Savills Commercial Research

Retail 2017
savills.co.uk/research

In partnership with
Retail Revolutions
The Rise of the Community
Shopping Centre
SUMMARY

Foreword
Morgan Garfield,
Managing Director, Ellandi

Retail is dead and it’s all about the internet. It must be true closures, and the provision profiles of shopping centre locations
as I’ve read it in the newspaper! This is the dominant narrative across the UK. Given the death of the high street narrative, these
and one that has been broadly accepted, without further figures are surprisingly positive.
questioning or scrutiny, by a largely London based well-heeled
set of middle aged non-shopping property investors. Certain Their examination of retailer turnover and operating costs by
commentators feel that beyond a handful of prime regional location suggests that retailers have a clear understanding of
shopping centres that everything else is secondary and should where and how they make money.
be avoided at all costs.
The conclusions provide interesting insight. The data highlights that
Politicians have discovered that educated urban elites are not the retail industry is evolving to meet the demands and needs of the
in touch with the way that real people feel and act. Could the UK population. People increasingly demand convenience, value for
same be true of the property industry? money and entertainment but they are willing to fulfil these needs in
different places and at different times.
Ellandi wanted to examine real shopping patterns to discover if
retail property really is an endangered species in an online world This Savills Research publication highlights the polarisation of
or if shops still had relevance to how people live their everyday shopping patterns; with powerful destination centres that are
lives. To do so we undertook a survey of 7,800 people across 25 visited occasionally and functional local shopping that fits around
shopping centres from St Austell to Aberdeen and Enniskillen to busy everyday life. These patterns are reflected across a wide
Great Yarmouth. geography and across socio-economic groups.

We asked Savills Research to analyse the shopper behaviour It seems that local retail space is in fact increasingly relevant,
from the consumer survey and consider these in the context fulfilling an important need for everyday shopping essentials. We
of trends in the wider market. The research is supported with hope this paper is enlightening and allow a better understanding
data that examines retailer estates, the number of openings / of the evolution in retail patterns.

02 | Spotlight: Retail Revolutions

Headlines
■ Shopping journeys are polarised between occasional ■ The growth in the Convenience and Value/Discount
destination shopping trips and essential, convenience based markets in recent years is closely aligned with the offer in
local shopping trips. Community shopping centres, where a good fit to the specific
needs of the catchment is essential. This includes offering a
■ Locations that support a higher proportion of ‘needs based’ range of Fashion and Comparison Goods where the brand fits
journeys account for the highest proportion of consumer the catchment and scheme profile.
spend and are the backbone to retailing in the UK, yet the
importance of these places is often underestimated. ■ Where the tenant mix is well aligned to the needs of
the local consumer, Community shopping centres can
■ Community shopping centres support these local consumer demonstrate compelling performance metrics, including
shopping trips. They serve a local catchment, have visitor strong footfall, low void rates, high renewal rates and
frequency above that of other retail centres, and have longer better retailer effort ratios than found in other shopping
dwell times and higher basket spend than might be expected. centre sectors.

SUMMARY
Non-prime high streets and shopping centres have been Our consumer insights show:
talked down for the last decade, but the reality shows that ■ Travel is short (79% within 20 minutes)
they are as relevant today as they always have been. Places ■ Frequency is high (78% at least weekly); higher than
to shop for every day goods, socialise and be part of the regional malls, major high streets or online purchases
civic environment. ■ Dwell is surprisingly long (44% over 1hr)
■ Basket spend averages £36.60 per visit
Modern lifestyles, the economic environment and significant ■ Demographic profile shows that the offer suits the needs of
advances in technology have collectively altered consumer all consumer groups
behaviour and shopping habits in the UK. The subsectors ■ Convenience key driver of visits (65%), yet highest basket
that benefit most from these emerging trends are Online, spend is for other retail categories
Value and Convenience retail. ■ F&B is not the ‘holy grail’ for all classes of shopping centre

