Retail Property Insights

Richard Wassell: ‘A year of extraordinary change’

5th January 2023

One of the most exciting things about the retail and restaurant sector is the evolution and revolution, but so many things have changed in the last 12 months. The adjustments to the Use Classes regulations in September 2020 has led to more cafes, restaurants and gyms opening on high streets, creating much needed variety and activity. However, the impact of Class E on rent reviews and lease renewals is still being determined. As the demand for online shopping increased, we saw the closure of major department stores. Leaving shopping centres and high street without the traditional ‘anchor’. This left room for more adaptable retailers to take up prime locations, such as smaller privately owned mini department stores and chains such as Zara, Apple and Next. With enticing window displays, persuasive offers and stronger customer relationships. I think this highlights how essential it is for retailers to meet evolving customer demand. Over 17,000 shops closed in the UK last year, 50% higher than 2021. Sadly, more than a third of the closures last year were independent shops (CRR). Some restaurant chains, with homogeneous menus, unmotivated staff, and often poor property advice, did not survive the challenges of Covid. But this presented, […]

Low growth for retail sector in 2023 predicted

4th January 2023

Retail sales are only expected to grow between 2.3% and 3.5% in 2023, according to research from the British Retail Consortium (BRC). However, sales are expected to pick up towards the end of the year with inflation likely to slow and consumer confidence expected to pick up, with the BRC anticipating a growth of 3.6% to 4.7% compared to 1% to 2.3% in the first half. The analysis suggests that food sales growth, which has continued to outperform non-food sales, will fall slightly in the second half of the year. However this is expected to be at a slower rate than the anticipated decline in food inflation. Non-food sales are expected to move from decline to growth. 2022 saw low retail growth at levels below soaring inflation rates, fuelled by the war in Ukraine, suggesting sales volumes rates were below that of 2021. Energy and food prices increased by over 10% on a year-on-year basis in the second half of 2022. During this period, despite a growth in retail sales of 2.3%, inflation levels of 11% suggested a fall in sales volumes of both food and non-food. Kris Hamer, director of insight at the BRC, said: “The first half of...

2022 worst year in five for shop closures

3rd January 2023

17,000 shopping sites shut down in the UK in 2022, the highest number for five years. Data from the Centre for Retail Research (CRR) revealed that total closures on high streets, shopping parades, and out-of-town retail parks, were higher than in 2021. The number of jobs lost in the retail industry jumped 43% to 150,000. Although the economy began to reopen in 2022 following the impact of COVID-19, the retail sector was particularly hard hit as consumers tightened their budgets and costs for retailers soared including wage bills and energy prices. CRR’s data revealed shops were closing at a rate of 47 per day. Over the year, large retail chains closed 6,055 shops while 11,090 independents closed. Many big names saw closures in 2022, including M&Co, Joules, and McColls. Interestingly, only a third of the closures were due to insolvencies. More than a third of closures were independents which decided to wind up their business, also called rationalisation. Joshua Bamfield, director of CRR, said: “Rather than company failure, rationalisation now seems to be the main driver for closures as retailers continue to reduce their cost base at pace”. “A few big hitters may well fail too”, he added.

UK economy shrinks more than predicted

22nd December 2022

The UK economy has shrunk at a rate higher than expected, according to figures from the Office for National Statistics. UK GDP is estimated to have fallen by 0.3% in the third quarter (July to September) of 2022, revised from an initial downward estimate of 0.2%. ONS figures also revealed a level of GDP in the third quarter estimated to be 0.8% below pre-Pandemic levels, downwardly revised from the previous figure of 0.4% below. Real households’ disposable income (RHDI) fell by 0.5% this quarter, a fourth consecutive period of negative growth. The economy has been hard-hit by rising inflation and soaring energy bills, partly as a result from the war in Ukraine, leading to lower consumer spending and reduced amounts of borrowing. As a result, lower consumer confidence has led to poor sales periods for many businesses. While the services sector grew by 0.1%, the production and construction sectors saw falls of 2.5% and 0.2% respectively.

