GB RETAIL AND LEISURE MARKET ANALYSIS FULL YEAR 2020
PUBLISHED MARCH 2021 BY LOCAL DATA COMPANY COPYRIGHT 2021 No part of this report may be reproduced or distributed without consent www.localdatacompany.com GB RETAIL AND LEISURE MARKET ANALYSIS - FULL YEAR 2020
FOREWORD
2020 was a year like no other, as the pandemic future relationship with the EU. impacted all aspects of our personal and professional lives. This created one of the toughest trading With the rapid pace of change in the market, it is climates for the retail sector, with all stakeholders important to note that these figures do not include having to rethink, adapt and show resilience in the the closures that will happen as a result of the sale face of a catalogue of challenges. of Arcadia and Debenhams in January 2021. This activity will be captured alongside the other recent This report focuses on the 12 months of 2020, which announcements including Thorntons and John we must not forget was unaffected by the pandemic Lewis in our H1 2021 report, which will also track until March. These first months of the year were the much-anticipated reopening of the market, filled with relative vibrancy after the general election which begins on 12th April 2021 (correct at time of provided some much-needed certainty on the UK’s writing).
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CONTENTS
4 ABOUT LOCAL DATA COMPANY 46 2021 OUTLOOK Openings and closures 7 KEY FINDINGS Vacancy rates
10 INTRODUCTION 49 CONCLUSION Openings and closures Temporary closures 50 COMMENTARY Vacancy rates Lucy Stainton, Head of Retail and Strategic Failures and job losses Partnerships
18 LOCATIONS 51 METHODOLOGY Openings and closures by location type Vacancy rates by location type 52 GLOSSARY Regional vacancy rates Persistent vacancy Redevelopment activity Case study – West Byfleet Hyper-localisation Case study - Heckmondwike
29 SECTORS Net change Top 10 growing categories Top 10 declining categories Multiples vs independents
39 BRANDS CVA/Administration activity Case study – reoccupation of former stores Expanding brands
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ABOUT THE LOCAL DATA COMPANY
The Local Data Company is the UK’s most accurate data is underpinned by our proprietary technology retail location insight company. We physically track stack which supports the field research and quality every retail and leisure business across the country. control processes. This technology enables us to Our data powers strategy and decision making for provide our clients with unrivalled insight on over our clients working across retail, leisure, out-of- 680,000 retail and leisure businesses, access to home media, investment, property and financial location insight dashboards and footfall tracking services. capabilities.
Our team of field researchers record the occupancy Our team of analysts and sector experts is committed status of every business on a regular basis. This to understanding the unique challenges our clients’ frequency enables us to track how the market is businesses face and applying our comprehensive changing in close to real-time. The accuracy of our data to support their strategic objectives.
OUR PRODUCTS
RICH, ACCURATE DATA Our database contains over 680,000 addressable, field-researched points of interest including over 400,000 independent premises and every chain retail and leisure brand across the UK.
ANALYTICS Local Data Online provides fast and accurate access to market trends, competitor insights and portfolio analysis tailored to your business.
STRATEGY For over fifteen years our dedicated insight team has been working in partnership with clients committed to investing in retail via a range of strategic projects.
FOOTFALL TECHNOLOGY Accurate counting and analysis of footfall trends is invaluable. Our proprietary technology stack provides this at a granular level, enabling forensic insights into flows and trends around a physical space.
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PROJECTS WE WORK ON INCLUDE: BUSINESSES WE WORK WITH:
• Location planning and strategy • Due diligence • Store rationalisation • Competitor and market tracking • Investment strategy and asset management • Anti-money laundering • Alt-data projects • COVID-19 impact analysis • Portfolio strategic realignment
After opening a number of successful dark kitchens and with home delivery being
an even more critical part of our strategy due to the covid-19 pandemic, Chopstix
Group enlisted LDC to support the expansion of our dark kitchen network. LDC
analysed the existing sites to establish drivers of performance and used this as a
framework for identifying what the market capacity was for this concept as well as
providing us with a list of locations to target. It was critical for us to work with live and accurate data for this project, and the experienced team at LDC helped up carve
out a strategic plan of action against set against a complex market background.
JOHN LAKE
MANAGING DIRECTOR, CHOPSTIX GROUP
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LOCALLOCAL DATADATA COMPANY COMPANY RESEARCH METHODOLOGY DATA RESEARCH METHODOLOGY
Our field research coverage 70 different data variables includes: collected including: 680K retail • Brand and leisure Every high name businesses street, retail • Address park and • Geocode 400K shopping • Website independent centre • Telephone businesses across the number Data is country is analysed by 3,200 visited either LDC’s Quality GB retail on a 6 or 12 Control Team destinations month cycle.
Live data is uploaded 24 hour in real time each day to the 80k updates update secure Local Data Company processed cycles server per month
Database of over 680K premises Products: including: Equalling in excess Online 400k of 1.2 million Insight independent 10 year unique records Dashboards businesses 4,800 national time brands series Rich, Accurate Data Strategic Consulting
The Local Data Company is the only business tracking the huge change taking place across
the GB retail and leisure market in near real-time.
Contact us at [email protected] or visit www.localdatacompany.com to find
out more about accessing data and insights on the post-covid landscape.
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KEY FINDINGS
1. 4. EXPOSURE TO COMPARISON RETAIL LED CHALLENGES AHEAD FOR OWNERS OF TO INCREASED RISK FOR SHOPPING VACANT DEPARTMENT STORE SPACE CENTRES With the announcements that Debenhams will close Shopping Centres were the most negatively and John Lewis will shutter more stores, landlords impacted of all location types in 2020, with a net have a challenging task ahead in finding reoccupiers loss in occupied units of 5.4%. The retail mix within for large-format space. Of the House of Fraser, these asset types tends to comprise of more ‘non- Debenhams or Beales department stores that essential’ retailers than other location types. On closed between January 2017 and December 2019, average, 57% of units in Shopping Centres are only 24% had found new occupiers with no capital Comparison Goods stores, much higher than the investment required by the end of 2020. 30% of average for the High Street at 28%. The risk that this the former department stores saw some structural creates for Shopping Centres is evident by data on change either being demolished or split into smaller the Comparison Goods retail sector, which declined units. This is likely to be the favoured approach for by -6,984 units in 2020, accounting for 62% of the the 124 Debenhams stores that closed at the end total stores that were lost in 2020. of 2020. 2. 5. LACK OF COMMUTER AND TOURIST FUTURE DEMAND FOR RETAIL SPACE IS FOOTFALL HIT CITIES HARD THE KEY FACTOR IN RETAIL REVIVAL The Vacancy Rate across City Centres increased Despite the challenges in 2020, 39,060 stores by 2.5% to 16.1% in 2020, the fastest jump seen opened their doors for the first time. 42% of these across all town profiles analysed. The move to were prior to the pandemic with the rate of opening remote working, loss of international tourists and after March at an all-time low. Total online retailing cancellation of major sporting events and concerts values increased by 46.1% in 2020 when compared which are key City Centre attractions, collectively to 2019 (Source: ONS). This jump is likely to have a created a sharp downturn in footfall. Two town longer-term impact in 2021 as retailers opt for fewer profiles which benefited from the pandemic were stores. However, locations suited to support online Villages and Commuter Towns where vacancy operations such as those out of town and on retail increased by just 0.4% and 1.2% respectively, both parks will boost store openings across 2021. below the national average increase of 1.6%. 3. SLOWDOWN IN REDEVELOPMENT ACTIVITY AS THE PROPERTY MARKET ENTERED A DEEP FREEZE There was a slowdown in property redevelopment activity for the first time in five years, with the number of retail and leisure units being converted for other use such as office and residential dropping by 16%. This was due to operational delays caused by restrictions during lockdown, landlords and investors delaying plans due to market uncertainty and many businesses being unwilling to commit the capital needed to complete work.
