Retail Property Insights

Retail sales below inflation but leisure showing resilience

7th February 2023

Consumer spending continued to remain below inflation in January, although the leisure sector proved resilient with better-than-expected results. The data from the British Retail Consortium (BRC) and KPMG showed spending rose by 4.2% in January, compared to an increase of 9.7% in an Omicron-marred 2022. Both these numbers were below the rate of inflation, however, which was as high as 10.5% in December. The BRC’s retail sales monitor warned that increasing cost of living is likely to lead to lower rates of discretionary spending. Helen Dickenson OBE, chief executive of the BRC, said: “As Christmas cheer subsided, retailers felt the January blues as sales growth slowed. Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes.” “The coming months will continue to be challenging for retailers and their customers. Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak”, she continued. However, the leisure sector remained buoyant. Further data from Barclays revealed that pubs, clubs and bars saw an increase in sales of 18%, their best increase since May 2022, […]

BRC: Inflation leaves shop prices at all-time high

2nd February 2023

The British Retail Consortium has has found that shop price annual inflation reached 8% in January, higher than the three-month average of 7.5%, leaving shop prices at an all time high. Food inflation also rose to 13.8% in January, a 0.5% increase from December and higher than the three-month average of 13.2%, now the highest on record. Non-food inflation increased to 5.1%, in line with the three-month average of 4.7% and a new high in this category. Fresh food and ambient food also saw an increase in inflation, with increases of 0.7% and 0.3% to 15.7% and 11.3% respectively, both are new records. Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Retail prices rose in January as discounting slowed and retailers continued to face high input costs.” “With global food costs coming down from their 2022 high and the cost of oil falling, we expect to see some inflationary pressures easing. However, as retailers still face ongoing headwinds from rising energy bills and labour shortages, prices are yet to peak and will likely remain high in the near term as a result”, she added. Mike Watkins, head of retailer and business insight at NielsenIQ, added: “Consumer demand...

Vacancy rates continue to improve but remain above pre-Pandemic levels

27th January 2023

The end of 2022 saw a fifth consecutive quarter in which retail vacancy rates fell, however occupancy has not yet returned to levels seen before COVID-19. In the fourth quarter of 2022, the overall vacancy rate in Great Britain improved to 13.8%, 0.1 percentage points better than in the third quarter and 0.6 percentage points lower than the same period in 2021. The data from the British Retail Consortium and Local Data Company revealed that all sectors of the retail industry continued to improve. Shopping centre vacancies fell to 18.2%, down from 18.8% in the third quarter, while high street vacancies improved by 0.1% to 13.8%. Retail parks also saw an increase in occupancy, with vacancies falling 0.7% in the fourth quarter to 9.0%. Greater London, the South East, and East of England had the lowest vacancy rates, while the North East, Wales, and The Midlands saw the highest. Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “While the number of empty stores reduced in the final quarter of 2022, vacancy rates have not recovered to pre-pandemic levels. Retail occupancy was boosted by the return of international tourists visiting UK towns and cities and more frequent visits […]

Karl Hodson: Flexible in-store payments will revolutionise spending

27th January 2023

Flexible instore payment options are currently an up-and-coming feature, much anticipated by stores around the UK. While buy now pay later (BNPL) options are offered as standard when shopping online, this option is rare when shopping instore, until now. The likes of Klarna instore services mean that shoppers can now access flexible payment options instore, through the multipurpose Klarna app. Karl Hodson of UK Business Finance, a commercial finance expert, explains how the BNPL market is changing the retail landscape and transforming shopping habits. The introduction of instore BNPL services The payment capabilities offered by online retailers have now been extended into physical stores, as seen with Klarna instore services. Customers can use a one-time digital card through the Klarna app to make payment, or use a QR code which initiates payment instructions through the app. This revolutionises the buy now pay later market and the way customers judge purchasing decisions thanks to newfound instore payment flexibility. Businesses can benefit from Klarna instore as it provides seamless, app-driven BNPL services, as opposed to having to open a traditional credit account which is often the next best solution retailers can offer instore. Here are some of the benefits of using Klarna […]

