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Delays in five retail developments have recently been announced. In Cheste, Dumfries, Newbury, Newport and Portsmouth, respected and experienced developers have put major projects on hold. In each case, rising costs of construction, land acquisition and market conditions have been blamed.
Who provides the better guide to the appropriate response - Henny Penny, who in the nursery rhyme was hit on the head and immediately assumed the sky was falling or Rudyard Kipling in his popular poem, If?
Clearly, the UK retail property market is at a point of inflexion and its direction in both the short and longer term is uncertain. However, the fundamental drivers of successful retail developments remain the same – sufficient unsatisfied demand from shoppers for a better place to shop, suitable available space for shops and retailers able to delight the identified shoppers. The challenge is not that the fundamentals have altered. The new imperative is for a more thorough understanding of each element and their inter-relationship.
For example, shopper requirements need to be quantified more precisely and greater insight into shopper requirements teased out. In an increasingly competitive environment, a new development is in itself not enough. The shopper demand has to be understood as coming from distinct consumer segments. We all understand that a Porsche or BMW buyer is different, and wants something different from a Skoda customer. The distinction is less well understood when it comes to shopping centres. To choose two centres at random, how do MetroCentre and Newcastle shoppers differ? Are these two shopper groups different from one another or the same people looking for a different experience or different merchandise at each location?
If the need in the present uncertain market is to understand both shoppers and retailers more thoroughly, then neither Henny Penny nor Rudyard Kipling is a particularly helpful guide. The sky hasn’t fallen but nor is a stoic forbearance an appropriate response. What’s needed is a better understanding of the drivers of the retail property market. Surprise, surprise – just what FSP offers!
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