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TRACKING FOOTFALL TRENDS ACROSS A RECOVERING MARKET LOCAL DATA COMPANY’S 2ND GENERATION FOOTFALL TECHNOLOGY
THE CHALLENGE OUR PRODUCT When the ‘non-essential’ retail market reopens The latest generation of Local Data Company across UK high streets, shopping centres and Footfall Sensor achieves a marketing-leading level retail parks, measurement of how and when footfall of accuracy, capturing ground-truth data on footfall returns is key to understanding the long-term impact trends without relying on proxies or generalising of the COVID-19 pandemic and what future strategy trends based on smaller data samples. should be for occupiers, local authorities, landlords and other retail stakeholders. Our proprietary technology uses low-level radar waves to count people walking within a set field of vision. It has been tested to perform within a +/- 5% error margin and works consistently 24/7, in all weather conditions.
SENSOR BASE STATION
Sensors have been designed to sit discreetly in a store environment and are installed by fully trained engineers, briefed to cause minimum disruption during their visit.
THE OUTPUT The unique benefit of our footfall data is not just Data is available each Monday for the previous week the market-leading accuracy of our technology, but in a range of formats: raw data files, via our online our ability to combine this with powerful, historical insight platform, or as bespoke reports produced by insight on 680,000 retail and leisure units. Adding our insight team. our contextual data enables us to tell the full story – not just how footfall is changing, but why.
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USE CASES It’s not only strategically important to track footfall portfolio of stores or a location can support a range as part of the COVID-19 recovery effort. Having an of long-term strategic activities. accurate and robust source of footfall data on a
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INTRODUCTION
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INTRODUCTION
2020 was the year defined by one word: COVID-19. This report will provide evidence for some of the A new Coronavirus spread across the world at a trends noted anecdotally across the year and will rapid pace, landing in the UK in January and causing highlight not only the intense challenges faced by the indeterminate damage to both the nation’s health market, but the green shoots of growth for a select and the economy. The retail and leisure market was group of winners. Our prediction is that the road to at the core of this damage, hitting the headlines recovery is on the horizon, but for occupiers and daily; from panic buying to the Eat out to Help Out landlords alike, the situation will get worse before it scheme and, creeping into 2021, the sad news of gets better. two high street giants, Debenhams and Arcadia falling into administration and shutting up (physical) shop for good.
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OPENINGS AND CLOSURES
The retail and leisure market was one of the sectors Retail and leisure openings were down by 13% as which was hit the hardest by the pandemic, evident many businesses paused expansion plans. There from the 50,379 closures across GB in 2020. were 39,060 openings in 2020; the lowest number However, this was down 6.8% on the previous since we started reporting on this metric in 2013. year which might surprise many, but there are two Of the 39,060 openings, 43% occurred in the first reasons for this: three months of the year. The slowdown in openings resulted in a net loss of 11,319 units, once again, the highest number since our records began. • Potent Government support schemes including the business rates holiday and protection from evictions put the property sector into a deep freeze. These measures enabled most retailers to keep their head above water as landlords took the hit on rental collections; only 54% of retail rents were collected within 14 days of the last December rents day according to Re-leased (Source: Re-leased, 2021). This equated to a year-on-year decline of 18%. • The temporary closure of the ‘non-essential’ retail market depressed closures as well as openings, with total activity (openings + closures) down by 50,379CLOSURES 9.6% compared to 2019. ACROSS GB IN 2020
ANNUAL MARKET ACTIVITY (OPENINGS + CLOSURES), 2013 - 2020
Figure 1: Number of openings and closures across GB, 2013 - 2020 (Source: Local Data Company)
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TEMPORARY CLOSURES
The introduction of the first UK lockdown in March following the first round of national restrictions. June 2020 brought with it a term we would become very and July saw the biggest increases in ‘non-essential’ familiar with, as only stores deemed ‘essential’ by units reopening, with many occupiers adapting the government were legally able to remain open. operations and store infrastructure in order to meet Those classified as ‘non-essential’ had to close strict social distancing guidelines. The peak of the until the virus was brought back under control. Just recovery came in September when 83% of units 19.5% of occupiers on GB high streets fell into that were eligible to reopen had done so and some the ‘essential’ classification and just 15.4% within businesses were encouraging staff to begin the shopping centres, which reflects the scale of the return to the office. Albeit this was short-lived with shut down at the time. a tightening of restrictions returning fairly promptly. Some essential retailers closed stores initially and reopened fairly promptly once stores had been Figure 2 shows the gradual recovery of the market adapted to meet COVID guidelines, represented in as occupiers were given staggered dates to reopen Figure 2 by the 3% reopening rate seen in April.
REOPENING RATE BY MONTH OF VISIT
Figure 2: Monthly reopening rate across GB by month of field research visit across 2020 (Source: Local Data Company)
Analysis of the units surveyed by our field team in the first lockdown. This ‘frozen market’ will have to September and October 2020, prior to the second thaw in 2021, with the end of the various support national lockdown in November and circuit breaker packages for businesses and holiday on business in Wales, showed that 3.6% of businesses had failed rates likely to force their hand. This is likely to result to reopen and had not vacated their premises since in another jump in closures for the year.
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VACANCY
Vacancy Rates increased significantly across the of 2020, the GB average All Vacancy Rate (retail and board in 2020. With the reopening of the retail sector leisure combined) was 13.7% - the highest on Local starting on the 15th June, closure activity and the Data Company records (which began in 2013). This first visible impact of the pandemic on occupancy equates to a 1.6% increase across the year - the became evident halfway through the year. At the end biggest annual jump in vacancy ever recorded.
HISTORICAL VACANCY RATES
Figure 3: Historical Vacancy Rates by type, 2013 - 2020 (Source: Local Data Company)
For context, even in 2018, widely coined the ‘Year of The Leisure Vacancy Rate (excludes retail units) the CVA’, the Vacancy Rate only increased by 0.3%, increased by 1.5% in 2020 ending the year in double emphasising the scale of the challenges faced by digits for the first time ever (10.7%). After years of the sector in 2020. growth, the leisure bubble burst resulting in an increase in vacancy of 0.9% in 2019 as many casual dining brands rationalised their estates. Arguably, The Retail Vacancy Rate (excludes leisure units) the hospitality sector was one of the worst affected increased by 1.7% in 2020, the biggest year-on-year by the pandemic, being one of the last sectors to jump since records began in 2011, ending the year reopen on the 4th July. Despite the brief relief in the at 14.9%. This was the highest vacancy has been form of the Eat Out to Help Out scheme, operators since September 2012 as many high street retailers were also hit by restrictions including the curfew and closed stores for good including Cath Kidston, the rule of six which impacted operating hours and Oasis, Warehouse and T/M Lewin. Retail closures party sizes, making trading more challenging. will continue to hit the headlines throughout 2021 with the sale of Debenhams and the Arcadia brands without their estate of bricks-and-mortar stores signposting further decline before things improve.