Community shopping centres are an important asset class Our retailer insights show:
in their own right and there is good reason to believe that ■ Key sector brands have an average of 57% of their
their offer, tuned to the local shopper, is more defensive portfolio in the secondary market, with many core brands
than other kinds of retail location, given further challenges having +200 stores
anticipated in consumer spending and the wider economy. ■ The need for many retailers to have large portfolios
inevitably means a strong reliance on more Secondary
In this latest research, Savills have looked at the consumer and Community shopping centre locations.
perspective of the importance of local shopping journeys, ■ Lower occupational costs mean stronger retailer
with particular reference to Community shopping centres. affordability, profitability and sustainability
We have analysed exit surveys from across Ellandi’s portfolio
of shopping centres, to identify what it is that is driving these We also explore what makes a successful local shopping
shopping trips. centre. A strong fit with the catchment is fundamental for any
retail location, irrespective of their offer or catchment size.
Our research looks at how retailers whose shops However, this is particularly pertinent to Community shopping
are closely aligned with shopping centre locations, have centres. As these schemes draw from a very local catchment,
evolved their portfolios with changing consumer preferences. meeting the functional, Convenience and Value needs of the
We see how store numbers have grown significantly, or everyday shopper is paramount.
consolidated less dramatically in many sectors than was
expected immediately following the Global Financial Crisis. Locations that have evolved supply to meet the cyclical and
structural changes of the last decade should be the most
adept at coping with future challenges. Furthermore, good
management of local shopping schemes with a strong fit to
catchment can see a marked improvement in footfall, void
rates and retailer affordability.

savills.co.uk/research | 03
Consumers

Emerging consumer journeys

Shopping has become polarised between what we need and what we want

It is almost a decade since the collapse switched to a more budget mind-set that These various adaptations and sector
of Northern Rock bank in 2007 and significantly boosted the importance of growth has fundamentally changed the
Lehman Brothers in 2008 saw the start of Value, Discount and Convenience brands. retail and leisure property landscape.
the Global Financial Crisis (GFC). There are many different retail and leisure
Shoppers became more focussed on journeys, and consumers expectations of
Since then a series of economic shocks essential purchases and were less experience or functionality vary according
and concerns have regularly been inclined to travel as far to shop. This to their priority at a given time.
reported that have implied that UK resulted in a change in the retail mix
economic growth is fragile and at risk on the high street in a period that saw What continues to drive consumer visits
from both internal and external forces. several brands grow their portfolios, to large retail schemes is the notion of a
While there remain many global economic often taking space made available from retail trip as a leisure pastime. Shopping
uncertainties (not least, Brexit, the retailers that had gone bust. The growth has evolved from being considered an
consequences of the hung parliament, or of 99p Stores for instance, saw their activity in its own right to part of a wider
the fall in sterling), the long term threat to portfolio increase from 50-250 from leisure experience. Consumers want
the retail and leisure markets has often 2008-2015 before being absorbed into to access everything from shops and
been overplayed. Poundland’s’ business. restaurants to cinemas, bowling and
other leisure activities in one place, and
UK retail did experience severe It wasn’t only the Value sector that expect the shopping centre to deliver
challenges between 2008 and 2012, with benefited from the downturn as there this. This is a ‘want-based’ activity.
consumer confidence and real earnings were other sectors that also performed
growth slow to recover from the GFC. well following the GFC. Consumers However, one clear consequence of
The period was tough for many retailers cut back on non-essential spending, change to the retail landscape is that
with store portfolio consolidation, a increasingly using any additional income shopping has become polarised between
swathe of high profile administrations and to spend on retail indulgences and leisure what we need and what we want and
increased high street vacancy. time. No other period in history has seen large retail & leisure destinations do not
such growth in the sale of handbags or fulfil all consumer journeys.
However, the retail and leisure market is electronic devices, the opening of coffee
dynamic and while consumers cut back shops and casual dining restaurants, or Furthermore, Geolytix report that the top
on many ‘big ticket’ items, they also uptake of gym memberships. 50 retail destinations in the UK account for

04 | Spotlight: Retail Revolutions

only 13% of Convenience and Comparison
FIGURE 1: Consumer journeys
Goods expenditure spent in store. What
happens to the other 87%?
DESTINATION LOCAL

While destination schemes provide

high profile but infrequent retail EXPERIENTIAL FUNCTIONAL
experiences, most shopping trips take
place much closer to home; 78% of COMPARISON convenience
consumers visit a local shopping offer destination
more than once a week. This is a ‘needs-
based’ shopping trip. INDULGENT essential

For everyday shopping trips, consumers occasional frequent

are time poor, convenience is key, goods
purchased are typically essential and
premium value
bought frequently, with ‘value’ being
important both in terms of price point and
Source: Conlumino/Savills Research
service experience.

