Retail therapy failing

News

25 February 1995

The opportunity for investors to buy into MetroCentre’s success has encouraged the sector, but the underlying problems in our High Streets remain.

Recent weeks have produced three interesting pointers to the course of events in the retail sector. First, the government’s response to the select committee report on shopping centres (see “News”). Second, the Church Commissioners’ decision to sell the long leasehold in Gateshead’s MetroCentre has sparked widespread investor interest both at home and abroad, with figures of over £300m being confidently predicted. Third, the closure of 285 Rumbelows stores by Thorn EMI, with the loss of 3,000 jobs, is another blow to traditional High Street trading, and to Environment Secretary John Gummer’s attempt to reinvigorate Britain’s town centres.

Research by DTZ Debenham Thorpe* places the MetroCentre firmly at the head of the country’s retail locations in terms of overall trading performance, combining high turnover with high profitability, and two opposing views can be taken of the sale of the Commissioners’ finest property asset. Critics argue that the decision is mistimed, for as the benefits of economic recovery become manifest spending will increase, and in the near future the leasehold will be even more valuable. Alternative opinion holds that the recovery is already slowing, retail results will continue to be disappointing, and that the disposal accordingly maximises the potential of the current economic cycle. Official figures go some way to supporting the latter case: the value of goods sold in January fell by 0.9%, and the three-month comparison, November to January – including the Christmas rush – shows only a 0.1% increase on the previous quarter.

But if sales generally are slowing, out-of-town shopping, particularly at Gateshead and the other massive regional centres – Merryhill (Dudley), Meadowhall (Sheffield) and Lakeside (Thurrock) – is not suffering: it is the High Streets, including London’s Oxford Street, that are feeling the pinch. People are voting with their feet, even if in this instance they are placed firmly on the control pedals of their cars. The greatest magnet is free and ample parking, underpinned by long opening hours – including Sundays – a wide choice of shops, protection from the weather and a safe environment. These advantages, together with reasonably priced food courts, offer a family day out – shopping as a leisure activity in place of hassle in the High Street.

Introduced last year in PPG6, John Gummer’s restrictive DOE guidelines, designed to shift the basis of the planning system in favour of town centres, may in fact generate even more out-of-town activity. Developers, debating whether to activate existing planning permissions, are now pressing on with schemes which, under less pressure, they might well quietly have shelved. When politicians attempt by regulation to divert market forces in property the practical results – however worthy the theoretical objective – may be the opposite of those intended. Additional restrictions add only to the value of existing developments or those in the pipeline.*Index of Retail Trading Locations (January 1995).

The opportunity for investors to buy into MetroCentre’s success has encouraged the sector, but the underlying problems in our High Streets remain. Recent weeks have produced three interesting pointers to the course of events in the retail sector. First, the government’s response to the select committee report on shopping centres (see “News”). Second, the Church Commissioners’ decision to sell the long leasehold in Gateshead’s MetroCentre has sparked widespread investor interest both at home and abroad, with figures of over £300m being confidently predicted. Third, the closure of 285 Rumbelows stores by Thorn EMI, with the loss of 3,000 jobs, is another blow to traditional High Street trading, and to Environment Secretary John Gummer’s attempt to reinvigorate Britain’s town centres. Research by DTZ Debenham Thorpe* places the MetroCentre firmly at the head of the country’s retail locations in terms of overall trading performance, combining high turnover with high profitability, and two opposing views can be taken of the sale of the Commissioners’ finest property asset. Critics argue that the decision is mistimed, for as the benefits of economic recovery become manifest spending will increase, and in the near future the leasehold will be even more valuable. Alternative opinion holds that the recovery is already slowing, retail results will continue to be disappointing, and that the disposal accordingly maximises the potential of the current economic cycle. Official figures go some way to supporting the latter case: the value of goods sold in January fell by 0.9%, and the three-month comparison, November to January – including the Christmas rush – shows only a 0.1% increase on the previous quarter. But if sales generally are slowing, out-of-town shopping, particularly at Gateshead and the other massive regional centres – Merryhill (Dudley), Meadowhall (Sheffield) and Lakeside (Thurrock) – is not suffering: it is the High Streets, including London’s Oxford Street, that are feeling the pinch. People are voting with their feet, even if in this instance they are placed firmly on the control pedals of their cars. The greatest magnet is free and ample parking, underpinned by long opening hours – including Sundays – a wide choice of shops, protection from the weather and a safe environment. These advantages, together with reasonably priced food courts, offer a family day out – shopping as a leisure activity in place of hassle in the High Street. Introduced last year in PPG6, John Gummer’s restrictive DOE guidelines, designed to shift the basis of the planning system in favour of town centres, may in fact generate even more out-of-town activity. Developers, debating whether to activate existing planning permissions, are now pressing on with schemes which, under less pressure, they might well quietly have shelved. When politicians attempt by regulation to divert market forces in property the practical results – however worthy the theoretical objective – may be the opposite of those intended. Additional restrictions add only to the value of existing developments or those in the pipeline.*Index of Retail Trading Locations (January 1995).