Clearly town centres have a range of uses within them, but retail has always been at their heart. Understanding the forecast for their future is therefore the key to creating a sustainable business plan for individual town centres.


Retail – the future


At the end of 2010, DTZ made the following forecasts for 2011:


ü That Central London would strengthen further as a retail location


ü That major regional city centres would thrive (such as Glasgow and Birmingham)


ü That historically affluent regional towns would prevail (such as Guildford and Oxford)


ü Financial incentives to retailers to take space would reduce in ‘super- prime’ locations


ü Secondary centres would continue to decline (in both occupancy, and financially)


All the above have actually occurred.


For 2012, and beyond, we believe three key principles will apply for retailers. These are that retail is:


ll DIGITISING ll POLARISING ll GLOBALISING


With online sales rising exponentially whilst in-store sales remain flat, many retailers are re-shaping their store portfolios to hold a smaller number of bigger units, retaining only their premium locations. This enables retailers to reach as many customers as possible with a smaller number of stores. Retailers want to keep their ‘flagship’ brand showcases – a physical presence is still viewed as important to connect with the consumer neurologically.


Retailers who have adopted this strategy include La Senza which has scaled down from 146 to 60 shop units, and Currys


THE TERRIER - Summer 2012


PC World which has scaled down from 170 to 70 stores (on-line sales at Currys PC World now account for 20% of total – and continue to grow significantly, year on year).


The actual impact of this ‘polarisation’ on UK centres can be shown by how example retailers have chosen to deal with trading in two typical locations (see overleaf).


The global market is enormous and is increasing in many developing economies still experiencing rapid economic growth and wealth creation, as illustrated in the following tables.


Cities with over 1million population: Area


UK


Europe China


Number 1


20 60


Larger population centres with strong economic growth


City Status


Population City GDP


City GDP Growth


Rising wealth Measure


$ Million- aires


Growth in $ million- aires


Leeds 7th


in Uk 6th


443,000 $60bn 0%


Shenyang in China


4,800,000 $32bn 16.5%


ll Global brands, moving forward, will generally look for no more than 20 UK stores (far fewer than retailers have previously identified)


ll UK retailers are under significant and increasing pressure from overseas competition, and many are looking to overseas markets for their own growth (for example M&S and Topshop)


Resulting from global competition, we are seeing new entrants to the UK market. Some of these have rapidly become established as key anchors to new schemes and refurbishments, including Victoria’s Secret, J. Crew, Express, Aeropostale, Hollister and Forever 21.


As a result, a variety of existing high street names are under substantive pressure, reinforced by increased on- line competition and expanded offer of supermarkets, for example HMV, Waterstones, Clinton Cards and Game.


What will this mean for the UK town centre retail led development pipeline?


Developers and investors of retail schemes are clearly led by retailers, and their future plans will very much relate to the above themes, in terms of where they choose to locate and the nature of those schemes.


UK 450,000 China 960,000 1.5% pa 12% pa


These markets are now much more easily accessible through new technology which has globalised the UK retail market:


ll Almost all luxury growth is focused on Asia


ll A London flagship store is still hugely important to drive global brand recognition (but only a London store)


As we all know, the pipeline effectively came to a halt following the impact of the ‘credit crunch’. In 2012, for the first time in 4 decades, there will be no significant retail led town or city centre scheme opening in the UK. I doubt few people would have ever felt that would be the case. That said, we are now seeing definite, tangible signs of the market picking up, albeit on a selective basis, and with one general theme – where local authorities are proactively getting involved, to help get things moving.


Only one major scheme (Trinity Leeds by Land Securities) is currently under construction and appears, pleasingly, to be letting up well in advance of its opening next year. This is a scheme that had been ‘halted’ on site. Other schemes, such as the old livestock market in


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