There is clearly a strong relationship

with grocery stores and retail services; Growth in discount homeware and an understanding of their purpose and
the rise of the Convenience grocery variety stores is one example, but relevance. Community shopping centres,
market in recent years shows how the divide is not always clear by a accounting for over half of the Secondary
consumers are less willing to travel to specific sector. Many fashion goods sector, have a particularly strong focus on
large schemes and are more inclined to are functional essential items that meeting functional, essential, convenience
shop locally more frequently. consumers are looking to purchase led consumer journeys from a locally
as conveniently as possible, hence placed retail offer.
However, convenience shopping trips the rise in Value/Mass fashion goods,
account for more than just grocery goods. while upmarket fashion is more closely A key influence to the structural change
affiliated with destination shopping trips. to the retail market includes the rise
of ecommerce, which now accounts
The Media often focusses on the best for 15.6% of retail spend. This market
and worst retail stories; regional malls disruptor will continue to affect different
with masses of aspirational and leisure retailers and retail places in very different
offer, or struggling high streets with ways. However, with price point and
high, long-term void rates and too much convenience being the driving force
redundant retail space. behind visitation to local Community
shopping centres, there is good reason
Yet there is a significant swathe of to believe that they can offer a point of
successfully functioning high streets difference over online shopping.
and shopping centres that serve well the
needs of local consumers. While the economic context of 2017 has
many parallels with the uncertainty that
Non-prime shopping centres are began 10 years ago, the key structural
generally categorised as ‘Secondary changes that have occurred since then
shopping centres’ and are often means that the retail market is better
dismissed as being of low value to placed to be able to cushion the blow
investors or retailer. Yet, much of from further impact. This is particularly
UK retail sits within this amorphous relevant to Community shopping centres
category, both shopping centre and high that have evolved their offer in line with
street. It is the backbone to retail in the these shopping trends.
UK and its importance to consumers
should not be underestimated. The findings of this research demonstrate
the importance of this sector to
Any analysis of shopping centres requires consumers, retailers and investors alike. n

“Destination schemes provide high profile less

frequent retail experiences, but most shopping
trips take place much closer to home”
Tom Whittington, Savills Research

