Town centre retailing: forces impacting the vitality & viability

Talk given at Cumbria Business School, 11 June 2014

Transcript

1. Town centre retailing: forces impacting the vitality & viability Dr Les Dolega e-mail: L.Dolega@liv.ac.uk
2.  Forces shaping UK town centres performance  Response of UK retail centres to the economic crisis and austerity  Cross-regional empirical evidence  Intra-urban (local scale) evidence  Conceptualisation - resilience of British retail centres Content
3.  Competition from out-of-centre retail developments and adoption of ‘town centres first’ policies  Rapid expansion of online retailing  Economic crisis and austerity  Shifting consumer behaviour and progressive rise of ‘convenience culture’  Changing demographics Forces shaping town centre performance
4.  ‘Free for all’ approach (Guy, 2007)  ‘Town centres first’ – regulatory tightening  Prioritisation of UK town centres by PPG 6  Adoption of the ‘sequential test’  Promotion of the vitality & viability of town centres by PPS 6  ‘Social inclusion’ and ‘urban regeneration’ agendas Impact of retail planning policies
5. Source: Griffith and Harmgart, 2008 Effects of policy tightening on retail developments  Decrease in large retail developments  Adjustment of the major retailers to the planning regime  ‘Policy friendly’ stores - located in/edge-of-town centre  Store formats flexibility  Retail-led urban regeneration  ‘Food deserts’ and social inequality agendas  ‘Mezzanine floor loophole’
6.  Online sales reached 12% of total sales in the UK  Amazon - 8th biggest retailer in the UK  Major retailers transformed into ‘bricks & clicks’  Impact on traditional high streets Progressive rise of online sales
7. Changing face of internet use and online shopping  Emergence of a new demographic group – the ‘digital generation'  Demographics of internet use  Geography of online shopping  e-commerce, m-commerce
8. Response of UK town centres to the economic crisis and austerity
9.  267 centres with retail composition surveys completed after the collapse of CCI - Oct 2008  119 in South West  31 in East Anglia  93 in North West  24 in West Yorkshire  Pre-crisis surveys completed in 2006 – 2007  Within-crisis surveys carried out either in Q4 2008 or 2009 Cross-regional analysis
10. Change in retail categories  Large increase in vacant retail:  Relative change +28.2%  Absolute change +2.7pp (increase from 10.4% to 13.1%)  Major contributors to closures:  comparison retail (-5.3%)  financial services (-3.2%)  Convenience retail more resilient  Leisure services - positive growth in all regions Cross-regional study – descriptive results 2.7 -2.5 -0.2 -0.1 -0.5 0.6 -4 -3 -2 -1 0 1 2 3 4 Vacant Retail Comparison Convenience Retail Service Financial & Business Services Leisure Services Absolute change in retail categories pp 28.2% -5.3% -1.1% 0.4% -3.2% 4.3% -10% 0% 10% 20% 30% 40% Vacant Retail Comparison Convenience Retail Service Financial & Business Services Leisure Services Relative change in retail categories North South Avg across sample
11. -8.6% -9.4% -7.8% 6.9% 0.6% -3.4% -4.3% 8.0% -9.9% -9.2% -12.1% -1.1% 15.9% -26.5% -29.5% -40% -30% -20% -10% 0% 10% 20% 30% Antique & Art Booksellers Sport & Leisure Charity Shops Chemists & Beauty Clothing & Footwear DIY,Carpets & Electrical Household discounters Furniture stores Gifts & Toys Florists Jewellers Telephones & accessories Music,Film & Photo Stores Department Stores North South Avg across sample Most fragile  Department stores -29.5%  Music, video and photography -26.5%  Florists -12.1%  Furniture shops -9.9%  Booksellers -9.2%  Gift and Toys -9.2% Most resilient Phones & accessories +15.9% Household discounters +8.0% As a result of filling vacant space: Charity shops +6.9% Cross-regional study – change in comparison retail