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FAILURES AND JOB LOSSES
109,407 jobs were lost in 2020, 47% more than due to failure or a CVA compared to 5,793 in 2008, the same figure at the height of the last recession in which is evidence of the scale of some of the stores 2008 (Source: Centre for Retail Research). Despite affected by the pandemic. this, fewer stores were impacted with 5,214 closing
NUMBER OF STORES AND EMPLOYEES AFFECTED BY FAILING COMPANIES
Figure 4: Number of stores affected and companies failing in the retail sector, 2007 - 2020 (Source: Centre for Retail Research, January 2021)
Additionally, the pool of potential buyers with the 53% of ‘at risk’ stores ended up closing, up from appetite to take on a struggling retail business is low. 36.9% in 2019 (Source: Centre for Retail Research). Data from the Centre for Retail Research shows that
109,407JOBS WERE LOSTIN 2020
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Donate You can help us be there #forthefour by donating what you can. Visit retailtrust.org.uk/forthefour-donate Corporate donors can contact Claire Greenwood at [email protected]
Championing the health of retail Join us! Join the conversation about health While one in four adults in the UK will and wellbeing in the retail industry. experience a mental health problem at some point in their lifetime, we believe we 10-11 Our virtual event will take place should be there #forthefour in four MAY during Mental Health Awareness colleagues who will experience a setback or Week. Join us to create health, life event. happiness and hope for everyone involved with retail.
Join us! Be there #forthefour Register at retailtrust.org.uk/forthefour retailtrust.org.uk/forthefour
retailTRUST is a registered charity in England and Wales (1090136) and in Scotland (SC039684). Company No 4254201 (Company limitedLocal by Guarantee) Data Company Registered Ltd, 13-19 England Vine Hill, & London,Wales. Registered EC1R 5DW. office: All Rights Marshall Reserved. Estate, Hammers Lane, London, NW7 4DQ. +44 (0) 20 3111 4393 | [email protected] | www.localdatacompany.com Page 17 GB RETAIL AND LEISURE MARKET ANALYSIS - FULL YEAR 2020
LOCATIONS
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LOCATIONS
This section of the report provides a more detailed Standalone units are those that sit outside of the review of the impact of the pandemic across various three other location types such as supermarkets, location types and asset classes; High Streets, hardware stores and furniture retailers, which are Shopping Centres, Retail Parks and Standalone as often located outside the main town centre boundary well as a review of how redevelopment activity was in residential areas. impacted in 2020.
OPENINGS AND CLOSURES BY LOCATION TYPE
Shopping Centres have been the most negatively 1.5% loss in 2019. Standalone locations were more impacted of all location types in 2020, with a net resilient in 2020 as the benefits of being accessible loss in occupied units of 5.4%. There was a marginal by car and their proximity to residential hubs met the reversal in the negative trajectory for Standalone needs of the population under lockdown. locations with a net loss of 1.3% compared to the
PERCENTAGE NET CHANGE IN OCCUPIED UNITS BY LOCATION TYPE, 2018 - 2020
Figure 5: Percentage net change in occupied units by location type, 2018 - 2020 (Source: Local Data Company)
SHOPPING CENTRES HAVE BEEN THE MOST NEGATIVELY IMPACTED OF ALL LOCATION TYPES
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VACANCY RATES BY LOCATION TYPE
The sharpest increase in vacancy was seen in distancing measures, due to the indoor nature of the Shopping Centres, rising from 14.4% at the end assets. Shopping Centres were also the last to open of 2019 to 17.1% at the end of 2020. This reflects following the first lockdown, especially in Scotland, an incredibly tough year for Shopping Centres as where they were only able to reopen from the 13th they faced the biggest challenges around crowd July. management and implementing rigorous social
HISTORICAL VACANCY RATE BY LOCATION TYPE, 2013 - 2020
Figure 6: Historical vacancy rate across GB, by location type H1 2013 - H2 2020 (Source: Local Data Company)
Shopping Centres also have the lowest percentage Vacancy on Retail Parks increased by 1.9%, hitting of retailers classified as ‘essential’ which resulted in double digits for the first time ever and High Streets huge proportions of large schemes shutting down saw the smallest increase in vacancy of all three for months at a time. On average only 15.4% of location types (+1.6%). Shopping Centre units are classified as ‘essential’ compared to an average of 28.7% for Retail Parks. Additionally, Shopping Centres are the most exposed to Comparison Goods retail, which was struggling to compete with online, even before the pandemic ON AVERAGE ONLY pushed even more consumers to shop in this way. On average, 57% of units in Shopping Centres are Comparison Goods stores, significantly more than the average for the High Street (28%).
OF SHOPPING15.4% CENTRE UNITS ARE CLASSIFIED AS ‘ESSENTIAL’
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REGIONAL VACANCY RATES
The Vacancy Rate in Wales increased the most of all region were some of the most resilient, due to the GB nations and regions, rising from 16.4% to 19% in fact that many are less exposed to leisure, with 2020. Wales was one of the slowest locations to be 14.4% of units in this category compared to the GB released from lockdown, which was felt especially average of 16.2%. Vacancy increased in Shopping hard across Shopping Centres in the nation, wher Centres in the North West by just 1.1% compared to the Vacancy Rate increased rapidly from 15.4% at a GB average of 2.7%. the end of 2019 to 21.8% at the end of 2020.
The second highest Vacancy Rate increase was The North West saw the least movement in this seen in the South West, rising from 11.8% to 13.9% metric, with a small increase in Vacancy Rate of in 2020. 0.6% across the year. Shopping Centres in this
REGIONAL VACANCY RATE, 2019 VS 2020
Figure 7: Regional vacancy rates, 2019 vs 2020. (Source: Local Data Company)
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PERSISTENT VACANCY
In 2020, the pandemic impacted both short-term to double from 0.8% in 2019 to 1.9% at the end of and long-term vacancy, as the lack of activity in the 2020. The recent demand for Retail Park space is market suppressed demand for space, leading to likely to see some units find new occupiers in the many vacant units remaining as such. form of acquisitive brands looking to expand their out-of-town portfolio. However, the risk is that not all of these units will find new tenants, particularly those Across GB High Streets, the percentage of units that on Retail Parks that lack strong anchor tenants, had been vacant for more than three years increased or lack a diverse retail and leisure mix enhanced by 0.5%. Retail Parks saw the smallest increase by grocery which has performed well during the in long-term vacancy at 0.4%, however the flurry pandemic. Therefore, some units are likely to remain of failures across this sector in 2018 (Mothercare, vacant for many years to come unless redevelopment Maplin and Toys ‘R’ Us) caused the percentage of or a change of use is considered. units lying vacant for between two and three years
PERSISTENT VACANCY BY LOCATION TYPE, 2020
Figure 8: Persistent vacancy rate by location type and length of time vacant, 2020 (Source: Local Data Company)
SOME UNITS ARE LIKELY TO REMAIN VACANT FOR MANY YEARS TO COME UNLESS REDEVELOPMENT OR A CHANGE OF USE IS CONSIDERED.
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REDEVELOPMENT ACTIVITY
Redeveloping and repurposing retail property is had jumped by 385% since 2015. Inevitably, this increasingly being discussed as a way to combat dipped by 16% in 2020 as the market was shut the rising numbers of vacant units as consumer down and many investment projects were paused demand changes. This strategy offers investors due to the uncertainty caused by the pandemic. In and developers the opportunity to create innovative 2020, over 1 in 5 units that were redeveloped were mixed-use schemes or change the use case for located in Greater London (23.9%) and the West an asset, such as reworking it as a logistics or Midlands saw the biggest slowdown in this activity warehousing hub. LDC data show that the pace of indicating that there will be regional differences in redevelopment increased significantly in 2019 and demand for alternative uses.
