Retailers yet to face toughest test, says DTZ

Michael Hunt

Richard Barker, head of retail at DTZ in Manchester, said the retail sector in the region is heading for even more difficult times despite the combination of interest rate and VAT cuts.

Barker said: "Whilst there has been much talk of the winners and losers on the high street following the Christmas period, all eyes will be on those whose sales hold up through the rest of the first quarter of 2009, with the real acid test of success or failure being their ability to make their March quarterly rental payments."

The use of online shopping as a backup revenue stream with lower overheads than high street premises was increasingly important in reckoning who will survive among retailers, Barker added.

"The effect of the internet emphasises the importance of a retailer's quality of service and price competitiveness, empowering the shopper through choice and providing a convenient way to compare prices in the comfort of their own home before making the important decision to spend.

"This may be one of the reasons why the growth of online shopping has boosted takings for retail ers such as M&S, the Co-op, Thorntons Direct, New Look, John Lewis and even Dominos Pizza!

"M&S' online sales were up 29%, New Look had 1.1m online visitors in the week before Christmas whilst Sainsbury's online home delivery had a record number of orders over the same week contributing to growth of 27% for the full quarter."

Barker said he anticipated a change in emphasis towards the quality of customer care for the retailer, strongly coupled with value for money over the next 12 months.

Commenting on the future of the retail property market, Barker said: "The anticipated imbalance between the increased availability of retail floor space and reduced occupier demand will challenge the normal equilibrium of the market and present opportunities to landlords and retailers who can operate in these testing market conditions predicted for the year ahead."

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