retail environment
High street far from dead, says report
The growth in online is not likely to kill the high street, according to a new report.
Indeed, far from diminishing the need for physical stores, multi-channel retailers tend to report stronger sales growth than their pure play counterparts.
The research by estate agents Savills, which aims to address a number of myths in the retail sector, found that multi-channel retailers, reported 21% sales growth year-on-year as of June 2015 compared to 13% by pure-play brands.
In addition, the report shows that 22 pure online retailers have moved into the physical arena by opening stores or concessions, including the likes of Screwfix, Misguided and Simply Be/Jacamo.
The firm noted that there has been an increase in retailers’ average store portfolios over the last five years, with the biggest uplift coming from retailers operating with in excess of 50 stores.
Savills said this demonstrates that the number of stores needed to be a national retailer for some sectors is now much larger than between 50 and 80. It also found that brands operating with over 75 stores have increased their average store portfolio by 36 since 2009.
Sean Gillies, head of UK retail at Savills, said: “We’ve seen a number of myths take hold during the height of the recession, however, retail is ever evolving and the industry needs to move on. Particularly the much talked about threat of the internet where we can understand the importance of physical stores as supporting online retail growth.
“Numerous retailers now report total retail sales as opposed to like-for-like online and in-store separately, showing the growing appreciation that both are now intrinsically linked. As the market develops there will be more opportunities for retailers to imbed multi-channel operations.”
While the Savills study highlights how value retailers have expanded in the market with a total store expansion of 15.1%, it also reveals that the mass convenience sector, including names such as Greggs and Holland & Barrett, has seen the largest increase in their average portfolio count with a rise of 33 stores to 315. Furthermore, the research found that the aspirational retail sector has seen its total store count increase by 16.8%.
Savills also looked at the number of international brands expanding from London into regional centres. The firm found four international brands opened their first stores outside London in 2014 including Khaadi and Calzedonia. This compares to only two brands in 2013. By the end of this year, Savills expects seven international brands to have opened their first regional stores including Massimo Dutti in Leeds and Supertrash in Liverpool.
Marie Hickey, retail researcher at Savills, added: “We don’t expect the high street to return to what it was pre-recession. Things have changed, namely in the way consumers shop and how retailers look at their stores portfolios. However we do believe that the retail landscape is more positive than some would believe. There are a number of retailers expanding and for the landlords we expect rental growth across all UK regions next year.”