12. -0.3% -8.2% 25.2% 21.4% 42.2% -3.8% 5.6% -3.7% -7.9% -7.1% -30% -15% 0% 15% 30% 45% 60% 75% Bakers & Confectioners Butchers & Fishmongers Independent Convenience St Symbol Convenience St Corporate Convenience St Frozen Food & Supermarkets Delicatessen & Grocers Health Foods Greengrocers CTN's & OffLicences North South Avg across sample Cross-regional study – change in convenience retail Most fragile  Butchers & Fishmongers -8.2%  Greengrocers -7.9%  CTN & Off licences -7.1% Most resilient  Convenience Stores: Multiple +42.2% Independent +25.2% Symbol Group +21.4%  Grocers & delicatessen +5.6%
13. Modelling cross-regional change in vacancy rate
14.  Change in retail vacancy rates – response variable  Spatial variability in vacancy rate:  up in 185 (69.3%) centres  down in 61 (22.8%) centres  unchanged in 21 (7.9%) centres  The average cross-regional increase in vacancy rate:  +2.2pp for fixed boundaries  +1.9pp for variable boundaries Response Variable
15. Changes in Vacancy Rates have been filtered through two systems: 1. Regional economic system in which centres are located  South – North divide  Affluent catchments 2. Existing local economic structures  The mix and interdependencies of businesses (balance of retail vs. services, diversity and presence/entry of a corporate foodstores)  Local supportive/unsupportive institutional structures (car park charges, town centre manager, BIDs schemes or attracting key ‘magnet stores’)  Physical configuration of a centre (size, proportion of larger modern shops and level of ‘structural – harmful vacancy’) Explanatory variables
16. Constant -0.076 0.019 -3.998** South-North divide -0.016 0.004 -4.170** Centre size (Log) 0.013 0.002 5.743** Retail diversity pre-crisis -0.027 0.013 -2.139* Corporate food store entry -0.008 0.004 -2.081* Retail vs services % pre-crisis 0.095 0.021 4.463** Structural vacancy pre-crisis 0.060 0.010 6.130** Std Avg Store Size x Std magnet store floorspace -0.349 0.082 -4.243** Best supported model **parameter estimate significant at 1%, * significant at 5%. R squared = 35.6% N = 259 P-value for normality test of residuals =0.84 Durbin-Watson d value = 2.17 Condition index value = 28.61 --------------------------------------------------------
17. Characteristics of resilient town centres  ‘southern’ rather than ‘northern’  ‘smaller’ rather than ‘larger’  ‘diverse’ measured by higher proportions of independent stores  experienced corporate foodstore entry (in/edge-of-centre)  higher proportions of service relative to retail units in pre-crisis  low levels of ‘structural vacancy’ in the pre-crisis period  physical structures are both relatively attractive and capable of re- configuration – proxied by the multiplicative variable
18.  Published in E&PA (Oct 2011)  Attracted large interest in the UK and internationally  Nominated for the AESOP best published paper prize Impact of the cross-regional study
19. Intra-urban study: Bristol
20. Intra-urban study design  47 retail centres in Bristol surveyed by Goad down to a shopping parade with 12 units  All centres surveyed in three different periods:  Pre-crisis (Jul 2006)  Within-crisis (Oct 2008-Feb 2009)  Austerity period (Feb-Mar 2012)
21.  Main characteristics of Bristol centres in pre-crisis  75% centres small - average centre size 88 units  High ratio of services (1.7) relative to retail  High diversity - independent retailers 73% Characteristics of Bristol centres  Main aims  Validate cross-regional results at local scale  Model the performance of UK retail centres during austerity
22.  Cross-regional findings hold well at local scale  Four of seven explanatory variables retained the same, however:  No North-South divide  Corporate foodstore entry replaced with presence  Income deprivation – significant variable  Multiplicative variable insignificant Constant -0.099 0.047 -2.124 Retail vs services % pre-crisis 0.168 0.069 2.428 Centre size (Ln) 0.020 0.008 2.415 Retail diversity pre-crisis -0.110 0.033 -3.321 Structural vacancy pre-crisis 0.098 0.028 3.506 Corporate supermarket presence -0.039 0.017 -2.258 Income deprivation 0.101 0.057 1.755 R squared = 48.4% N = 47 Best supported model Modelling of VRC between pre-crisis and within-crisis
