Insight: travel hubs set to benefit from retailer investment priorities in the coming year
A new report has predicted that travel hubs will be the most favoured location for new stores in the coming year.
The ‘Retail Growth Strategies’ report by law firm TLT and retail research agency Conlumino surveyed the views of the UK’s top 100 retailers. It also found that that out-of-town retail parks, in-town shopping centres and shopping parades away from high streets were thought to have the fewest prospects for growth.
Dan Sweeney, real estate partner at UK law firm TLT, said: “Store location has always been important, with the most favoured locations inevitably changing over time in response to shopping habits. The rise of the travel hub is an example of that, pointing not only to their guaranteed footfall and convenience but, importantly, their ability to support the growth in click & collect.
“The less popular locations are arguably more mature with retailers who want to be in those locations already there. But, it is clear that in these areas we will continue to see a trend for major retailers seeking lease re-gears in advance of breaks and expiry, often securing enhanced terms and incentives in return for their continued presence.”
The report also uncovered a growing trend for retailers to share space in stores with 22 of the UK’s top retailers embracing the idea. It also predicts that there will be more coffee shops in stores.
Sweeney continued: “Physical stores are still viewed as vital to the success of most retailers, but their role continues to change and they are being asked to deliver more for less with the need to optimise the size and location of their store estate in the continued fight for footfall.
“The trend to share space reflects this and supermarkets have been quick to grasp the opportunities with Sainsbury’s plans to roll out more Argos digital concessions and mini-Habitat shops a great example.”
When looking at opportunities for growth by region, Scotland, the South West, London and the West Midlands were the only four regions deemed as being ‘under potential’ in terms of growth opportunities. All other regions were regarded as saturated markets for new stores.
Business rates were seen as an increasing barrier to investment in new stores UK-wide with 53% of those polled believing that they will have a more negative impact this year than last. Some 44% said they were planning to reduce the number of new store openings as a result.
Other barriers to investment in new stores included planning restrictions on new developments and the fragmented ownership and disjointed asset management prevalent in many town centres,
Sweeney added: “It is clear that more needs to be done to strengthen land acquisition powers to facilitate redevelopment of town centres. Doing so will help retailers compete with improved out-of-town retail developments and online shopping.”
Looking internationally, 19 of the UK’s top retailers said they planned to expand overseas in the year ahead by opening more physical stores. The most popular location was China although the US, Germany, India, Turkey and Ireland were also viewed as good prospects.