NUMBER OF UNITS BEING REDEVELOPED, 2015 - 2020
Figure 9: Redevelopment activity by number of units across GB, 2015 - 2020 (Source: Local Data Company)
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CASE STUDY – WEST BYFLEET
West Byfleet is in the top 20 towns across the demolished completely. This resulted in the Vacancy country in regard to pace of redevelopment activity Rate improving drastically from 16% in 2019 to 5.3% in 2020. Situated in Surrey, it is a key commuter town in 2020. Some of the brands that closed prior to the with a journey time of 30 mins into London Waterloo, units being demolished were Costa, Londis, Boots making it an attractive location for investment. and LloydsPharmacy.
More than a third of the total activity (openings and The proposed new mixed-use redevelopment closures) in West Byfleet were units undergoing scheme will contain 255 residential units, 300 sqm redevelopment or being taken out of the retail market. for a new community hub or library and up to 5,000 A total of 20 units were removed with 18 being sqm of retail and leisure space.
Figure 10: Station approach, West Byfleet prior to the demolishment (Source: Local Data Company)
As with most redevelopment plans, the West Byfleet as the surrounding oversupply of retail property is scheme still features retail and leisure at its core. addressed. These new units are likely to attract a This reflects the confidence from town planners strong tenant line up due to the immediate catchment that physical retail and leisure still has a place providing a ready customer base for convenience, in the community, and how attractive it still is to service and leisure operators to reinvigorate the local developers in terms of income and stability - as long economy.
Figure 11: Artist’s impression of the future of West Byfleet (Source: Altitude Real Estate Limited)
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HYPER-LOCALISATION
With national lockdowns and ongoing restrictions service and convenience offer and higher balance rendering consumers largely confined to their of independent retailers were more resilient in 2020, immediate locality, the concept of hyper-localisation seeing an increase in vacancy of 0.4% compared has been a key talking point across 2020. to the GB average of 1.6%. This is further evident when assessing changes to Vacancy Rates across City Centres, which have seen footfall plummet as This trend can be evidenced through analysis of workers and student populations have been working change in Vacancy Rates for different profiles of remotely. The Vacancy Rate across City Centres town. Village locations, which are more residential increased by 2.5% to 16.1% in 2020, the highest of with a smaller comparison retail offering, a larger all town profiles analysed.
VACANCY RATE BY TOWN PROFILE, 2019 VS 2020
Figure 12: Vacancy rate by town profile across GB, 2019 - 2020 (Source: Local Data Company)
The move to remote working was a catalyst for Commuter towns have been able to sustain higher the significant loss of shops and hospitality outlets levels of weekday footfall and spend, with home across City Centres, as the supporting retail workers visiting coffee and takeaway food stores provision lost customers almost overnight. However, across the week. Pre-pandemic, these visits would the surrounding commuter towns have benefitted have been within proximity to their office. from this shift to home working, as this profile saw vacancy increase by 1.2%, below the GB average THE VACANCY RATE of 1.6%. ACROSS CITY CENTRES INCREASED BY 2.5% Local Data Company Ltd, 13-19 Vine Hill, London, EC1R 5DW. All Rights Reserved. +44 (0) 20 3111 4393 | [email protected] | www.localdatacompany.com Page 25 GB RETAIL AND LEISURE MARKET ANALYSIS - FULL YEAR 2020
CASE STUDY – HECKMONDWIKE
The town of Heckmondwike in West Yorkshire has home for the majority of the pandemic. 46.5% of remained resilient during the pandemic, reflected by the working population in the local authority area a drop in vacancy in 2020. The town sits 9 miles south are in the three top occupation groups associated west of Leeds, 2.8 miles from nearby Dewsbury. with white collar workers (Source: Office of National The catchment for the town is mainly comprised Statistics). of commuters, who would have been working from
RETAIL MIX
81.7% of the units in Heckmondwike are independent ‘essential’, above the national average of 2 in 10, which is significantly above the GB average of 65% which will have sustained a higher volume of footfall and has increased by 5.4% since 2017. Additionally, during the lockdowns. 3 in 10 of the town’s retailers are classified as
BUSINESS TYPE MIX IN HECKMONDWIKE, 2017 VS 2020
Figure 13: Business type mix across Heckmondwike town centre, 2017 & 2020 (Source: Local Data Company)
NON-ESSENTIAL VS. ESSENTIAL RETAIL MIX IN HECKMONDWIKE
Key retailers in the town centre across the town centre that are week and throughout classified as ‘essential’ lockdowns. are food and discount chains Morrison’s, Lidl and Poundstretcher, with these brands able to attract footfall to the
Figure 14: Percentage of non-essential vs essential retail in Heckmondwike as of March 2020 (Source: Local Data Company)
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Key retailers in the town centre that are classified as fallen into administration is limited and the town was ‘essential’ are food and discount chains Morrison’s, able to attract new, independent occupiers across Lidl and Poundstretcher, with these brands able to leisure, service and comparison retail categories. attract footfall to the town centre across the week and throughout lockdowns. Additionally, the town had reopened 95% of the ‘non-essential’ retail outlets that were forced to close Vacancy in Heckmondwike decreased by 3.3% in in the first lockdown in September, 9% above the 2020, despite the ongoing restrictions impacting GB average of 85%, demonstrating that the level of the retail and leisure units in the town. Exposure to footfall was enough to sustain trade over the course national chains that have undergone CVAs or have of the pandemic.
VACANCY RATES IN HECKMONDWIKE, 2015 - 2020
Figure 15: Historical Vacancy Rate in Heckmondwike, 2015 - 2020 (Source: Local Data Company)
In total five units did not reopen after the first REOPENING RATE OF NON-ESSENTIAL lockdown. This equates to 5% of the total units that UNITS IN HECKMONDWIKE were forced to close due to their ‘non-essential’ status. Of the five units, only one remains vacant, with the other four finding new occupiers.
HECKMONDWIKE REOPENED
95%OF NON-ESSENTIAL RETAIL
Figure 16: Reopening rate of non-essential retailers in Heckmondwike as of October 2020 (Source: Local Data Company)
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SECTORS
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SECTORS
This section of the report reviews net change across the Local Data Company, quantifying the varying the four top-level retail classifications (Leisure, performance across different corners of the market Service, Comparison Goods and Convenience) in 2020 and historically. and the 400 retail and leisure categories tracked by
NET CHANGE
Net change data across the four top-line categories moved online, with most retailers reliant on digital tracked show a clear divergence between ‘essential’ channels for revenue during periods of lockdown. (mainly Convenience and Service) and ‘non-essential’ With the majority of social events cancelled, there retail (mainly Comparison Goods and Leisure). were fewer reasons for consumers to purchase new outfits and other personal grooming items, which also had a significant impact on fashion and beauty The Comparison Goods market declined by a net businesses. The Shirtmakers category was one of 6,984 units in 2020, which is mainly a result of the most impacted by the pandemic, with limited the fact that this sector was forced to close for a demand for workwear alongside the demise of T.M large proportion of the year. The pandemic has Lewin resulting in this category shrinking by 62% in also accelerated the pace at which this sector the year.
HISTORICAL NET CHANGE IN OCCUPIED UNITS BY RETAIL CLASSIFICATION, 2012-2020
Figure 17: Net change in units by retail classification across GB, 2012 - 2020 (Source: Local Data Company)
The impact on the leisure sector has been much category which continued to be negatively impacted discussed and data reflects the stories that were by a change in legislation back in 2019. The Pizza told by occupiers across the year. Pubs (-833), Italian Takeaway and Fast Food categories conversely both Restaurants (-309), Take Away Food Shops (-245) appeared in the fastest growing categories list as the and American Restaurants (-130) saw the highest demand for takeaways skyrocketed. numbers of closures, following Bookmakers – a
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There was a marginal slowdown in the decline of both the Service and Convenience categories (which are mostly comprised of ‘essential’ occupiers) in 2020. The Convenience category decreased by 618 stores, the lowest decline since 2016, driven by the higher demand for local grocery stores as travel was limited. Not all Convenience categories benefitted from the change in consumer behaviour, with the loss in Newsagents continuing at the same pace seen previously. Newsagents were disadvantaged by their lack of fresh produce, small footprint which made social distancing difficult and the decline in the paper newspaper and magazine market which is increasingly moving towards digital subscription models. Others previously relied on the high volumes of footfall passing through transport hubs, which was very low for most of 2020.
