Retail

How Covid is driving an unlikely renaissance of the British retail park


On a frosty spring afternoon this week, cars were queueing down the North Circular ring road around London, waiting to enter the Friern Barnet retail park. Just days after lockdown rules eased in England, allowing non-essential shops to reopen, the traffic provided evidence of an unexpected boost the pandemic has given to a retail format often derided as dull and soulless.

A renaissance for traditional British retail parks — out-of-town open air clusters of big household chains — would have seemed unlikely before Covid struck. Many were hit by closure programmes or had suffered ever since the collapses of chains such as Comet, Toys R Us and Blockbuster and the emptying out of food outlets such as TGI Fridays.

But these car-dependent arrays of boxes have hung on for their moment during the pandemic. Data from retail adviser Springboard showed footfall in such parks was the only part of the retail market to grow compared with pre-pandemic levels after the two 2020 lockdowns on non-essential retail ended.

On Monday — the day the latest restrictions were relaxed — footfall in retail parks across the UK was almost 8 per cent higher than on the equivalent day in 2019. In comparison, it was down more than a quarter on high streets and 16 per cent lower in shopping centres.

Vacancy rates are still increasing in retail parks, up slightly to 10 per cent in the final quarter of 2020, according to the British Retail Consortium and Local Data Company. But they are still lower than the 17 per cent of units that are empty in shopping centres and 13 per cent on high streets.

Read More   Report traces E. coli outbreak to romaine from California farms

Lucy Stainton, head of retail and strategic partnerships at the Local Data Company, predicted that retail parks “should see a reprieve in coming quarters” as units became “more attractive to retailers who are looking to expand and make the most of the availability of space”.

Fashion chain Next, for whom retail parks account for three-fifths of selling space, said in its recent full-year results that sales in those stores were consistently up to 20 per cent higher than stores in other locations.

John Lewis’s stores in shopping centres and on the high street have been hit hard; Average change in footfall each year between 2008 and 2020 by destination type (%)

The size of these outlets is part of their appeal in a Covid-19 world. They offer more space and air for shoppers nervous about crowds. Diane Wehrle, insights director at Springboard, also pointed to the ease of access by car for those still wary of travelling on trains, buses or the Underground and who now rarely venture into city centres to shop.

“Offering easy access by car, free parking and more open space, consumers feel safe and know they can enjoy their shopping experience,” said Helen Dickinson, head of the British Retail Consortium.

Martin Supple, head of out-of-town retail at property agents Cushman & Wakefield, said the units were “typically large with clear-span trading floors allowing retailers to adapt more readily to social distancing measures, such as wider aisles and increased till circulation areas”.

On Wednesday, property group British Land said it wanted to acquire more out-of-town retail parks, hoping to tap into the rush of consumers to “open-air locations” that “facilitated click-and-collect, returns and shipping direct from store”.

Retail park tenants are also often in the “right” sectors for the pandemic.

Read More   HDFC Bank announces winners of 3rd Digital Innovation Summit 2018

Sumpter pointed out that the supermarkets, bargain stores and DIY sheds that often anchor estates were deemed essential retail businesses during lockdown, helping sustain footfall.

In Friern Barnet, queues of people snaked from Pets At Home to pick up supplies for their pandemic puppies. B&Q, Dunelm and Sports Direct had people waiting patiently to improve their homes and fitness with cash they might once have spent on holidays or meals out.

The resilience of retail parks has also attracted new occupiers. Five Guys, a fast-growing burger chain, has agreed to open half a dozen since the start of this year and plans more in the next months. All are on retail or leisure parks close to former commuter towns and cities that have been the beneficiaries of working from home. 

Charles Dunstone, the entrepreneur who co-owns Five Guys in Europe, said that such locations were the fastest-growing within the burger chain and that the failure of other casual dining businesses had left plenty of available space.

Commercial real estate agents said companies such as Tim Hortons, Greggs and Starbucks were in the market for sites, both for sit-down dining and “drive-through” operations.

Even retailers usually associated with high street locations are now chasing sites on retail parks, including variety discounters such as Home Bargains and Poundland, cut-price trainers merchant Sports Direct, greetings card group Card Factory and budget footwear chain Shoe Zone — which closed 40 smaller shops in the year to October but opened 10 out of town.

Read More   Saudi explanation of Khashoggi killing 'not enough', U.S.'s Mnuchin says

Supple said the resilience of retail parks had been reflected in rent collection rates, with landlords reporting an average range of 65-75 per cents, which is typically higher than elsewhere in the industry.

Will Andrews, a director of KLM Retail, a retail and leisure property adviser, predicted that retail parks would have a role in acting as showcases for goods for customers to buy online, to allow for click-and-collect services and provide an easy place for returns.

He added that investors were again interested in acquiring retail parks after slowing activity during the lockdown, with consumers embracing the “chance to take themselves and their social bubble to the shop door”. 



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.