Callcredit Blog

Retail planning: can retail parks bounce back?

Market Analysis & Network Planning

Can-retail-parks-bounce-back?

I hate to say it but I am a consumer that craves immediacy, my first retail location is Amazon and yes I do love Prime. Having my items delivered within 24 hours, what could be better? It is with a heavy heart, therefore, that I must acknowledge that I am part of the problem; I live not far from Bradford Forster Square, a retail park in West Yorkshire and have spent many a Saturday afternoon perusing the stores. Unfortunately, this retail park is home to a Mothercare that is earmarked for closure (if the leaked list is to be believed), a Maplin that is closing, a Clarks that closed last year, a PC World that has co-located with Currys, a Poundworld and a Toys R Us just behind.

Is big really beautiful?

We all know that the retail sector has been through tough times, wages have been falling in real terms, inflation has consistently been above the target 2% and interest rates are likely to rise again this year. Being part of a credit reference agency we are well placed to see that consumer spending has become increasingly debt-fuelled with unsecured lending rising at the fastest rate since the financial crisis. Consumers have had to make tough choices and we have seen in our data the demise of many fashion outlets and a rise in leisure venues. Who would have thought 5 years ago that our kids (and us if we are being honest) would be bouncing up and down at trampoline parks, but there are now over 150 across the country?

toys-r-us-closes-down

(Photo credit: Justin Sullivan/Getty Images)

As my behaviour demonstrates, this change in consumer spending has been exacerbated by a seismic shift in channel preference towards digital and online, so it is no surprise that the high street has suffered. Town centres are now dominated by convenience stores, fast food outlets and hairdressers, plus a plethora of charity shops. One format that appeared to have survived this trend was the retail park, which lures consumers with wide open spaces, free parking, variety and convenience. They are typically composed of a range of chain stores, including furniture, clothing, electricals, carpets and others, with the anchor store typically being a supermarket.

I’m old enough to remember retail parks springing up all over the country, typically on brownfield sites or more affordable land. They were built big and attracted a specific type of retailer, eg Currys, TK Maxx and Harveys Furniture. They appealed to those that could occupy a significant square footage, but it is these big brands that are in decline and could result in the death of traditional retail parks and their possible evolution into leisure destinations.

 

Throwing the baby out

The news that 50 Mothercare stores are to close is another blow for the retail parks. Of the 130 or so stores over 70% of them are located at retail parks/out-of-town shopping centres as classified by RetailVision, Callcredit’s retail centre classification tool. When considered in the context of the demise of Toys R US and Maplin the effect is potentially amplified. The below illustrates the subcentres within which each were located as defined by RetailVision:

mapping-toys-r-us-retail-sites

Toys R Us have a similar model to Mothercare with the majority of stores located in large retail parks. Maplin on the other hand required a smaller footprint so the trend is not as strong, but retail parks still account for over 55% of stores. If the list leaked by Ditchfield Properties is to be believed, over 40% of the Mothercare stores earmarked for closure are located in close proximity (within ½ a mile) or on the same retail park as a Toys R Us or Maplin.

It is unlikely that this will be the end of the bad news. Carpetright, a stalwart of the retail parks has announced the closure of 92 stores, Poundworld’s US owners have decided to sell the loss making discount chain rather than implement a rescue plan, and companies such as Homebase (40 stores), New Look (60 stores) and M&S (100 stores) are all rationalising their networks.

If supermarkets are the anchors of retail parks, the possible merger of ASDA and Sainsbury’s, and the suggested closure of 75 stores as reported by BBC news must also be considered. The impact may not relate to the supermarket sites, but felt in the context of Argos.

There are already 191 Argos stores in Sainsbury’s supermarkets, with 280 currently planned by the end of 2018. If the same number were rolled out to ASDA stores, this could have a huge influence on the need for independent locations. Indeed, the Argos I use most frequently is at Bradford Forster Square retail park. I’ll leave that debate for another time.

 

Experience counts

man-wearing-vr-glasses

(Photography credit: Spencer Platt/Getty Images)

The question is what could fill this retail space? A recent BBC list proposed 5 options for the High Street: Gyms, Crazy Golf, Prosecco & Patisserie, Discounting and Convenience as well as Residential. Builders Merchants and DIY brands such as Screwfix and Toolstation continue to grow but are these brands a suitable fit to fill these sites? Discounters such as Aldi and Lidl are perhaps more obvious candidates but the comparison shopping locations may not fit the needs of such brands. The same could also be said of the Food and Drink sector, who also could not occupy such large footprints.

Whatever replaces the likes of Mothercare, it must offer the consumer an ‘experience’ that they can’t get online. Retailers have got to innovate, for instance, car manufacturer brands may want to occupy these spaces and provide an experience, attracting the attention of future generations through simulators. Sports brands must allow consumers the opportunity to try out the equipment. I could throw in the buzzword of ‘competitive socialising’ and ‘destinations’ to bring virtual reality, golf, trampoline and climbing walls into the discussion. Whether retail parks will prove to be successful hosts of these activities remains to be seen or are they just postponing the inevitable.

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