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Is retail heading out of town?


The Localism Bill is currently in the committee stage of the House of Commons but if passed it will devolve many powers to people outside of local government.

Some hope that it can lead to a resurgence of the high street, with local communities able to take control of and turn around failing shops in towns up and down the UK.

A recent survey by the Local Data Company showed the national shop vacancy rate has risen to 14.5 per cent, with many smaller centres in the north of the country reporting vacancy rates above 30 per cent.

By why are so many shops struggling or lying empty in the UK’s town centres?

Along with increasing online retail trade, one of the major reasons is the rising popularity of out-of-town developments with consumers and retailers alike.

Jon De Mello, Head of Retail Consultancy at property company CB Richard Ellis (CBRE), says that rising town centre rents and improving standards at retail parks are proving irresistible to growth hungry businesses.

“Out-of-town retail is more convenient for people to get to and retailers make more money from it, it works for the retailer it works for the shopper – it’s a sign of the times,” De Mello commented.

“Local town centre accommodation can’t provide for the modern retailer’s needs.”

Recent CBRE analysis has found that sales densities at retail parks are as good if not better than many shopping centres in the country and profitability is much higher than in comparable town centres.

Click and collect services add to the appeal of retail parks, with most based close to areas of high residence and population making them ideal pick-up spots for ordered items.

The retail mix at these sites has improved vastly in recent years, with many parks moving away from just supplying bulky goods.

Whilst household names Next and Marks & Spencer (M&S) have a history at these locations other department stores such as Debenhams, House of Fraser and John Lewis at home are all now looking to retail parks as locations for new stores.

De Mello added: “British Land has a park just outside of Orpington where several large retailers including M&S and Next have decamped from the town centre and what is left in the town now is mainly discount and charity shops.

“On the edge of the town a massive Tesco Extra has opened up which contains more non-food than the entirety of the town.”

Meanwhile on the high street, supermarkets are using the gaps left behind to explore their convenience drive but Peter Austen, Managing Director for Commercial at wholesaler Palmer & Harvey, warns that this alone will not revive town centres.

Austen told Retail Gazette: “The supermarkets’ expansion into convenience was caused by a huge divergence of basket sizes going through their tills, with people wanting to spend £5 not being serviced properly by being struck behind someone with a basket full of food.

“That doesn’t mean there will be a huge influx of convenience stores in every town, as two high quality convenience stores competing for the same catchments area is just not going to work.”

This is where the Localism Bill may come in. Decentralisation and Localism Minister Greg Clark reiterated the government’s promise to put town centre investment at the forefront of its plans.

Some see dangers in this approach however with the British Retail Consortium warning against power being given to nimby sentiment, which could prevent important retail developments getting off the ground.

De Mello also worries about some councils’ approach to putting town centres first and highlights an example in North Tyneside where the authority has identified a need to expand retail space in order to maintain consumer spending.

“Instead of investing in one location which retailers want to be in, Silverlink Retail Park, they want to give money to South Shields and some smaller local centres,” De Mello explained.

“Vacancy rates at these centres are between 30 and 50 per cent, with most stores being charity shops and independents, so by adding to the retail space they will just be increasing the vacancy rate.

“The council is shooting itself in the foot because consumers will vote with their feet and not shop in these places.”

Others are more positive about the high street’s outlook and believe it is important to revive its fortunes, with Austen claiming that “a vibrant high street creates the right kind of community”.

Lower rental rates could be a good start of coaxing retailers back to town centres and there seems to be scope for local authorities to adjust rates as part of the new legislation.

Many argue that the retail landscape has change irreversibly and that high streets will never return to the way they were only a few years ago but Austen is confident that good planning could still revive town centres.

“The type of retailers that take up the gaps on the high street will depend on the socio-demographic make-up of the individual area,” added Austen.

“I am hoping that the Localism Bill will allow planning at a local level, shaped by the community to fit its individual infrastructure.”

Published on Thursday 03 March by Editorial Assistant

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