-week.com | April 2015 | PROPERTY 17

The face of out-of-town retailing is changing as discounters take advantage of changes in consumer buying habits and excess space, putting the grocers and other retail giants firmly in defensive mode. John Reynolds investigates

he face of out-of-town shopping is Rob Pearson, director at consultancy WYG stores result in bigger baskets", according to a changing. A major shift in consumer Planning, said: "People increasingly view the spokesperson. It has ambitions to buying habits - with smaller, regular discount market less as a dirty habit, more of grow its estate from 588 stores to 1,000 in the T trips to the shops now preferred over a value proposition." coming years, with many in retail parks. the stack-it-high weekly bonanza - has caught Allied to this is that discounters have been Poundland acquisition manager Sean Riley the big and other retailers out. able to take on lease agreements on the masses says: "A lot of people have faith in the future Some of their giant 100,000 sq ft-plus of available space freed up following the of retail parks because they are a convenient stores have been rendered superfluous, and downsizing of retailers such as Homebase and shopping experience." excess space is affecting their bottom lines. the demise of others. According to Trevor Wood According to Riley, they represent a good fit The misfortunes of some retail giants, though, Associates, this has freed up more than 2 million for Poundland as customers arrive in their cars has spelt only good news for the discounters - sq ft of floor space over a 12-month period. with the intention of loading up their vehicles both food and non-food - which are cashing with a selection of goods from different stores, in on the change in consumer buying habits by Poundland leading the way including Poundland. hoovering up smaller spaces in retail parks up Poundland, powered by strong revenue growth, "They do not replace the town centre stores, and down the country. arguably encapsulates the shift that discounters because it's a completely different shopping As Alex Munro, partner at property expert are making from town centre to retail parks. mission," he says, pointing to the quality of Knight Frank, says: "The discounters are more The single-price retailer is focusing on neighbouring stores, catchment and accessi• than just basket shops and sell a wide variety out-of-town 6,000 sq ft to 12,000 sq ft stores, bility retail parks offer. of household good. They are taking advantage shifting away from the high street as "bigger "Certainly in terms of the future, we see of the fact that there is an excess capacity in retail parks as having good longevity as long as the out-of-town market and therefore there are the adjacencies are strong," Riley adds. plenty of opportunities." Drive to any out-of-town retail park in the Race for space UK today and discount stores will be aplenty. ¿6 Like Poundland, B&M has changed consumers' Poundland, , B&M, and perceptions of its offering. Boasting more than A lot of people have faith in will be jockeying for business next to some 400 stores, B&M has been prolific in picking of the biggest names in retail, such as Next, the future of retail parks up former Focus shops and has been linked to Boots and Marks & Spencer because they are a convenient sites occupied by Homebase, which wants to The emergence of discounters in out-of- shopping experience shutter a quarter of its stores. town retail parks is due to a number of factors, According to Patrick Heaps, head of retail Sean Riley, Poundland underpinning which is an acceptance that, at BNP Paribas Real Estate, retail parks offer discounters are now part of the mainstream. opportunities for retailers such as B&M, ^ PROPERTY I April 2015 | retail-week.com

Battle of the discounters - B&M versus Poundland

B&M Poundland Headed up by Headed up by Chief executive Simon Arora Chief executive Jim McCarthy Number of stores Number of stores 417 588 Mix of town centre Mix of town centre and and out-of-town out-of-town. Ambitions Notable fact to grow to 1,000 B&M's biggest store is its Notable fact 42,000 sq ft shop in Poundland recently acquired Great Yarmouth rival and has a store in Spain ahead of an expected roll-out across Europe

which are not available m town centres. He into defensive mode. They have mothballed Sub-dividing space says: "The discounters have gone from difficult out-of-town store plans and formed rearguard Like the big four supermarkets, B&Q has found space in urban locations to taking often hotlv actions as to how to extract value out of super• itself playing catch-up on consumer trends. fought after space in out-of-town locations." fluous floor space. This has resulted in it pioneering a new type The competition between discounters for Cushman & Wakefield joint head of out-of- of store by sharing floor space with space in retail parks would appear to represent town retail Martin Supple points out: "The in towns such as Stoke and Wigan, and in good news for landlords, which have been hit problem with the big four supermarkets is Belvedere, south London. by waves of tenants downsizing and adminis• they have all got big portfolios. Too many Likewise, sports retailer Decathlon is taking trations in recent years. stores and too many large stores not being the space in Asda's Watford store. Typically, the likes of Home Bargains and right format." Carson believes it is a trend shoppers are B&M will take lease agreements for between 10 However, , Sainsbury's, Asda and likely to see more of, albeit in moderation. and 15 years on spaces between 10,000 sq ft and Morrisons are not undertaking a mass exodus He explains: "It is not going to be massively 25,000 sq ft, which is longer than Pound from out-of-town sites, but instead are common because there are not going to be that land's six to 10-year agreements judging stores on an individual, many good opportunities." However, it is arguable case-by-case basis. In fact, However, divvying up floor space does whether these longer leases some of Tesco's most profit• present potential headaches, according to are albatrosses around able stores are its 60,000 sq Supple. He says: "The problem you have is, are their necks, as on the plus ft retail park sites, which you competing with that person that comes side they can benefit from are performing better in alongside you? And a lot of these stores are controlling their capital than its giant out-of-town difficult to sub divide. Also, there are not many outlays with five years 150,000 sq ft Extra shops. people wanting 50,000 sq ft of space." rental reviews. Tesco, like its rivals, The charge of the discounters across retail But some believe the land has looked to combat the parks shows no signs of abating anytime grab for retail park space is change in consumer buying soon. The likes of Poundland, Home Bargains leaving discounters at the mercy habits by reconfiguring its stores. and B&M are now regarded as a central cog of landlords. Munro says: "Competi• For example, it reopened its Watford in the mix of any UK retail park, enticed by tion amongst themselves often means they are hypermarket in 2013 and included a Giraffe the proximity to other retailers and plentiful pressured in to signing 10 and 15-year leases. restaurant, nail salon and "community space" parking, and because of their own transforma• Some landlords want to limit the number of for local groups to use. tion from being stigmatised to being celebrated. discounters on a park to maintain a retail mix, Sam Carson, associate director, Their success has come at the expense of the which also heightens competition." landlord advisory at property adviser CBRE, big four supermarkets and other large retailers, says: "Rather than close these stores, they which have been made to look cumbersome Big supermarkets caught on the hop [the big four] will just change the format and out-of-touch. While the discounters are basking in the of how they work. In many places, the But the biggest supermarkets are not the change in consumer buying habits amidst a big supermarkets will extend the service area biggest by fluke - expect them to think of backdrop of economic austerity, the big four at the back where they can do more online innovative ways to fight back against the grocers and other retail giants have been forced distribution." discounters in the future.