May 2012 Archives
The ONS today released April's sales figures, revealing that on a month-to-month basis the British public has spent less across all sectors of retail - resulting in a 2.3% decrease in total retail sales.
This has, in fact, largely been the case over the last four years. March tends to provide an early-year boost to sales figures, resulting in a return to something approaching normalcy in April - indicated by the chart below.
Perhaps a fairer reflection on how April 2012 performed is to look at a year-on-year comparison. Yearly sales overall were down almost £500 million on April 2011, and sales excluding petrol were down by around £288 million. Some sectors, however, saw an increase in spending - namely non-specialised stores, household goods and non-store retailing - which I'll come to later. The graph below indicates that this April essentially returned to levels seen in years previous (when petrol sales are excluded) - this could point to April 2011 being something of a Royal-Wedding-inspired anomaly.
I think the decline in year on year figures can largely be explained away by a combination of the lack of nationally-celebrated nuptials (with the additional bonus of an extra bank holiday) and, of course, the wettest April since 1910. The fact that some sectors seem to have picked up since 12 months ago is also slightly encouraging.
One interesting piece of information I picked up from the figures is that although some sectors of retail increased slightly; the only one showing a steady increase over a number of years is 'non-store retailing' - which, one can surmise, reveals the ever-increasing tendency to shop online.
This graph indicates the increase in sales figures for non-store retailing in the month of April since 2000. Despite the aforementioned £288 million decrease in overall sales from 2011-12, non-store sales increased by around £162.5 million overall. This simply points to the robustness of the on-line retail environment, and to the nature of the challenge facing those who wish to return Britain's high streets and town centres to their former glory.
The on-line retail revolution was pointed to by GVA's 'Unlocking Town Centre Retail Developments' today as one of the main reasons for the high street decline - as retailers continue to row back their requirements for physical space in lieu of pursuing multi-channel sales. On this evidence, it's hard to see how the high street can fight back, and enjoy a similar upward curve in years to come.
Housing & Local Government Minister Grant Shapps tweeted yesterday that the successful bids for town centre regeneration funds via the 'Portas Pilot' scheme will be announced at the end of the month.
With hundreds of entries reportedly clamouring for the cash, I had a look at a few of the video entries to get an impression of how the town teams were going about pitching to the government.
With an extremely broad creative brief, it is of little surprise that each submission differs from the last - and as such, it's extremely difficult to judge which ones will be successful. There are some which unimaginatively point the camera at vacant stores with the word 'Help' emblazoned across the screen, and others who have clearly tried to stand out by engaging the town in wacky dance routines in various (former) retail hotspots.
The ones which I found most appealing came from towns such as St. Austell, Warwick, Grantham and Aylsham; as they seemed to have more of a focus on what their towns specifically require in order to regain the vitality of ages past - and already appear to have a plan as to how best use the government cash.
There were also interesting entries from Ripon and St. Ives, who have focused their regeneration plans around unique heritage sites, and embraced the potential of tourism to help boost town centre footfall.
The most bizarre entry comes from Exmouth; wherein a teenage girl is apparently beamed down from space, and then escorted around the town by someone looking suspiciously like her sister, before concluding that the townsfolk are spending entirely too much time larking about by the beach, and not enough on their 'quite nice' high street, before she's whisked back into the orbit. The tagline, 'bring them here, keep them here", is altogether more sinister than was surely intended.
Also, if you'd like to see perhaps the worst impression of Mary Portas ever performed - check out Tamworth's effort.
Some common themes mentioned in almost every entry are the failure of councils to come up with innovative town-centre-saving solutions over a number of years (or even decades); the cost of town centre parking or the lack thereof; proliferation of supermarkets & out-of-town developments causing town centres to falter, and the impact that on-line shopping has had on the high street. These, of course, are aspects that the government and Ms. Portas are already painfully aware of.
One wonders how the winners will eventually be chosen. Do the video entries carry as much weight as the application form? If so, does 'view count' get factored into the final reckoning? Are CACI ratings consulted in order to determine the most deserving of town centre investment?
We'll find out in a couple of weeks - but for now, I'll champion Warwick's entry one last time...local bias at it's best!
IPD this week published their comprehensive annual lease review, which indicated that 2011 saw another decline in the average lease length taken for retail space - not to mention another increase in the percentage of leases containing lease breaks.
The study shows that over the past nine years, the average lease length has fallen from just shy of ten years to just under seven. In addition, the percentage of leases which now include a break has doubled.
The figures got me wondering about 'averages' across the retail market - and whether the available space across the country could be distilled down into one unit; the ultimate 'average space', to display what's typically available to UK retailers at this point in time.
Using samples from EGi's researched availability, which currently holds over 12,000 retail units being marketed, I found that the average retail unit currently available measures 2,941 sq ft; would be marketed with a lease length of 11.82 years; and would have an asking rent of £43,281 per annum.
Breaking these figures down by Property Type:
'Average' Shopping Centre Availability: 2,482 sq ft; 11.45 years; £72,195 per annum.
'Average' Retail Park Availability: 12,800 sq ft; 14 years; £171,094 per annum.
'Average' Other Retail Space: 1,837 sq ft; 11.57 years; £29,437 per annum.
Breakdown by Lease Type:
'Average' New FRI Leases: 3,069 sq ft; 11 years; £57,303 per annum.
'Average' Lease Assignments: 3,746 sq ft; 13.23 years; £111,547 per annum.
Whilst this is only a sample, it indicates that the space being marketed at the moment would, on average, be looking for a retailer to commit to a lease length far above that which is representative of the market. The difference between assignments and new leases can probably be attributed to struggling brands trying to divest themselves of lengthy, expensive obligations agreed during better economic times.
The majority of the 'other' retail space is located on high streets - and the fact that, on average, the £/sq ft ratio is closer to that of retail parks than shopping centres shows the level to which those spaces have struggled to attract occupiers. Indeed, shops have been going for as little as £1 per annum - so perhaps it's surprising to see the figure so high!
On average, then, retailers are currently best off going for a new lease on an out-of-town scheme; whilst the most costly deal would be agreeing to take an assignment at a shopping centre - which honestly comes as no surprise at all.