savills.co.uk/research | 05
Insights

Consumer
insights
We examine the nature of local shopping trips

Shoppers of all ages and demographics times being short. Travel time of less than might be expected, with 44% of
across the UK are using local shopping than 10 minutes was recorded for 46% trips longer than 1 hour and only 30%
centres to fulfil a wide range of retail and of shoppers in Ellandi’s shopper survey, less than 30 minutes. Northern Ireland
service needs, including more than just with 79% of journeys less than 20 shoppers had the largest proportion
grocery goods. minutes. of trips being longer than 1hr (66%),
followed by Greater London (51%).
Analysis of our latest survey into Frequency of visit is high, with 78% of
the nature of these local shopping shoppers visiting the shopping centres While longer travel times (and therefore
trips has provided several insights at least once a week and 92% visiting effort) results in increased dwell times,
into the importance of this sector. The at least once a month; this is in line with there appears to be no consequent
national exit survey of 7,800 shoppers, visitation to other Community shopping impact on frequency of visit.
undertaken across Ellandi’s Community centres. The Midlands, North East
shopping centre portfolio, gives us an and North West regions have the most Local competition does play a factor
accurate account of what is driving frequent visitation, with over 80% visiting in shopper dwell times, as they are
these visits. at least once a week. longest in locations where the shopping
centre is the dominant scheme in the
Local shopping centres often gain more By contrast, large regional shopping town, or where additional town provision
regular visitation from the communities centres have much lower shopper is smaller.
they serve than larger retail destinations. frequency, with only c.15% visiting
Yet dwell times and basket spend are weekly and 44% of visitors coming less There was no demographic bias in
surprisingly high. than twice a year. Retail parks draw 19% frequency of visit or dwell times across
of shoppers weekly and high streets the schemes we analysed, and they were
Furthermore, there is increasing evidence 53% weekly. broadly similar across all affluence and
that community shopping places can age bands.
co-exist more readily with ecommerce The difference in visitation between
than larger comparison shopping retail different types of retail schemes is The conclusion is that these community
destinations. This is because local closely linked to the nature of the retail based locations have frequent visits and
shopping centres can provide a key journeys they support. A local offer may short travel times. The surprise is in the
point of difference in the ‘here-and- typically be expected to provide a high length of duration of shopping trips for
now’ consumer culture we have grown proportion of groceries, retail services these regular visits.
accustomed to, in terms of availability, and other staple goods that shoppers
convenience, accessibility, service and require more often, as opposed to a
price point. ‘destination’ retail scheme providing
a higher proportion of comparison

Travel, frequency
and fashion goods, and a more
comprehensive leisure offer.
“78% of shoppers
and dwell visit at least once
However, if the relationship was simply
The key distinction of functional, a matter of ‘convenience’ then we could a weekplace much
convenient retail places is that they
serve a local population, with journey
anticipate short shopping duration.
Instead, dwell times are far longer
closer to home”

FIGURE 2: Travel time and dwell time FIGURE 3: Shopping frequency by retail place type

n Weekly n Monthly n Every 3 months n Every 6 months n Once a year or less

Travel time Dwell time FOC

More than
30-60 mins
2 hours Online
8%
5% Regional Malls
60+ mins
1% Less than
City Centre
30 mins
10-30 mins
1-2 hours 30% Retail Parks
12% 31%
0-10 mins
High Street
46% 31-60 mins
10-20 mins 26% Secondary shopping centre
33%
Smaller local centre
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: Savills Research/Ellandi Source: Savills Research/Ellandi

06 | Spotlight: Retail Revolutions

How much are than other groups, have over £5 more FIGURE 5: Basket spend by generation
people spending? spend than average on both grocery (£30)
and non-food goods (£38).
n Groceries - Food n From retail stores
n Catering outlets n Average of Total spend
Further indication that Community £45
shopping centres provide an important Shoppers are spending more on non- £40
functional shopping experience, can grocery goods (£34), than food-grocery £35
be seen in the conversion rates and (£26), yet given that ‘convenience’ is cited £30
spend profiles. at the main reason to visit it is clear that £25
£20
consumers think of Convenience Goods
£15
Basket spend is higher than expected, as more than just supermarket shopping.
£10
averaging £36.60 per visit, 56% of trips With an average catering spend of £7.50, £5
are purpose driven and 78% of people F&B demand is associated with the £-
are spending when they visit. need for a coffee, or snack rather than a BB X Y Z Average

restaurant meal. The F&B in this context is Source: Savills Research/Ellandi

Analysis of shopper demographics shows therefore also driven by convenience.