Begbies Traynor: Small businesses vulnerable to impending repayments

24th January 2023

Insolvency firm Begbies Traynor has warned that small companies will be especially vulnerable to collapse, as repayments on COVID loans, cuts to energy bill relief and high inflation all loom. In the firm’s latest Red Flag Alert report for the fourth quarter, it was revealed that over 610,000 British businesses are in ‘significant’ distress, 4% higher than a year ago. Compared to pre-Pandemic levels, there has been a rise in businesses being in ‘critical’ and ‘significant’ distress, with increases of 11% and 24% respectively. It has also been revealed that in the final three months of 2022, nearly 24,000 County Court Judgements were served, 52% higher than in 2021 and 77% higher than pre-COVID. The Red Flag Alert report is a measure of the health of British businesses which has been running for over 15 years, and Begbies Traynor says this latest report shows the immense strain on an increasing amount of companies. Julie Palmer, partner at Begbies Traynor, said: “What we are hearing from directors of businesses is extremely distressing. “We came into 2022 hopeful that the pandemic was fully behind us and better times were ahead, only for Russia’s invasion of Ukraine to unsettle the global economy, leading to […]

UK consumer confidence falls again after sales dipped at Christmas

20th January 2023

Consumer confidence dropped to near historic lows in January after a small resurgence in the last quarter of 2022, following a greater than anticipated fall in Christmas sales. This follows a small but consistent increase seen between September and December 2022. GfK’s monthly Consumer Confidence survey was down three points in January to -45, with four of the recorded measures down and one up, compared to December. The measures include personal financial situation and the general economic situation for both the last 12 months, and the next 12 months, as well as the major purchase index, which is a measure of how confident consumers feel about making larger purchases. The only measure which had improved was consumer confidence in their personal financial situation for the next 12 months, although an improvement of two points only brought this score to -27, 25 points worse off than the same time last year. The savings index, which is also measured but not incorporated into the overall index score, also fell by six points to 14. This fall in confidence may not come as a surprise, as Office for National Statistics figures released on Friday revealed that retail sales are estimated to have fallen...

SCC: Increasing concerns for Scottish businesses

19th January 2023

The Scottish Chambers of Commerce (SCC) have highlighted a number of key concerns which are facing Scottish businesses, including price rises, labour costs, inflation and a decline in consumer confidence. As a result of these hardships, cashflow and profits are falling, investment decisions have paused, and firms are raising prices and struggling to recruit and retain staff, the SCC have said. The SCC’s report said that 82% of all firms indicated that they intend to raise their prices over the next quarter, a record high for the survey. The retail and tourism sectors had the highest proportion of firms indicating a future price rise at 77% and 76% respectively. The report said that labour has now overtaken energy as the top cost pressure for businesses, with concern over the former halving since the last quarter as a result of the Government’s energy bill relief scheme. Over seven in ten firms (72%) said that labour costs were now the biggest cost pressure for businesses. Concern remains over the cost of fuel and raw materials, both cited by six in ten firms. Concern for inflation has fallen for a second successive quarter, but is still cited by 8 in 10 businesses and […]

Hospitality sees best year in three but lags behind pre-Pandemic levels

18th January 2023

Pubs, bars, and restaurants celebrated their best December trading in three years, data from the Coffer CGA Business Tracker has revealed, but sales in real terms remain below pre-COVID levels. The data revealed that like-for-like (LfL) sales in December 2022 were 15% ahead of 2021 levels, when trading was hampered by the widespread omicron variant of COVID-19. Despite this, sales were only 2% higher than 2019 levels, and when adjusted for double-digit inflation, trading was significantly behind pre-Pandemic rates. Christmas was a particularly strong period of trading for pubs, which saw an increase in LFL sales of 19% compared to 2021, as concerns about COVID reduced and the World Cup drew more people into their locals. Restaurants saw a more modest rise, at 9.1%, while sales in bars were up 11.9%. London saw a more dramatic increase in hospitality sales, with the capital seeing an increase of 22.8% compared to 12.9% in the rest of the country. The data is produced by CGA by NielsenIQ in partnership with The Coffer Group and RSM UK. Karl Chessell, director of hospitality operators and food, EMEA at CGA by NielsenIQ, said: “After two bleak Decembers, solid Christmas trading helped many pub, bar and restaurant groups to end 2022 on […]