There was a slowdown in the decline of the Service category, with the net loss reducing to 1,077 in 2020, compared to 1,460 in 2019. Estate agents accounted for 56% of the total net decline, losing 605 units in the year, however this figure was also down on the previous year (-827). This slowdown is in part due to the stamp tax holiday introduced in July, designed to help stimulate recovery of the economy. The scheme has been a success, with residential property transactions up 26% in 2020 (Source: Zoopla) despite mass job losses and the onset of the recession.
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Making town centre property marketing easier
At Completely Retail we understand there has never been a more challenging time for retail, with vacancy levels at an all time high, especially on the High Street. Local Authorities and Business Improvement Districts (BIDs) are doing all they can to bring life back into town centres.
Each BID page contains:
y A comprehensive list of all available properties to rent within the BID district on CompletelyRetail.co.uk, the UK’s leading retail property portal.
y Unlimited detail, property contacts, Using our retail expertise and relationships photos, brochures, plans with with Agents and Landlords we want to help BIDs properties shown in context on a market their empty shops to prospective retails town centre map. and get the High Street buzzing again. y Help and advice from local property We have thousands of national and local retail experts for local businesses and brands searching CompletelyRetail.co.uk every entrepreneurs looking to acquire their week looking for their perfect premises. To make first shop in your town centre. the process easier for them, we will create a page allowing visitors to see each district as a y Links to other useful local resources, destination with glorious detail on every available shopping centres, local authority etc. unit. There is also information about the major shopping centres, with links to, and useful advice from, local retail property experts. Further details
If you would like further information email [email protected] CompletelyRetail.co.uk Read more about our BID campaign at: www.completelyretail.co.uk/BIDS
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TOP 10 GROWING CATEGORIES
Despite an intensely challenging year, some things of DIY haircuts. New Barber units were seen across remain constant. Once again, Barbers topped the all location types, including Retail Parks which fastest growing list for the 4th consecutive year, increased by 35%. Units increased across Shopping with growth of 800 units, 18 more than 2019. The Centres (+9%), High Streets (+6%) and Standalone reopening of barbers and hairdressers at the start (+5%) also. of July was a huge relief to many, following months
TOP 10 GROWING CATEGORIES IN 2020
Figure 18: Top 10 growing retail categories across GB by net change in units, 2020 (Source: Local Data Company)
The real success story of 2020 was Convenience The Fast Food Takeaway category also saw a Stores; after four years of decline, this category reversal in fortunes for the better, moving from entered the top 10 fastest growing list for the first decline in 2019 (-117) to growth in 2020 (+267). 87% time since 2015. The category grew by 149 units of this growth was driven by independent openings across the year, feeling the benefit of the increase in across High Streets and Standalone locations, with localised shopping, the ‘essential’ nature of their offer entrepreneurs taking advantage of the spike in and the increased demand for grocery shopping due demand for food delivery. to the shutdown of the hospitality sector. The ONS reported a 4.4% annual growth in food sales in 2020 (Source: ONS Retail Sales, December 2020) which Gyms was a surprising category to enter the top reflects this trend. 10 growth categories, given this sector was one of the last to reopen following the first lockdown. When they did reopen, many had to invest in refits Supermarkets also feature in the top 10 fastest to ensure that they could meet the strict government growing list, alongside a huge surge in demand for protocols. Again, the growth of gyms was largely online delivery; the ONS reported that online food driven by independents, taking advantage of the sales were up 79.3% in 2020. Despite this, the relaxed planning laws to open yoga studios, boxing physical store network grew by 101, indicating that gyms and Pilates centres at a time when the public bricks and mortar is still a key part of the growth had a renewed focus on health and wellbeing. Some strategy for Supermarket brands. national chains saw growth in 2020, including Pure Gym, The Gym, Anytime Fitness and Snap Fitness.
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TOP 10 GROWING CATEGORIES – SURVIVAL RATES
Survival rates is the measurement of the length of time Grocers had the lowest rate of survival at 62%. 100% occupiers within retail categories remain operational of this category is independent, which tend to have before shutting up shop for various reasons. This lower survival rates when compared to multiples. metric can help to determine how resilient categories Grocers include mini marts and ethnic food stores are and the likelihood of long-term survival. For this located in high density residential locations. analysis, we review the occupiers within the top 10 growing categories that opened in 2017 and are still operational 3 years on to determine how resilient the Interestingly, the only subcategory that saw new units which opened in 2020 are likely to be. Of independents outperform multiples was Beauty the 10 fastest growing categories, 7 saw more than Salons, where independents had a survival rate of 75% of new stores survive for at least three year 71% compared to multiples at 68%. This is mainly after opening. due to the fact that limited businesses in this category have been able to reach scale, with the largest beauty salon operator only having 50 units Supermarkets had the highest survival rate with nationwide. 90% still operational three years from opening, rising to 96% when considering multiples alone. 72% of independent supermarkets were still operational three years from opening.
PERCENTAGE OF UNITS IN TOP 10 FASTEST GROWING CATEGORIES STILL OPERATIONAL AFTER THREE YEARS, 2017-2020
Figure 19: 3 year survival rate of the top 10 fastest growing categories, 2017- 2020 (Source: Local Data Company)
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TOP 10 DECLINING CATEGORIES
Bookmakers continued to close in 2020, with a 2020 brought about further challenges for the Pubs loss of 944, the highest rate of decline seen for any sector with lengthy periods of closure, limitations on category in one year. The shakeout in this market group sizes and curfews restricting trading. Pubs is mainly due to the changes to regulations of fixed declined by 833 in 2020, however many are still odd betting terminals which came into effect in April temporarily closed following the first lockdown in 2019. The sector has seen 1,677 units close since March 2020, so this figure is somewhat diluted, and this date. William Hill accounted for almost half of we expect to see further decline in this space. these closures (832).
TOP 10 DECLINING CATEGORIES IN 2020
Figure 20: Top 10 declining retail categories across GB by net change in units, 2020 (Source: Local Data Company)
Another regular feature in the top 10 declining list The loss of Mobile Phone stores was mainly driven is Fashion Stores, with many businesses falling by Carphone Warehouse, which closed 531 stores into administration, launching CVAs or estate in March, however this was not a response to the rationalisation programmes in 2020 including pandemic, but a strategic decision with Dixon Cath Kidston, Warehouse, Oasis, Roman, M&Co, Carphone to combine its Carphone Warehouse Peacocks and New Look. concept with its large format concepts, Curry’s and PC World.
