Comment - CBRE Retail response to Mary Portas review
News • Dec 15, 2011 17:00 GMT
"Given the recent administration of Barratts Priceless and the current travails of Blacks and a number of other retailers, post-Christmas we could witness a level of retailer failures akin to the historically high levels reached in 2008. Although this weekend's positive retail footfall and trading figures should be welcomed, it masks the fact that much of this was driven by significant hard discounting across the sector, from the larger department stores down to smaller independent retailers. This will have hit profit margins considerably and will mean retailers will have to discount post-Christmas, in order to maintain shopper interest.
"It is against this troubling backdrop, that the much awaited review of the high street by retail 'guru' Mary Portas has been announced, and while some of the proposals seem reasonable, these measures alone will not be sufficient to 'save' the high street. The success of out-of-town centres in recent years is largely down to shoppers voting with their feet, and retailers choosing to trade in such centres as a result. Making it more difficult for these centres to trade - which seems to be a key element of the Portas review - would be self defeating, as it is unlikely that these retailers will make wholesale changes to their location strategy as a result.
"Retail development in our town and city centres is absolutely to be encouraged, and there are many successful examples of such development in Birmingham, Liverpool and Manchester. Ultimately, however, for those secondary centres where retailers choose to close rather than open stores, a fundamental shift in spend to the internet and supermarkets cannot be stemmed by allowing more overnight deliveries and reducing the amount of charity shops. Fundamentally, if such centres are to survive, they need to provide a more consumer-focused and convenience-oriented shopping trip, with catering and leisure as an integral part of the mix. Relaxing planning restrictions to enable property owners to easily change use to accommodate such structural change should be promoted, in addition to enabling easy conversion of commercial space to residential space. This latter initiative would help to stem our chronic housing shortage in what would be fairly prime residential real estate - a shortage that will only get worse given the 9 million additional people the UK will welcome over the next 25 years according to government projections.
"Retail is the second largest private sector employer and we are very likely to see an increase in shop vacancy rates post-Christmas. Given this, if we witness just a 1% increase in retail vacancies through CVA’s, administrations or through retailers exercising their lease expiry options we could see a potential estimated loss of 20,000 retail jobs. Mary Portas should therefore considered measures to improve the health of the UK's retailers overall. One such initiative could have been a reduction in business rates rather than a deferral, for example. This would directly (and positively) affect retailers’ bottom lines - which is exactly what they need in this challenging economic climate."