive when the legitimacy of the other’s role is denied.
Curiously the BRC’s 20 key recommendations fail to mention landlords, except in connection with “The retail mix must complement the public perception of the High Street’s identity”. This is indeed a challenge for landlords whose chief concern is their bottom line. Too often the time horizon is short term and a global overview of the state of the local town centre is not something that is often considered relevant. For the long term health of their investment, it should be a consideration as should be their involvement in the other 19 key recommendations.
Reserve, Collect and Spend a Little More
The New Retailing Landscape
The fog of war
Analogies between business and warfare can be over-done. Perhaps in the realm of intelligence there is a parallel. Both business leaders and generals need to adapt strategy in the light of “events”. But how do they know which events, what changes are significant? The military, it has been said, is always preparing to fight the last war, not the present. Too often, intelligence systems fail to monitor what is strategically most significant.
It is difficult to be unaware of dramas, such as the current Credit Crunch. Such events throw up immediate challenges. However, they should not be allowed to mask more significant long-term strategic threats. As Steven Covey points out, in Seven Habits of Highly Effective People, the urgent should not be allowed to drive out the important.
There is a strategic threat to the current pattern of UK retailing. It has gone largely unrecognised, and when noticed, it has been seriously misunderstood.
Evidence over the last five years from the NSLSP (National Survey of Local Shopping Patterns) shows a gradual erosion of market share for the major UK retail locations. The annual losses have been modest, perhaps 1.5% a year, but they have been persistent, widespread and largely un-noticed.
The press has recently run a story that the increase in petrol prices has reduced the number of shopper visits to out-of-town shopping locations. This is seriously misleading on several fronts:
The press has recently run a story that the increase in petrol prices has reduced the number of shopper visits to out-of-town shopping locations. This is seriously misleading on several fronts:
- The data was based on visits to regional shopping centres. Out-of-town retailing more generally refers to stores on retail parks. It is the growth of sales though retail parks, and through grocery stores that are also largely out-of-town, that mainly account for the decline of town centre sales
- The implicit assumption that shoppers drive further to regional out-of-town shopping centres than to those in-town is erroneous
- This is not, as the NSLSP data show, a recent phenomenon
Thus, while a significant change has been identified, it has been misunderstood and incorrect inferences have been drawn. In the possibly apocryphal story of the boiling frogs, it is the very gradual, small changes in temperature that ultimately prove fatal. You have been warned!
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