The Retailer Spring Edition 2022

THE RE TA I L ER

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THE ROAD TO RETAIL RECOVERY: ARE WE THERE YET?

Sarah Abu-Amero Marketing Executive Local Data Company

K ey learnings from our 2021 analysis and what they mean for the future of British retail and leisure

The gapwidens between multiples and independents

Redevelopment activity reaches a record high Redevelopment activity within the commer cial property space saw a record increase of 49% in 2021. Considering that the first three months of the year were spent in lockdown, this increase reflects the scale and significance of this activity. Relaxed property laws allowed for greater flexibility for investors and planning authorities. The majority of redevelopment was seen in Greater London (26%) and the South East (14%), although there was a considerable increase in activity in major Northern cities, and the government’s Levelling Up scheme is set to provide further support as a backlog of planning approvals continues to come through and larger projects resume.

The year proved especially challenging for chain retail and leisure brands, compounded by the end of the furlough scheme and the £2million cap on business rates relief which excluded many larger operators. Multiples (defined by LDC as any business with 5 or more units) across the GBmarket experienced their largest net decline in units on record, -10,059. Larger brands continued to reduce the size of their physical store estates or close shops altogether, investing instead in online channels which now account for a large share of sales. By contrast, independents continued to thrive; the independent retail and leisure sector saw a net increase of 2,157 units over 2021. This marks the first time that more independents have opened than closed in Great Britain since 2016. Home working has contributed to increased sales for local businesses, with more of the population staying— and spend ing— closer to home.

Spring 2021 sawus emerge froma third national lockdown into a changed Britain, bearing the effects of a year of COVID-19. After a four week delay, ‘Freedom Day’ arrived in July and consumers enjoyed a summer of sport and socialising, although the challenges were far from over. New virus variants (and the threat of them), coupled with travel restrictions and homeworking, loomed over physical retail, but 2020 seems to have provided an opportunity for retailers to adapt to this wave of change. Looking at the key findings from our 2021 analysis reveals green shoots of recovery amid a continuing state of flux. Vacancy rates decline for the first time in three years The second half of 2021 saw the first decline in GB vacancy rate since H1 2018. This is the clearest sign yet that the market is beginning to stabilise. Adecline in vacancy rate was seen across all location types: even shopping centres, recently beset by a host of challenges, led the way with a 0.3% decrease in empty units. Recovery for high streetswas more muted, with a 0.1% decline in vacancy seen in the second half of the year. However, high streets have proven resilient compared to pre-pandemic figures, and were not as heavily impacted as other location types to begin with; they have less vacant stock to shed in order to recover. We forecast further reductions to vacancy rates across all location types this year, supported by the ongoing repurposing and redevelopment of retail space.

Historical vacancy rate by retail type, 2013-2021

10 12 14 16 18

0 2 4 6 8

Vacancy rate (%)

H1 2013

H2 2013

H1 2014

H2 2014

H1 2015

H2 2015

H1 2016

H2 2016

H1 2017

H2 2017

H1 2018

H2 2018

H1 2019

H2 2019

H1 2020

H2 2020

H1 2021

H2 2021

Axis Title

Retail Vacancy Rate

Leisure Vacancy Rate

All Vacancy Rate