2023 business rates revaluation explained

18th January 2023

The draft 2023 rating list has now been published, showing that the 2023 business rates revaluation looks set to reduce retail rateable values nationally by 10%, which will be welcomed by owners and occupiers of retail properties. The extent to which occupiers of retail premises will benefit from a decrease in rateable value depends very much on location; some are certainly going to benefit more than others. Find your current and future rateable value here. To arrive at the 2023 rateable values, the Valuation Office Agency (VOA) have estimated the rental value of properties on what is known as an antecedent valuation date (AVD). This estimate of the rental value of a property becomes known as the property’s rateable value; a multiplier is then applied to this to generate your annual business rates liability. Your annual liability can increase, depending upon where the multipliers are set. Even if your rateable value is set to decrease, it is nonetheless important to ensure your business rates liability is based upon correct and fair information. Action can be taken now to ensure you are paying only what you should, now and in the future. The VOA assess the rental value of retail properties […]

A guide to renting a shop in South London

17th January 2023

Considering renting a shop in South London? Here’s what you need to know. South of the Thames, South London consists of the boroughs of Bexley, Bromley, Croydon, Greenwich, Kingston, Lambeth, Lewisham, Merton, Richmond, Southwark, Sutton, and Wandsworth. While maybe not seeing as much footfall as central London, South London has a lot of up-and-coming areas which can make it attractive to retailers, with many town centres based in its boroughs. According to the South London Partnership, South London is home to six times more start-ups with better survival rates than the London average, making it an ideal location to consider when renting a shop. Attractions South London is home to The Shard, London’s tallest building and second in the UK only to Emley Moor in Yorkshire. Southwark‘s Bankside is also home to contemporary art museum the Tate Modern. Southwark also boasts Shakespeare’s Globe for theatre lovers, as well as the historic HMS Belfast, which is moored on the southern banks of the Thames. Music fans may be familiar with the O2 Academy in Brixton which has played host to many world-famous acts over the years. South London is home to world heritage site Maritime Greenwich, famous for historic landmarks such...

Demand for pubs still strong with freehold prices up 41% in 2022

11th January 2023

The average price of a trading freehold pub rose by 41% in 2022, according to new information from leisure property specialists Fleurets. This was primarily driven by sales in the South, which saw a dramatic increase in price of 54% to £1,148,750, while the average sale price in the North was £530,688. Although the prices of pubs have gone up, Fleurets said there was a reduction in transaction volumes, especially in the South with a fall of 35%. The price of bottom end freeholds, that is, pubs sold without accounts and often closed, also rose. Bottom end freeholds saw an increase to 15% to £373,712 in 2022. The amount of transactions did decrease, however, as more operators looked to balance the books and continue operating, through increased staycation trade, government support, and savings. Fleurets’ data also revealed that 37% of 2022 freehold pub sales were for alternative uses, which was in fact lower than in 2020 and 2021. The most common alternative use was for residential, at over 60%. While 52% of bottom end pub sales were for alternative uses, a substantial 83% of trading freeholds were sold for continued pub use. The number of pubs in England and Wales […]

Business property market bucking negative real estate trends

10th January 2023

The percentage of people purchasing property for business purposes has more than doubled over the last year, despite the residential real estate market still taking hits. Property sales for business were at 33% in 2022, up from 15% in 2021, according to data from solicitors Bird & Co. It said that no enquiries it received in 2020 were for business purposes. This is a stark contrast to some of the trends seen in the residential market, with Bird & Co. citing the invasion of Ukraine, the aftermath of COVID-19, and Liz Truss’ tenure as Prime Minister as reasons behind its poorer performance. The statistics showed a drop in the amount of first-time buyers from 71% in 2021 to 68% in 2022, while a significant jump was seen in people buying property as their main residence, up to 76% from 42%, indicative of lower spending power as many chose not to purchase multiple properties. Bird & Co. said that to help encourage more people to get on the property ladder, the Government must focus on affordable housing, keep with the demand of new builds, tackle living costs, and address mortgage lender skepticism when lending to renters.