very little difference in spend between FIGURE 6 Link between basket spend
different socio-economic groups. The notion of convenience implies a and dwell time
quick ‘in-out’ shopping experience, n Groceries - Food n From retail stores
The exception is the least affluent group yet dwell times are surprisingly long n Catering outlets n Total spend
“Urban Adversity”, which accounts for and there is strong evidence that in £80
24% of shoppers across all schemes Community shopping centres, longer £70
analysed. However, with an average spend visits supported by a diverse offer results £60
of £26 and weekly visitation of 76%, this in higher spend; average spend increases £50
group still accounts for a considerable to £78 on visits over two hours. While this £40
volume of total spend. might seem obvious, it is indicative that £30
£20
convenience trips are not always short
£10
The similar spend profile across and people are visiting with an intent to
£-
the demographic groups demonstrates spend money rather than just as a means Less 31 - 60 1 hour - More Average
the nature of shopping trips in these of spending their time. than 30 mins 2 hours than
mins 2 hours
locations. These are functional shopping Source: Savills Research/Ellandi
journeys based on necessity rather than Increasing dwell beyond 30 minutes does
indulgence. not appear to result in higher grocery is increased there is little demand for
spend within an hour, but doubles with visiting a restaurant.
This necessity is shown through the visits of more than two hours. The main
spend profile of the different generations. beneficiary of longer shopping trips is to These insights are counter to the often
Generation Z (born post 1995), who are other non-grocery retail stores, as spend held view that Secondary retail places lack
typically only shopping for themselves doubles over one hour and quadruples relevance. Community schemes have high
and may still live at home have the lowest over two hours. While a longer visit conversion rates, visitation and an average
average grocery spend (£9). increases the likelihood of spending on spend of over £36, these schemes have
F&B, the average spend remains below the potential to draw a considerable
Generation X with more mouths to feed £10. This means that even when dwell amount of catchment spend.

FIGURE 4: Visitation & spend highlight

78% of customers
visit weekly 56% 78% 65%
48% visit more than purpose driven purchase rate convenience driven
once a week
Average Retail Average Grocery Average F&B
Spend Spend Spend

44% of customers
79% spend less than spend more than 1 hour
20 minutes travelling in the centre
47% travel by car
£33.83 £25.57 £7.46
Average dwell time
21% walk of 52 minutes
Average Total Spend £36.63
Source: Savills Research/Ellandi

savills.co.uk/research | 07
Insights

What are Many non-grocery brands,

people buying? particularly those with an affordable
price point, fit well within a convenience
Convenience is by far the primary shopper journey, particularly where
reason that shoppers visit Community they provide a functional offer that fits
shopping centres, with 65% stating this necessity rather than indulgence; hence
as a key driver. This explains the short the range of Value/Discount retailers

65%
travel times observed, frequency of visit being cited as a reason to visit by 20%
and the importance of grocery purchases of shoppers.
that are made in 46% of visits.
Increasing dwell times from 30 minutes Convenience is
The range of shops on offer is also a to 2 hours broadly doubles the likelihood
the primary reason
key reason people choose to visit a that a shopper will purchase from a
centre and has a direct influence on particular goods sector. However,
shoppers visit Community
dwell time. For people shopping less shoppers are 3 times more likely to make shopping centres
than 30 minutes the range of stores was a fashion purchase over a 2 hour trip
only considered important to 28% of than a half hour trip, and 4 times more
shoppers, but this increased to 43% for likely to make an F&B purchase.
shoppers dwelling for more than 2 hours.
The F&B offer is particularly important
This demonstrates that a diverse offer to Generation Z shoppers, who are likely

95%
can help to extend shopper visits. to be visiting for social reasons as much
The range of goods purchased reinforces as shopping, with over a third of these
that Convenience shopping is much shoppers making an F&B purchase.
more than just making a grocery trip.
Customer satisfaction is good, with 65%
Percentage of shoppers who
Household, Fashion, Discount and rating the experience 8-10 and 95% felt able to find everything
Health & Beauty goods are all purchased finding everything they wanted to buy. they wanted to buy
during more than 20% of shopping trips. The key reasons for a positive experience
Gifts & Cards sector are purchased 13% are due to retail line up and environment/
of visits. experience. These factors are important
to shoppers despite the functional nature

FIGURE 7: What has been purchased?