Retail sales across the fashion sector declined by RETAIL SALES 25.1% in 2020 according to the ONS (Source: Office ACROSS THE FASHION of National Statistics, 2021) – the highest annual SECTOR DECLINED BY decline across all retail categories. The number of Women’s Clothes Stores also fell (-390) resulting in the overall decline across the Fashion & General Clothing category equating to 1,846 for the year. 25.1% Local Data Company Ltd, 13-19 Vine Hill, London, EC1R 5DW. All Rights Reserved. Page 34 +44 (0) 20 3111 4393 | [email protected] | www.localdatacompany.com GB RETAIL AND LEISURE MARKET ANALYSIS - FULL YEAR 2020
MULTIPLES VS INDEPENDENTS
Accelerating the trend seen since 2014, the It should be noted that 2020 data does not include multiples market declined considerably faster than the failures of Arcadia or Debenhams which occurred independents in 2020 – declining by a net 9,877 in early 2021. We expect the 2021 to push the figures units compared to 1,442 for independents. The to a record once more, with market turbulence set to contrast is even greater reviewing the figures in get worse before it gets better. There was a 7% drop percentage terms, as independents make up 65% in overall activity (openings plus closures) across of the total retail and leisure market. The multiples multiples in 2020, a figure driven mostly by a 21% market shrank by 4.5%, compared to independents drop in openings. at just 0.4%. Despite the record decline, the year- on-year acceleration was not at fast as the increase seen in 2017/2018 with the huge volume of CVAs that took place in 2018.
NET CHANGE IN OCCUPIED UNITS BY BUSINESS TYPE, 2013 - 2020
Figure 21: Net change in occupied units by business type across GB, 2013 - 2020 (Source: Local Data Company)
Closures of independent units also slowed by 11% in • The extension of the lease forfeiture moratorium 2020, as businesses relied on government support allowed occupiers to continue to trade 2020 measures, both of which are likely to end in 2021: safe in the knowledge that they could not be evicted from the premises.
• The business rates holiday that was offered to all occupiers to the end of March 2021 It remains to be seen what success these initiatives had the desired effect in 2020 and allowed have had in terms of securing a longer term future more independent occupiers to weather the for these businesses. It could well be likely that a challenges thrown at them during the course of second wave of closures occurs, especially across the pandemic. independent businesses as the true impacts of the pandemic are felt.
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Behaviours moving online ≠ buying online Nick Brackenbury, Co-Founder & CEO at NearSt
One of the most discussed retail trends of 2020 was the tidal wave of shopper behaviours moving online, as millions of people were pushed to experiment with getting the products they want in new ways. As an industry though we have conflatedbehaviours moving online with buying online, and in doing so overlooked another even more important change in how people shop that will have a massive positive impact on the high street.
Shoppers are going online to find products locally We all know that people are buying more online - ecommerce sales grew by 40% in 2020 - but there has been an even more dramatic increase in people going online to find products locally.
At NearSt we power live in-store inventory in places like Google for thousands of retailers, and each month see millions of searches for products in local stores. That’s a person tapping into Google things like “who has gluten free flour in stock” or “where can I get men’s brown brogues size 8” and seeing a product in search results that’s stocked nearby.
During the first lockdown these searches for in-store product availability jumped by7x compared to their February 2020 levels and jumped again to 8x that level during the November and December restrictions.
NearSt Local Product Search Index. 1 = Feb 2020 average.
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Are these temporary or permanent changes? While one might initially think that these changes are only driven by lockdown restrictions, our data suggest there is significant long term adoption happening.
During the summer, when there were very few restrictions in place, local product search levelled off at 3x its pre-pandemic levels. In the first lockdown many people suddenly discovered they could easily check local in-store product availability in Google, and continued doing it as a matter of convenience post-lockdown. Today we are sitting at 4.5x pre-pandemic levels of local product searches.
What this means for high street shops Retailers have an incredible opportunity to capture shoppers who are searching and browsing online, and direct them with intuitive convenience to their local store. Shoppers have a ton of goodwill towards their local high streets, and today there is an opportunity to make acting on that goodwill genuinely more convenient than shopping online, using the web to drive really meaningful footfall.
Today Google is the most advanced of the platforms enabling shops to offer this local in-store availability to shops, but other tech titans like Facebook and Uber are rapidly developing offerings of their own.
While the rise of ecommerce may have dominated the headlines in 2020, I firmly believe that 2021 will be the year we’re all talking about the rise of local product discovery online, where the web is a driver rather than detractor of growth on the high street. And that is truly something to be optimistic about.
NearSt is a retail technology company that drives footfall for high street retailers. Their technology makes in-store inventory visible online in places like Google and Facebook, and is a Global Google technology partner.
To find out more visit near.st.
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BRANDS
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BRANDS
CVA/ADMINISTRATION ACTIVITY
A fresh wave of occupiers launched a CVA or fell into In order to understand the likely long-term impact of administration in 2020 as the pandemic proved to CVA/administration activity, analysis was completed be the final straw for many already facing challenges. on the current status of units impacted by these This has and will continue to result in many store processes in 2018. Figure 22 lists the percentage closures as occupiers look to exit any locations of units which had been reoccupied as of January which are not viable in the current trading climate. 2021. In total, of the 776 units that closed, 434 have been reoccupied, 272 remain vacant and 69 have been redeveloped (merged, split or demolished).
PERCENTAGE OF STORES THAT CLOSED IN 2018 DUE TO CVA/ADMINSTRATION THAT ARE CURRENTLY OCCUPIED
Figure 22: Percentage of former stores reoccupied since CVA closures, as of January 2021 (Source: Local Data Company)
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Former Select Fashions (89%), HMV (82%) and retailers analysed in Figure 22 close (New Look, New Look (79%) stores had the highest occupancy Marks & Spencer, Topshop, Mothercare and Toys rate, indicating a higher demand for units vacated ‘R’ Us), however the former Marks & Spencer and by these brands. None of the 5 former Wallis stores the New Look units have both been reoccupied were occupied at the time of this analysis and just since. A cluster of closures such as this can have 24% of former Marks & Spencer stores had been a devastating impact on the vitality of a town centre occupied. Locations to lose a Marks & Spencer and can impact other occupiers’ decisions on both were mainly high streets in towns that have seen lease renewals and property acquisitions in the other retail brands retreat in recent months. On area. Nottingham saw the most impacted stores average, vacancy across these high streets has reoccupied at 88% - all but one of the vacated units. increased by 2.6% since the end of 2018 compared 80% of impacted units in Liverpool, Leeds, Grays, to the national average of 2.2%. Harrogate and Tunbridge had been reoccupied, which reflects the sustained demand for larger cities and towns with an affluent local catchment. One of the towns that lost its M&S is Stockton-On- Tees, one of the Portas Pilot Towns. It saw 5 of the
CASE STUDY – REOCCUPATION ANALYSIS OF FORMER STORES
With many department stores closing and the pool In total, there were 346 stores that closed of potential occupiers reducing, we review previous permanently across the selected brands, 118 reoccupation activity of large-format stores to of which were live with an occupier at the time of identify the brands that are taking up these sizable analysis (January 2021). 192 were vacant and 36 units. This analysis reviews stores that were formerly had been redeveloped (merged, split or demolished). occupied by the Arcadia brands, House of Fraser, Analysis found that 93% of stores that found a new Debenhams or Beales that closed between January occupier did so within two years of being vacated. 2017 and December 2020 and have since been The unit that took the longest to be reoccupied reoccupied. was the former Dorothy Perkins in Penzance which reopened as an independent gift shop in 2020 after closing in 2016.
