6 ANALYSIS


Terminal illness or gradual decline?


New research by The Local Data Company has found that town centre vacancy rates in Great Britain have risen to an all-time high


able to afford prime areas.” The outlook for the retail sector is bleak


with retailer failures forecast to increase in 2011. Insolvency practitioner Begbies Tryanor reports that 10,250 companies in the retail sector are facing financial distress while the Centre for Retail Research expects 10,000 shops to close this year. Latest store reductions by Arcadia, HMV Group, O2 and others are evidence of this squeeze. “Fundamentally we have too many shops,”


said Gilbertson. “Now it’s down to the law of the jungle and survival of the fittest.” Mike Riley, joint chief executive officer


at the Local Shopping REIT added: “Some of the secondary town centres need to be demolished and replaced with housing.” Internet sales are a big worry, accounting


The researchers calculate that voids have risen from a national average of 12 per cent at the end of 2009 to 14.5 per cent at the end of 2010. Of the 168,000 shops surveyed, 24,300 units are now empty. The north/south divide is still rife. Empty


units in Northern and Midland regions are well above the national average at 16.5 per cent with southern regions well below at 12.3 per cent. Rotherham is one of the worst performing


towns with a vacancy rate of 28.2 per cent – a rise of 13.7 per cent in just six months. The North East, North West, East Midlands


and West Midlands all see average vacancy rates for large centres around 19 per cent. Yorkshire and the Humber is higher at nearly 21 per cent. London, the South East, the East and the South West all cluster around 14 per cent. Scotland stands out with the lowest regional rate at 12.6 per cent. Introducing the research, Hugh Pym, chief


economics correspondent at the BBC, said: “The national picture is reasonably buoyant but


the regional view is different. There’s a sense of tumbleweed blowing down the street.” Big centres in London and the South


East are holding up well, while further north vacancy rates are much higher. Ninety per cent of the top 25 highest vacancy large towns are in the Midlands or the North, this reduces to 68 per cent for the medium sized towns and 44 per cent for the small towns. In large towns average vacancy has


increased by 4.8 per cent over 12 months - this figure is slightly less for medium-sized towns at 4.5 per cent and lower still for small centres at 3 per cent. Matthew Hopkinson, director of The Local


Data Company, believes that medium town centres, those that have between 200 and 400 shops, are at greater risk. “With increased vacancy, rents will go


down because landlords will have to offer better deals and incentives to get people in,” said Barry Gilbertson, partner at PwC. “This means that retailers in secondary areas will be


SHOPPING CENTRE March 2011 www.shopping-centre.co.uk


for 10 per cent of all retail sales. Gilbertson spoke of the possibilities of click and collect. “John Lewis launched its online store 24 months ago,” he said. “Now online sales generate £400m a year, the same amount as its Oxford Street store. “In the run-up to Christmas, 10 per cent


of John Lewis’s online sales were for click and collect and 30 per cent of those customers bought something else when they went into store to collect their purchase.” Gilbertson also said that getting car


parking right is “absolutely essential” to the success of any town centre. The VAT increase and other Government


austerity measures, a fall in consumer disposable income and internet sales are all expected to affect vacancy rates in the foreseeable future. “In the last two years, the decline in


disposable income hasn’t been so high since the 80s,” said Pym. “Some retailers did very well in 2010 but it’s going to be a challenging year.”


Find out more: For more information, please contact the author mia.hunt@jldmedia.com


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