Watch: Predictions for the retail market in 2023

21st December 2022

As the year draws to a close, many retailers are occupied with the busy festive period, and with businesses and consumers under immense pressures this year, some will be looking forward to the new year already. With less than half of Brits feeling positive heading into 2023, we spoke to Georgie Brooks, Matt McCue, Rachel Belam, Matt Illingworth, Ronald Nyakairu, and Robert Wingrave at Completely Retail Marketplace to ask them their predictions for the next year. Matt McCue, director at Savills, said that any changes in the New Year would “be an evolution, rather than a short, sharp shock”. “When you look at the market at the moment, I think we started the year at a vacancy rate of 6.1%, we’re down to 5.5%, and Savills research are talking about a vacancy rate of 4.4% by the end of the year, which is an all time low”, he added. Georgie Brooks, director at Curson Sowerby Partners, observed that the blending of uses in retail parks was becoming increasingly widespread, with more drive-throughs opening, as well as leisure units such as gyms joining retail parks and expects to see this continue. When asked about the brands to look out for in […]

Majority of Brits think supporting independents is important this Christmas

20th December 2022

Nearly three quarters of Brits believe it is important to support independent retailers in the run up to Christmas, according to findings from Direct Line business insurance. As the cost-of-living crisis has squeezed budgets this last year, over two thirds (67%) said it was particularly important to support local businesses. Over half (57%) of the 2,000 adults surveyed said they will shop at independent stores because they believe they offer less generic and more unique items than major chains, while 46% said the quality of goods on offer from independents is higher. Over two-thirds (68%) said shopping independently was important to boosting local employment while 60% said they offered better customer service. However, people will continue to purchase presents from a variety of stores: On average, purchases at independent retailers will only make up around a quarter (27%) of people’s Christmas shopping, and the average spend at independent retailers is expected to be around £164. Overall, the cost-of-living crisis is having a wide impact on peoples’ festive spending habits as a whole. A third (33%) of people are buying fewer gifts this year, while 27% said they were buying for fewer people. Nearly a quarter (23%) looked to spread the...

Consumer confidence sees meagre increase but remains at historic lows

16th December 2022

GfK’s Consumer Confidence Index edged up two points in December to -42, but marks the eight month in a row in which the index has sat at -40 or below. This long-standing low is the first time this has happened since GfK’s records began nearly 50 years ago. Joe Staton, client strategy director at GfK, said: “Despite the latest GDP figures showing slight growth in October, the warning is of a tough road ahead and that the UK is not out of the recessionary woods.” The measure of changes in personal finances over the last 12 months decreased four points to -28; 23 points lower than December 2021. Meanwhile, the forecast for personal finances in the next year remained at 29. This is 30 points lower than 12 months ago. Consumers’ measure of the country’s general economic situation over the last 12 months was up one point to -66; however this is still 27 points lower than last year. Meanwhile, expectations for the next year were tempered, despite a five point increase to -53, down 27 points on December 2021. The major purchase index was up four points to -34; this is 28 points lower than 12 months ago, while […]

Customers stock up on Christmas food as overall retail sales down

16th December 2022

Retail sales volumes (quantity bought) are estimated to have fallen by 0.4% in November, following a rise of 0.9% in October, which is believed to have been skewed by a bounce back from the Queen’s funeral in September. Data from the Office of National Statistics (ONS) also revealed that non-store retailing (predominantly online) sales fell by 2.8%, continuing a downward trend seen since early 2021. However, food store sales volumes saw an increase of 0.9%, suggesting that consumers were stocking up for Christmas to help spread the costs. Despite this, these levels were still 2.9% below pre-Pandemic numbers. Compared with the same period in 2021, retail sales volumes fell by 6.2% in the three months to November 2022. These figures suggest that the impact of Black Friday was less than anticipated for retailers, as many consumers struggle with a cost-of-living crisis which sees spending power pacified. The above figures from the ONS shows how on a seasonally-adjusted basis, sales volumes continue to decline. This method is used to offset the skew from the annual spike in sales at Christmastime which can misrepresent trends in retail sales. Despite an increase in non-seasonally adjusted sales volumes of 11.4% in November, when adjusted, […]