NUMBER OF UNITS CURRENTLY OCCUPIED FOR CASE STUDY RETAILERS
Figure 23: Number of units reoccupied from selected retailers, as of January 2021 (Source: Local Data Company)
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The brand to reoccupy the largest number of units of the 86 former units housing new tenants. Wallis within the sample was The Works which took over had the highest reoccupation rate, with 48% of their 5 former Arcadia stores. Dorothy Perkins saw the former stores reoccupied. largest number of former stores reoccupied, with 38
PERCENTAGE OF UNITS CURRENTLY OCCUPIED FOR CASE STUDY RETAILERS
Figure 24: Percentage of stores reoccupied since closures, as of January 2021 (Source: Local Data Company)
Only 1 of the 12 House of Fraser stores had been The challenge faced by landlords now is who will reoccupied - by fashion brand Zara which relocated reoccupy the department store space, as previous to take up the former unit in the Highcross Shopping brands to take up this empty space are largely Centre in Leicester. TK Maxx reoccupied some of fashion stores, a sector which is facing some of the larger stores - taking up the former Debenhams the most intense competition from online which in Eltham High Street and former Outfit in York. has been exacerbated by the pandemic. The only non-fashion reoccupier was B&M Bargains, which is still expanding, but demand for units for this one brand will not likely meet the supply coming on to the market.
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REGIONAL REOCCUPATION TRENDS
45% of vacated units located in Wales had been are predominantly those who want to upsize, for reoccupied, the highest of all GB regions/nations. example Primark and H&M taking up former BHS This figure was driven by Mountain Warehouse, stores following the collapse in 2016. Once more, which took the opportunity for expansion across demand will not meet the supply of these large the region. By comparison, just 17% had been units and structural redevelopment is likely to be the reoccupied in the North East, which evidences the best way to protect locations from large units laying variance in demand across the country. Opportunistic vacant for long periods of time. brands who tend to take up large format space
REOCCUPATION BY REGION FOR CASE STUDY RETAILERS
Figure 25: Percentage of stores reoccupied since closures by GB region, as of January 2021 (Source: Local Data Company)
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Despite the pandemic creating ‘unprecedented’ there were brands that were acquisitive and grew challenges for the retail and leisure market in 2020, their portfolio of property.
GROWTH BY UNITS
The list of growing brands in 2020 is dominated by thru locations should be noted, as Costa expanded grocery retailers, with 12 of the top 30 supermarkets across Retail Parks to capture the market share or convenience store brands. This will come as no from remote workers looking for a socially distanced surprise, as the grocery market was classified as caffeine hit. Drive-thru locations have the added ‘essential’ and consumers purchased more in these benefit of easy access by car and proximity to other stores as the ‘non-essential’ market was closed, essential units including supermarkets and garden which included all out of home food venues. centres, providing an easy stop off on the way to or from ‘essential’ shopping trips. Other food and beverage brands have been expanding their drive The inclusion of takeaway brands on this list also thru venues to provide a location closer to residential reflects this trend, as these units were also able to areas which also supports their roll-out on delivery remain trading during lockdown. The growth in drive platforms such as Deliveroo and UberEats.
FASTEST GROWING BRANDS
Figure 26: Fastest growing retailers across GB in 2020 (Source: Local Data Company) GB RETAIL AND LEISURE MARKET ANALYSIS - FULL YEAR 2020
GROWTH BY PERCENTAGE INCREASE
Electric bike retailer Pure Electric grew by 367% in bikes and scooters to avoid travelling on public 2020 rising from 3 to 14 stores nationwide, as the transport. Growth was observed in city centres, such pandemic saw consumers lean towards electric as London, Glasgow, Bristol, Norwich and Liverpool.
FASTEST GROWING OCCUPIERS BY PERCENTAGE GROWTH
Figure 27: Fastest growing occupiers across GB by percentage growth. (Source: Local Data Company)
Another key finding from the fastest growing The growth of these brands shows that despite the categories analysis was the speed at which national widespread challenges faced by the sector, there chains were able to pivot business models and is a future for physical retail in a post-COVID world. focus expansion on concepts which aligned with 2021 will see more brands roll-out plans that either new consumer habits. Sainsbury’s On the Go and have been designed to meet the new consumer Morrison’s Daily convenience formats enabled demands, or that were delayed back in 2020 when retailers to expand their offer to out-of-town and the pandemic started. Likewise, the availability of local areas to meet the needs of consumers unable property and a potential softening of rental values will to travel far. The only non-essential retailer on this also create a perfect environment for those brands list is Everlast Fitness Club, however this expansion looking to grow their physical presence. was due to the acquisition of DW Sports gyms out of administration for £37m in August 2020.
PURE ELECTRIC GREW BY 367%
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BRC CONTENT
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2021 OUTLOOK
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2021 OUTLOOK
OPENINGS AND CLOSURES When forecasting the potential net change in retail compared to 2020, while openings would slump and leisure units for 2021, analysis was focused by 11.2% as occupiers adjust estates to fit the new around a number of scenarios that would impact landscape. The ‘medium case’ scenario models the market activity across the year. Across all the data based on an optimistic trading environment scenarios, opening activity is expected to be lower where the number of openings is down just 5.3% than 2020. The main reason for this is Q1 2020, year-on-year. The ‘best case’ scenario would see which was a three-month period unaffected by the openings drop by 2% year-on-year, with strong pandemic, with 42% of all 2020 openings taking market recovery and strong consumer confidence place then. brought about by the end of restrictions and good performance of the vaccine. In this scenario, support packages would continue, such as the business Early 2021 data shows that there has already been rates holiday, which would allow occupiers to a 29% slowdown in openings in the first 55 days consider opening stores due to the available deals of the year compared to 2020 with the restrictions and low rents, especially among independents as that have been in place since September impacting entrepreneurs seek out opportunities on their local retailers’ willingness to commit to expansion. high streets.
The ‘worst case’ scenario models the expected net Vaccine success could lead to the UK leading the change in the case that retailers remain extremely global recovery, which would encourage international cautious with openings, with no bounce back and brands to take advantage of the availability of space, many retailers focusing efforts on existing stores. especially across prime locations. In this scenario, closures would be up by 5.7%
HISTORICAL NET CHANGE IN OCCUPIED UNITS, 2013 TO 2021 PROJECTIONS
Figure 28: Forecasted net change in occupied units across GB, 2013 to 2021 (Source: Local Data Company)
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VACANCY RATES
Through analysis of early 2021 data combined with Despite business support for retailers continuing insight on towns visited since the pandemic started until the expected reopening date of the 12th April, and the percentage of shops still temporarily closed, many brands are likely to reduce their store footprint we can forecast what the Vacancy Rate will look like as the migration towards online shopping continues. at the end of 2021 across the three location types Such closures will filter through into the market in we track. 2021, with Arcadia and Debenhams closing stores. Closures from these two brands alone will release nearly 15 million sq ft of space back into the market. Vacancy hit a record high in 2020, especially in H2 as the full force of the pandemic was felt across the market. This is set to continue, in the first two months With the hope of normality returning on the 21st of 2021, the Vacancy Rate increased to 13.8% (as of June, the leisure and hospitality sector can see the end of February 2021). better times on the horizon. This should temper the increase in Leisure Vacancy which will still rise, but at a slower rate of 0.3% in the second half of 2021 to end the year at 11.4%.
