There’s been a lot in the news this week about the Portas Pilots – so here is a round up and my view on some of the key issues that have been discussed.
Why have the Portas towns got high retail vacancy rates?
There are some forces of change that work on a national or even international level, affecting all town centres, such as the recession – people have less money to spend and e-commerce – more of people’s spend takes place on-line.
Then there are factors that impact on individual town centres, such as the size of the catchment – whether more or less people are living in the area, how many people work in the town centre, the retail and service offer, for example comparison or non-food retailing has suffered the most in the recession, food and service business have done better.
Other factors include its location (northern towns have higher vacancy rates than those in the south), size (small centres are more resilient than large) and their accessibility or the ease with which people can travel to other competing centres.
In the case of the Portas towns, what is more important is the long term vacancy rate. For example, pre-recession Stockport’s vacancy rate was 12.7% compared to a national average of 10.3% A long-term vacancy rate higher than the national average indicates a long-term problem, and in most cases, an over supply of retail floorspace.
Whilst the Town Teams can get behind the existing retail, this is difficult if it is spread all over town. A strategic approach to concentrating retail into the right-sized centre is also necessary.
Have the Portas Pilots got high churn rates?
In a word – no. You could not pick out a Portas Pilot accurately on the basis of the number of shops opening and closing in its centre. Croydon has the highest churn rate – but then it probably had the highest concentration of multiple retailers, and due to the amount that closed last year (HMV, Comet, Clinton Cards, JJB Sports, Blockbuster, and Thomas Cook etc.) it’s not surprising they have more of their share of 4,000 empty shops to fill.
As Croydon is in the more affluent south, then retailers are likely to be more attracted to relocate there, rather than Nelson in the poorer North.
Churn rates are higher everywhere.
There has been a dramatic fall in the length of leases on commercial properties over the past five years. Before the recession, the average length of a high street lease was 10 years. There’s no doubt the economic climate has meant property owners have had to offer more flexible lease arrangements –a third of high street leases are now less than 5 years.
So, retailers can relocate to more profitable locations – areas with higher footfall – or larger, more efficient retail space, more easily. In other words they are not so ‘trapped’ in locations, which previously kept the churn rate down.
Also, with shorter term and pop-up leases, rent and rate relief, more independent retailers are being attracted into premises that would not have been feasible for them before. However, like other small business, their failure rate is high. A small shop has about a 40% chance of being in business 5 years after opening.
In a survey we did of 600 small retailers in the UK less than a quarter had a business plan, many of them had no previous retail experience and did not invest in training. We found a significant relationship with having a business plan the number of years the shop was in business and turnover.
Without a business plan and some grounding in retaiing, new entrants may be making the wrong location decisions – based upon supply side factor considerations like the price of the unit, rather than whether there is real market demand for their offer and whether the shop is in a location that attracts enough footfall.
How can the Town Teams increase footfall?
In the short term – by making the most of the space and the assets they have. Markets, vintage fairs, festivals, promoting existing retailers through guides, websites etc. Free or cheap parking on its own will not encourage people to the centre if what they want isn’t there, if there is nothing to attract them, if they can’t find it – or the town is dirty or feels unsafe.
But longer term, towns need to have an offer that meets the needs of their users. Retail and consumer data should be used to undertake an analysis of the retail area and work out what is missing and what sort of businesses would do well. Small in-town or edge-of-town supermarkets are associated with lower vacancy rates. Towns should actively encourage certain types of retailer – by going to other locations and seeing what is missing and who they could attract. If a town doesn’t want a supermarket then it should consider options like a local food market.
How can the towns improve their image?
There’s been a lot of investment by towns and cities into rebranding. But behind every good brand you have to have a good product, so there’s no shortcut to the investment and effort needed in terms of getting the place product right.
However, place perceptions can offer lag behind reality – and if a town has a poor image it can take a long time to change that. Place ‘ambassadors’ should be engaged; these could be the local press or key stakeholders like local retailers, for example. Basically, people that can and are willing to ‘talk-up’ the town.
A rebranding exercise can be useful, if it is thought of as the ‘organising principle’ for integrating measures (e.g. events, media relations, residents’ participation). But it needs to capture the place’s distinctiveness and shouldn’t just be a trite slogan – like “open for business”. What town wouldn’t be open for business?
What’s all this about the night-time economy?
Reports by the Local Government Association show that the public and council offers are concerned about the proliferation of sex shops, betting shops and food take away outlets. But if a property is empty landlords will want to fill it. The problem is the landlord is very unlikely to live in the town that seemingly becomes plagued with late-night bars and take-aways etc.
Councils can stop operators by using licensing restrictions, but they may well be challenged – and this is expensive at a time when they have no cash. Splitting the economy into day and night isn’t very helpful. The economy should be seen as a whole – if a late-night takeaway causes a litter problem that puts people off using the town in the day then the net effect on the economy may be negative.
What sort of retailers are doing well?
Well it is not all doom and gloom on the high street. Primark has seen its sales shoot up 24% in the last 6 months (to March 2013). Unlike other retailers, it is not going on-line as it is concentrating on growth in its existing market and profitability from improving retail operational efficiency. So, for example, it is expanding the sales floor area in shops so it can sell even more.
Even though there is a decline in comparison retail (electricals, toys etc.) Argos has seen its sales grow by 3% because of its successful click and collect service. Whilst consumers like the convenience of shopping on-line, the delivery aspect can be very inconvenient – so the ability to order something and know you can pick it up is very compelling. Likewise, John Lewis and Waitrose have seen big growth in click and collect sales.
And lastly, footfall in towns that participated in last years ‘Love your Local Market’ increased by 4% (against a backdrop of 6% decline). There is a growth of the Totally Locally movement, and after the horsemeat and other scandals, more people want to know where their food comes from, and smaller food retail businesses can offer this more personal connection with the supply chain and this reassurance.
So, one year on – the same questions are being asked and answered – this is worrying as we need to move on to real action if we want to support our towns and high streets to change so they have a sustainable role in the future.