While shoppers across the region have welcomed the reopening of non-essential stores, Chris Thomas, Senior Retail Director at CBRE South West, considers the long-term outlook for the region’s retail market.
When non-essential stores opened their doors to the public on 12 April, we saw a surge in visits as shoppers took the opportunity to visit bricks and mortar shops once again. But the retail landscape is undoubtedly changing and the impact of the Coronavirus pandemic has certainly taken its toll.
Patterns we’re seeing across the country’s retail market are being mirrored throughout the region, with many stores going into administration over the past year, including the failure of several historic retailers with large portfolios, including Debenhams, Arcadia, Edinburgh Woollen Mill, Peacocks and Laura Ashley.
The net result is retail vacancy rates are at their highest ever levels, but with variations from location to location.
Changing city centres
The most affected areas from these high vacancy rates are city centres and large towns, where there are usually a higher percentage of national multiples affected by administrations and CVAs (Company Voluntary Arrangements).
These locations have experienced a fall in pedestrian traffic in recent months as more people are working from home and therefore supporting their local shops instead. In cities such as Bath, a drop in tourism has also taken its toll.
CBRE used mobile phone data to compare visits to high streets across the UK for the week of 12 April to the same week a month prior (week commencing 15 March) to see if, where and which consumers have returned to the shops. We found that high streets in the South West typically saw a significant uplift in visits at over 70%. While this was led by one clear consumer group – affluent shoppers – it was a sign that retail continues to play an important role in driving footfall to these areas.
However, this initial bounce in shopping trips driven by pent up demand during lockdown could potentially drop off over the coming months and we could see a different picture emerge in three to six months’ time.
The future of department stores
A big factor impacting on city centres such as Bristol, Bath and Plymouth is the closure of Debenhams, where these large empty buildings will feel like a significant loss.
The demise of Debenhams is a very sad scenario for all the loyal staff and customers, but in time I’m confident these buildings will be brought back to life, just not as we remember them. Alternative uses that might be considered by landlords and councils could include residential, hotel, offices, leisure and other retail options – which in some instances may involve complete demolition and rebuilding.
I don’t think the closure of Debenhams spells the end of the department store in general. Debenhams failed for a number of reasons, such as historically high rents, a failure to attract brands and concessions that were relevant to the changing needs of the shopper and the ongoing impact of its decision to undertake a large-scale leaseback stores in the middle of the noughties.
The department store sector is now much smaller, but with some well-established businesses of scale and can adapt to shoppers’ changing habits. Most notable of these in the region are Harvey Nichols, John Lewis and the Frasers Group. The demise of Debenhams as a competitor should allow these businesses to stabilise and invest in delivering the department stores of the future.
For example, Bristol, Bath and Plymouth still have trading House of Fraser stores, which will cater for the department store customer and younger demographic being attracted to these shopping environments.
Strength in retail parks
Retail parks around the South West have tended to perform better than our city centres during the pandemic, largely because they are usually anchored by a food store or a large DIY operator and have a high proportion of essential retailers as occupiers.
Plus, for shoppers nervous of returning to a potentially busy city or town centre, retail parks have the perception of being a safer place to shop than a crowded street and offer free parking at a time when many have been reluctant to use public transport.
The omnichannel challenge
Much has been said about the rise of online shopping and the impact this is having on bricks and mortar stores.
There’s no doubt that retailers are facing a big challenge as they evolve to adapt to today’s shopping habits by establishing a true omnichannel presence. This includes reviewing how many stores they have, where they need to be and to what extent they will focus on their online services.
However, there will never be a replacement for human interaction. Our high streets need to offer a mixture of national, local and regional operators and a mix of uses – and we need to interact with our councils to ensure that we all have strong reasons to spend time there.
But one size does not fit all and all stakeholders in retail, especially councils when it comes to the business rates debate, will need to work together to ensure that we are successful in making our retail locations places that people want to shop, work and play in.