Rob Millington, partner at Cheetham & Mortimer, finds retail fortunes favouring smaller towns over larger ones in recent months.
It is easy to forgive those commentators who have written off the prospects for the High Street. Visit any mid-sized town in the North West that has traditionally been dominated by mass multiple representation and the reason is apparent. In general, demand for shop premises is declining and the number of voids is rising. Sadly, this trend is both cyclical and structural.
The sector has been victim to a "perfect storm". The pot of consumer expenditure is much reduced. The banking crisis brought an abrupt halt to the debt-fuelled consumer frenzy and now shoppers are struggling against the affects of the austerity measures. Furthermore, consumer spending patterns are changing as evidenced by the rapid growth of the internet and the supermarket sector.
Curiously, this trend is notably absent in some of the small market towns and commuter towns that surround our larger cities. We consider these locations as "desirable places to live". Admittedly, they tend to have a wealthier demographic profile but they are adapting well to change and are characterised by low void rates and stable demand from both national multiple and independent retailers. Examples are in abundant supply.
Cheetham & Mortimer recently let the former Travelbag and Blockbuster units in Knutsford to Waitrose. Both the outgoing occupiers are victims of the technological revolution. The incoming retailer caters to the growing convenience market. Encouragingly, even without marketing the property, we received strong interest from such retailers as WHSmith. This particular retailer is adapting its offer to be more convenience orientated with a focus on smaller towns such as Formby and Clitheroe. They recently secured representation in Frodsham along with Costa Coffee. The latter retailer is reflective of the "lifestyle" trend and is similar to Pizza Express taking occupancy of the former Woolworths in Bramhall.
These retailers have exacting requirements and they will not compromise – they tend to polarise around prime property with large regular floor templates typically in excess of 2,000 sq ft (sales). There are limitations on rental costs. With the exception of small supermarket formats, the total is unlikely to exceed £70,000 a year which typically equates to between £30 and £45/sq ft zone A or £15/sq ft gross internal area depending on the use. Lease terms are unlikely to exceed 10 years.
However, an expectation of customer focus within such locations is also a key driver and this provides an opening for smaller niche retailers. Travelbag decided against abandoning its loyal customer base in Knutsford. Instead, they opted to decant into property that is a quarter of the size of their former outlet. After an absence of 10 years, the Northwich suburb of Hartford welcomed the return of an independent butcher. On a Saturday morning, customers arrive early and are encouraged to form an orderly queue down the street. This is by no means unique. Their success, and other retailers like them, can be attributed to a focus on service, quality and choice.
So the message is one of "evolution". The smaller towns are adapting to changing consumer patterns by providing convenience and lifestyle retailing. In many instances, occupational costs remain modest, stable and affordable thus providing a viable opening for independent retailers. This contributes towards an eclectic retailer offer and in turn creates a vibrant town centre.