23.  Only three variables remained significant:  Proportion of retail vs. services  Diversity in pre-crisis  Presence of policy-compliant corporate foodstore  Significance of centre size, structural vacancy and income deprivation waned Model of VRC between pre-crisis and austerity
24. Conceptualising our work  Intriguing question in economic geography – ‘why some regional economies manage to renew themselves, whereas others remain locked in decline’? (Hassink, 2010)  Resilience of economic systems recently attracted wide-spread attention of social sciences  Resilience is defined as: ‘the ability to recover form and position elastically following a disturbance of some form’
25.  Engineering resilience (physical science) – the resistance of a system to disturbances and the speed of return (bounce back) to its pre-shock state  Ecological resilience (biological science) - the scale of shock a system can absorb before it is destabilised and moved to another configuration (tipping point notion).  Adaptive resilience (complex system theory) – anticipatory or reactive reorganisation of the form and/or function of a system to minimise the impact of the external/internal shock Three concepts of resilience (Martin, 2011)
26.  Evolution of UK town centres affected by:  Unexpected shocks – economic crisis  ‘Slow burns’ – competition from online and out-of-town retailers, changes in consumer culture Adaptive resilience of town centres  Town centre adaptive resilience linked to:  pre-crisis position in adaptive cycles  knowledge and innovation of various actors  successful interventions across multiple scales The Adaptive Cycle Growth INNOVATION & CREATIVITY HIGH NEW RETAIL UNITS OPEN UP HIGH RETAIL CHURN RESILIENCE HIGH Consolidation PERIOD OF STABILITY LOW RETAIL CHURN SLOW RESPONSIVENESS TO CHANGE INCREASING RIGIDITY RESILIENCE DECLINING RESILIENCE LOW Release INCREASING VACANCY RATES/ SHOP CLOSURES ECONOMIC OR COMPETITIVE SHOCK TRIGGERS CHANGE RESILIENCE INCREASING Reorientation EMERGENCE OF INNOVATION NEW INTERDEPENDENCIES AND SYMBIOTIC RELATIONSHIPS INSTITUTIONAL SUPPORT
27. Reconfigured town centres? Reorientation may be: spontaneous or controlled Four main drivers:  Supportive institutional structures  Knowledge of actors  Innovation and creativity  Changes in consumer culture Emerging versions of reconfigured high streets:  High growth Britain  Low growth Britain  Emergence of new interdependencies
28.  Role of geo-demographics in predicting town centres performance and internet shopping patterns  E-resilience linked to an extent to which retail centres are exposed to consumers who heavily engage with ICT  Aims of the study:  Estimation of conventional catchment areas for evolved retail centres  Defining characteristics of e-resilient centres  Measures of the engagement with ICT at small area level (LSOA) E-resilience of town centres Growth in UK Online Buyers, by Age 2013-2016 (% change) 2013 2014 2015 2016 15-24 3.5% 3.8% 3.5% 3.0% 25-34 4.1% 3.5% 2.8% 2.1% 35-44 1.5% 1.0% 0.8% 0.5% 45-54 4.3% 3.8% 3.1% 2.4% 55+ 6.5% 5.5% 5.0% 4.0%
29.  Systematic evidence on cross-regional and intra-urban high street performance during economic crisis and austerity provided  First multiplicative modelling of drivers of that performance  Evidence on both diversity and corporate food store entry benefiting the economic health of retail centres, despite being portrayed as polar opposites  Conceptualisation of adaptive resilience of UK high streets  Exploring the relationship between the geo-demographics and e-resilience of town centres Value added
30. Any questions?