Over half of Brits to shop second-hand this Christmas, says eBay

14th December 2022

52% of Brits plan to buy second-hand gifts this Christmas, according to data from eBay. Meanwhile, 56% said they still want to treat loved ones to thoughtful gifts while 26% intend to put more thought into sourcing meaningful presents. Nearly four in ten (38%) said they intend to spend less than £100 on gifts this festive season. Rising costs of living, inflationary pressures and high energy prices are some of the factors contributing to the lower consumer spending power seen this Christmastime. eBay’s director of trading, Kirsty Keoghan, said the online retailer was anticipating a shift to pre-loved gifting this Christmas. eBay’s Christmas ad report also revealed that 29% of consumers began their shopping earlier this year, looking to get ahead of the festive rush and taking advantage of Black Friday sales. Meanwhile, data from RSM recently revealed that over a third of consumers said they have no money left over at the end of the month, and that average spending this year will be down around 16%

Business rates must remain high on the agenda, says Colliers

13th December 2022

The head of business rates at Colliers, John Webber, has said that MPs must continue to challenge the Government on progress with business rates reforms. This comes ahead of a Parliament Backbench Business Committee Debate taking place this week, led by the MP for Waveney Peter Aldous. The committee will discuss business rates and the debate will receive a ministerial response. Despite decisions in the Autumn Statement welcomed by many, Webber believes these measures are the tip of the iceberg: “In his Autumn statement, the Chancellor was, in reality, merely putting a sticking plaster on a gaping wound.” “Whilst we welcome the freezing of the multiplier and removal of downwards transition, the fundamental flaws of the business rates system remain”, he added. Colliers said that as a result of valuations being given in the midst of Covid while properties were closed and deals were being struck, some of the larger stores such as those on Oxford Street as well as hypermarkets or shopping centres will see bigger drops in their rateable value and rates bills from April. The real estate company said that smaller, underrepresented traders may not see much reduction at all. “Unless this discrepancy between those well represented...

Consumer sentiment divided heading into 2023

13th December 2022

30% of British consumers are feeling negative heading into the New Year, according to research from Attest. Only 46% of the 1,000 Brits surveyed said they were feeling positive heading into 2023. The data found that 61% of shoppers were pulling back on spending plans for 2023 as energy bills cause the biggest concern. Only 18% said they would be spending freely. There has been a 10.2 point increase in “fairly cautious” spending compared to last year and a 9.1 point increase in “very cautious” spending. Unaffordable energy bills were the biggest issue raised, worrying 59% of those surveyed. The War in Ukraine (7%) was the second biggest concern with increases in petrol prices the third (6%). 38% of those surveyed cited being able to afford to eat out as their biggest issue with rising food prices, reflecting the difficulties felt by the hospitality sector in recent times. However, more consumers are shopping in person more frequently, with a 6.2 point increase in people shopping daily and weekly to 65%. While the pandemic increased the frequency of online shopping among older consumers, however baby boomers are heading back to the high street. Over 40% of boomers said they now mostly […]

Retail activity bolsters small bump in growth

12th December 2022

Retail and wholesale recovery in October has helped the economy see a return to growth, however economists still anticipate a recession. Early figures from the Office of National Statistics reported growth of 0.5%, an improvement on the fall of 0.6% in September. Experts believe this will be the last showing of growth in some time. Businesses were hurt in September by closures relating to the death of HM Queen Elizabeth II and the subsequent funeral. It is believed that this small increase in growth is simply a reflection of working hours returning to normal. The war in Ukraine has contributed to high levels of inflation, currently at a 41-year high of 11.1%. This has led to decreased consumer spending as well as a reduction in borrowing rates, all-in-all leading to a weaker economy. The figures for November, which are due on Wednesday, are expected to reveal inflation rates of 10.9% for the year. The chancellor, Jeremy Hunt, said: “While today’s figures show some growth, I want to be honest that there is a tough road ahead. “Like the rest of Europe, we are not immune from the aftershocks of Covid-19, Putin’s war and high global gas prices.”