VACANCY RATE FORECASTS
Figure 29: Forecasted Vacancy Rates by retail type across GB, H2 2021 (Source: Local Data Company)
VACANCY INCREASED TO 13.8% IN FEBRUARY 2021
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CONCLUSION
Over the coming months and years, the retail market shoppers back once restrictions are lifted. Investors will continue to adapt to the changing landscape will also need to evaluate their existing exposure, to caused in part by the pandemic, but also by the help mitigate for any shock closures from occupiers changing nature of the way we shop, work and play in high-risk categories that could close large volumes that started long before 2020. Stakeholders must of stores. adapt to continuing levels of uncertainty caused by the rollercoaster of historic events taking place in Britain over the last five years. Local authorities are under great pressure to apply funding in the most effective way, as well as spearheading the recovery across stakeholders in Occupiers will be experiencing deja-vu, with the their local areas. From the onset of the pandemic, road map dates not quite set-in stone but pencilled policy makers have had to work hard to support in for the 12th April. Many brands have spent the businesses, whether that be altering trading rules past 12 months honestly reviewing their physical on opening hours around Christmas shopping or retail needs and planning for a future in the new changing licencing rules and pedestrianising streets world. Some have taken the decision to rationalise to enable hospitality businesses to offer alfresco their estate, with the objective of cost cutting as dining. Tracking the impact of these measures will consumers progressively move online. Others have be critical in order to maximise the support for local used the increased supply of units to acquire new traders and businesses. Redeveloping retail space space, expanding their provision in a market that will also be a key element in the road to recovery, has proven to be successful. The majority have with a combination of both retail and non-retail uses made less drastic changes, whether in location vital in attracting consumers back into local towns. or in format, as they try their best to embrace the mountain of change. In all three scenarios, our data is able to assess the state of play and identify where 2020 saw the dial shift across the entire retail and long-term investment should be focused. leisure market, as the pandemic placed a question mark across almost all parts of the industry. This has resulted in an acceleration in the pace of change Investors must take note of the resilience of certain seen previously, but more importantly has highlighted asset classes, as well as location types as they the need for even more change in 2021 as the real strategise in order to future-proof their estate in impact of the pandemic is felt. the new post-COVID world. The pool of growing occupiers is shrinking by the day, however within this pool there are brands which can breathe new life into assets, offer diversity in the retail offering and attract
VISIT OUR WEBSITE FOR MORE INFORMATION ON HOW WE CAN SUPPORT RETAILERS, LANDLORDS AND COUNCILS TO RECOVER IN THE POST-COVID ECOMONY WWW.LOCALDATACOMPANY.COM /COVID-19-SUPPORT
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COMMENTARY
LUCY STAINTON, HEAD OF RETAIL AND STRATEGIC PARTNERSHIPS
As we have all learnt over the past 12 months, this Whilst we are forecasting further structural decline virus does not follow a predictable path. However, over the coming months, I would say that as an with the number of people receiving their first vaccine organisation we still remain incredibly optimistic about fast approaching 30 million adults in the UK, there is the future of the physical retail and leisure landscape. more hope than at any time over the last year that a As this report has hopefully also highlighted, there return to some sort of normality is within reach. are some really innovative approaches being taken as regards to redeveloping and repurposing space. Alongside this, anecdotally, we are proud to be The unlocking of the retail and hospitality market working with a wide variety of acquisitive operators, will be a welcome relief for us all, both personally as well as very proactive investors, asset managers, and professionally, with our industry being one of BIDs and councils. And whilst we are far from the most significantly impacted as a result of the being “post covid-19”, the acceleration of many pandemic. However, whilst our latest report shows pre-existing trends as a result of the pandemic a marked increase in the structural decline across may get us to a more diverse, innovative, dynamic the physical retail and leisure markets, we would retail market more quickly than we had previously also argue that we aren’t yet close to seeing the full anticipated. impact of the covid-19 pandemic. It was interesting to see that whilst the gap between openings and closures continued to widen, this was a result of both a decrease in permanent closures and suppressed levels of new openings. The lower level of closure activity compared to previous years is arguably a result of government initiatives designed to support retail and leisure businesses navigate the pandemic. What remains to be seen however, are the consequences of this government support THE ACCELERATION OF MANY ending, effectively “defrosting” a significant portion PRE-EXISTING TRENDS AS A of the market which has been frozen in time since RESULT OF THE PANDEMIC the onset of the pandemic. With this in mind we MAY GET US TO A MORE would expect to see the state of play in terms of vacancy rates and net change worsening over the DIVERSE, INNOVATIVE, course of 2021 and 2022 before levelling out. DYNAMIC RETAIL MARKET
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METHODOLOGY
• The Local Data Company visits over 3,300 towns cycle depending on size and churn, with both and cities (retail centres and government defined a field survey and office research team tracking retail core), retail parks and shopping centres changes in the local market. across England, Scotland and Wales. Each premises is visited, and its occupancy status recorded as occupied, vacant or demolished. • Independent retailers are business with less than five stores nationwide, and no international presence. • Retail type refers to Convenience Retail, Comparison Goods and Service retail, while leisure refers to hospitality units namely, • The GB vacancy rate analyses the top 650 town Entertainment Venues, Restaurants, Bars, Pubs centres. & Clubs, Coffee Shops and Fast Food outlets.
• Each centre has been physically walked and each premises recorded as vacant, occupied or demolished on the day of survey. Vacant units are units which did not have a trading business at that premise on the day of survey.
• Towns are updated on a 6-month to 12-month
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GLOSSARY OF TERMS
CLG BOUNDARY CONVENIENCE RETAIL This is the ‘retail core boundary’ as defined by This category covers all perishable goods retail. Department of Communities and Local Government. Categories that lie within Convenience retail are: This is used by Local Data Company to carry out like Bakers; Butchers & Fishmongers; Confectionary, for like comparisons between locations. Tobacco & Newsagents; Groceries, Supermarkets & Food shops; Off Licences; Petrol Filling Stations. BESPOKE BOUNDARY LEISURE RETAIL This is a boundary which is defined by an end user. In this report, a bespoke boundary has been used Leisure Classification includes: Accommodation; for Manchester city centre and its districts. Bars, Pubs & Clubs; Cafes & Fast Food; Entertainment; Restaurants. STOCK SERVICE RETAIL The total number of premises available (occupied or vacant). This classification includes: Auto & Accessories; Banks, Financial Services & Building Societies; RETAIL STOCK Employment & Post Offices; Estate Agents & Auctioneers; Hairdressing, Health & Beauty; The total number of Comparison, Convenience and Household & Home; Launderettes, Dry Cleaners Service retail (occupied or vacant). & Other; Locksmiths, Clothing Alterations & Shoe Repairs; Pawnbroking & Cheque Cashing; Travel LEISURE STOCK Agents & Tour Operators. All Leisure premises. INDEPENDENT RETAILER RETAIL VACANCY A fascia with fewer than 5 units nationally. The vacancy rate based on retail stock only. MULTIPLE RETAILER CHURN LEISURE VACANCY A fascia with 5 or more units nationally or The vacancy rate based on leisure stock only. internationally.
ALL VACANCY NET CHANGE The overall vacancy rate for Retail and Leisure stock. This is the number of businesses opening and closing. This is the overall change (Openings minus closures). COMPARISON RETAIL This classification covers all retailers offering non-perishable items. Categories that lie within Comparison Goods shops are: Fashion & General Clothing; Charity & discount Stores; Electrical Goods & Home Entertainment; Furniture Shops; Department Stores; Books & Stationary; Car & Motorbike; Chemists, Toiletries & Healthcare; Florists & Garden; Footwear; China & Gift shops; Jewellers; Pet shops; and Sporting Goods shops.
Local Data Company Ltd, 13-19 Vine Hill, London, EC1R 5DW. All Rights Reserved. Page 52 +44 (0) 20 3111 4393 | [email protected] | www.localdatacompany.com Data correct as of March 2021
DISCLAIMER
Information herein has been obtained from sources believed to be reliable. The material provided by us is intended for the sole use of the person or firm to whom it is provided. Any projection, opinions, assumptions or estimates used are our best estimate of the future performance of the market.
AUTHORS
Ronald Nyakairu Senior Manager - Insight & Analytics
Maddie Malone Insight Analyst
PRODUCTION
Sarah Phillips Senior Manager - Marketing & PR
DESIGN
Hannah Badley Senior Graphic Designer
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