With inflation outstripping wage growth and the UK officially back in recession, it is of no surprise that substantial parts of the retail sector continue to struggle. In the last six months alone, a number of well known high street retailers, including Peacocks, Barratts, La Senza, Hawkins Bazaar, Past Times, Game and most recently Clinton Cards, have gone into administration.
Multi-channel retailing leads the way
The troubles these retailers are experiencing highlight the fact that we are in the midst of a major shift in the UK’s retail market: there is now a significant focus on multi-channel retailing, on out of town retail, supermarkets, and on large shopping centres which have a high quality leisure offer. Retailers who have been unable to capitalise on the move towards the internet have lost out. The UK accounts for 11% of global online sales and the average annual online spend per capita in the UK (£378) is the same as in France and Germany combined.
In this context, we have taken a look at the state of the market in a number of key high street locations in the East Midlands and East of England.
Cambridge: still a hot spot for retailers
Cambridge, while not immune to national trends, it does continue to prove itself as a hot spot for retailers. A recent survey carried out by the Local Data Company highlighted that Cambridge had a vacancy rate of just 6.4%, significantly below the national average of 14.3% and 2% below any other major town or city in the UK.
Continued re-invention of the retailer’s experience has played a large part in this. The opening of Grand Arcades in 2008 undoubtedly acted to push Cambridge up the retail rankings. But Cambridge has not had it all its own way. Rents have been under downwards pressure, recent deals on Market Street show a reduction in rent of 30% over the levels that were being achieved pre-2008. There are parts of the city which have struggled in recent years - Grafton Centre and Fitzroy Street namely.
Cambridge remains a vibrant and diverse retailing centre, with an excellent range of national, regional and local independent retailers. Certainly its excellent catchment and visitor population has a lot to do with this, and it is likely that Cambridge will be at the forefront of recovery when the markets improve.
Peterborough: out-of-town retailing grows
Peterborough continues to be relatively under-shopped given the size of its resident and catchment population. The city centre continues to be dominated by the Morley Hammerson Queensgate Centre. A planned 750,000 sq ft extension has been put on hold indefinitely, however, vacancy rates within the central area remain relatively low, and recent analysis by LSH shows that they are no higher than they were at the start of the downturn in 2008.
Reflecting the more positive outlook in the retail warehouse market, Peterborough is seeing development of new out of town retail space, with works at the Brotherhood Retail Park underway. This will provide M&S with a new 70,000 sq ft unit, Next are taking 27,000 sq ft and Outfit have signed up for 12,500 sq ft.
As elsewhere, rents in all sectors of the market have suffered, with average values running at approximately 25% below pre 2008 levels.
Leicester: restaurant market prospers
The city's retail area continues to be led by the Highcross Shopping Centre Any new national fashion labels looking at Leicester tend to be only willing to consider Highcross, and with fashion being the primary driver of city centre footfall this is continuing to pull the prime pitch northwards, leaving Leicester’s southern sector looking fairly empty. However, as with many shopping centres, requirements are currently thin on the ground and there are still a high number of voids in parts of the centre.
Despite nationwide declines in household discretionary spending, the restaurant market is holding up well and demand exists for the right type of space. Pizza Express has just acquired its third unit in Highcross and Red Hot World Buffet, has acquired a large block of units on the corner of Highcross and the high street to exploit the ever expanding buffet market.
Derby: discount retailers reign
Poundland is among a number of discount retailers such as 99p Store, Poundworld and Poundstretcher, which are holding up well within the current market conditions. With many customers out shopping for a bargain, discount retailers seem to have an appetite for new stores in new locations.
These stores are able to drive rents down, setting new Zone A tones. Some argue that discount stores are blighting the high street, making it harder when a recovery comes as higher end retailers are driven away, which may restrict recovery in the longer term.