The hard-hit High Street and the increasing shift to online shopping came under the spotlight when more than 50 property professionals gathered at our recent Birmingham Real Estate Network seminar.
Speakers included Sean Prigmore, National Head of Retail at Lambert Smith Hampton (LSH), Don Williams, National Head of Retail at BDO LLP, Keith Stone, Leasing Director at Grand Central Birmingham, and Ben Wall, National Portfolio Manager at Poundland. The presentation addressed how changes in the retail market and consumer behaviour will continue to have a significant impact on the real estate sector throughout 2014.
Action needed from the Goverment to help struggling retailers
Mr Prigmore said there were still too many vacant shops on the high street. Although vacancy rates in the top 650 towns and cities had dropped to 13.9% - the lowest level in three years – there was still a long way to go before it could be classed as a recovery. In comparison, the vacancy rate in 2008 was 4%.
Action is needed from the Government on business rates in order to help struggling retailers. Many regional centres are getting stronger while smaller suburban centres are struggling, while some sub sectors – such as food stores - are very expansive, putting major resources into convenience stores.
An increasingly important part of town centre development is the leisure and catering sector, with a growth of restaurants in town centres. Value retailers, such as Home Bargains, Poundland and Primark, would also have increasing presence on the high street," he added.
Retailers must ensure their online offering is adaptable
Speaking at the event at Shoosmiths’ Birmingham offices, Mr Williams led the debate focusing on the impact of future retail trading trends for the region’s real estate sector. His predictions included increased use of dark stores in order to meet demand from online shoppers, with tablets and smartphones overtaking desktops as the primary channel. Retailers therefore needed to ensure their online offering is adaptable ‘from couch to desk’.
He also predicted that consumers would increasingly make food shopping trips daily instead of weekly, driven by cheaper small store formats and a growing deep disdain for waste. Value retailers would also go from strength to strength. Falling footfall last year had seen fewer people hitting the high streets, presenting retailers with challenges.
“In part we attribute this to the growth of other channels such as online and mobile. As it has become increasingly convenient to do your shopping from your armchair the high street has become a less attractive proposition. Moving through 2014 this is a trend that is likely to stabilise as the British consumer will always have an appetite for spending some of their precious leisure time on the high street,” he said.
He added: “The fact of the matter remains that the retail market is an incredibly tough place to trade and many retailers are yet to see the ‘pick-up’ materialize. There will be growth but it will be roughly in line with inflation and as such it is still an ‘eat someone else’s lunch’ type of market.”
Investment in technology and their supply chain would be key. “The bottom line remains that if a retailer’s supply chain is not right, and they cannot get their products to the consumers in an efficient manner, they are going to die.”
Grand Central development to give Birmingham retail sector enormous boost
Mr Stone explained how the £750 million development to create Grand Central and transform New Street into a 21st century transport hub in Birmingham, anchored by the 250,000 sq ft John Lewis store, would give the city’s retail sector an enormous boost and reinforce its position as a major European shopping destination.
With a predicted footfall of 50 million each year, it offered a huge opportunity to provide a premium offer of more than 40 shops, with some of the leading brands including The White Company and Cath Kidston, and 20 restaurants and cafes.