46% Grocery

24% Household

23% Fashion

22% Discount

21% Health & Beauty

19% F&B

13% Gifts/Cards

3% Entertainment

2% Jewellery

1% Mobile Phone

Source: Savills Research /Ellandi

08 | Spotlight: Retail Revolutions

 of their
of their visit
visit and
and increase
increase in
in importance
importance The visitation
The visitation rates
rates of
of different
different generations
generations as proportion
monthly onlineas visit a regional
purchase; the samemall.
as
for shoppers
for shoppers with
with longer
longer dwell
dwell times.
times. of consumer
of consumer to to the
the Community
Community shopping
shopping Furthermore,
proportion 40%aofregional
as visit those surveyed
mall.
centres sits
centres sits between
between 75-85%
75-85% weekly
weekly don’t shop online at all.
One question
One question the the analysis
analysis sought
sought to visits, with
visits, with monthly
monthly visits
visits of
of 91-95%.
91-95%. Furthermore, 40% of those surveyed
to address
address is whether
is whether thethe
riskrisk of impact
of impact By comparison,
By comparison, onlineonline usage
usage varies
varies This highlights
don’t shop online theatimportance of local
all. This highlights
from ecommerce
from ecommerce isis less less of
of aa threat
threat significantly between
significantly between the the generations,
generations, centres
the in regularly
importance engaging
of local centreswithin
to local
to local shopping
shopping centres.centres. Given
Given and even
and even amongst
amongst the the most
most online
online savvy consumers
regularly and their
engaging withfrequent retailing
consumers and
the importance
the importance of of convenience,
convenience, group,group,
savvy Generation Y, onlyY40%
Generation (bornmake an
1980s/ needs
their via an offline
frequent retailingretail
needsexperience.
via an offline
value, availability
value, availability and and price
price point
point asas online purchase
mid-1990s), only every week.an online
40% make The responses
retail from the
experience.The consumer
responses survey
from
fundamental drivers
fundamental drivers within
within these
these retail
retail purchase every week. indicate
the consumerthat online
surveyand local shopping
indicate that online
places, itit isis less
places, less vulnerable
vulnerable to to the
the growth
growth On average, across all Generations, schemes
and are more complimentary
local shopping schemes are more to their
in online
in online shopping
shopping than than may
may have
have been
been onlyaverage,
On 40% of across
shoppers surveyed make
all Generations, overall retailingto
complimentary needs
their than a directly
overall retailing
anticipated.
anticipated. a monthly
only 40% ofonline purchase;
shoppers the same
surveyed make a competing
needs than aoffer.
directly
n competing offer. n

FIGURE 8: What the Generations shop for FIGURE 9: Reason for visit by dwell
FIGURE 8: What the Generations shop for FIGURE 9: Reason for visit by dwell
n Baby Boomers n Generation X n Generation Y n Generation Z n Less than 30 mins n 31 - 60 mins n 1 hour - 2 hours
n Baby Boomers n Generation X n Generation Y n Generation Z n Less than 30 mins n 31 - 60 mins n 1 hour - 2 hours
n More than 2 hours n Average
n More than 2 hours n Average
50%
50%
70%
70%
45%
45%

40%
40% 60%
60%

35%
35%
50%
50%
30%
30%

25%
25%
40%
40%
20%
20%

30%
30%
15%
15%

10%
10%
20%
20%
5%
5%

0%
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Source:Savills
Source: SavillsResearch/Ellandi
Research/Ellandi Source:Savills
Source: SavillsResearch/Ellandi
Research/Ellandi

FIGURE10:
FIGURE 10:Frequency
Frequencyof
ofshopping
shoppingcentre
centreand
andonline
onlinevisitation
visitationof
ofthe
thedifferent
differentGenerations
Generations

nOnce
n Onceaayear
yearor
orless nEvery
less n Every66months nEvery
months n Every33months nMonthly
months n nWeekly
Monthly n Weekly

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Baby Boomers
Baby Boomers Generation X X
Generation Generation Y Y
Generation Generation Z Z
Generation Baby Boomers
Baby Boomers Generation X X
Generation Generation Y Y
Generation Generation Z Z
Generation

Community Shopping
Community Centre
Shopping visitvisit
Centre Online purchase
Online purchase

Source:Savills
Source: SavillsResearch/Ellandi
Research/Ellandi

savills.co.uk/research || 09
savills.co.uk/research 09
insights

Consumer insights
Exactly how do the different Generations shop Generation Y -
in local shopping centres Millennials

Generation Z Generation Y - Millennials

Z Born post 1995 Y Born 1980s-mid1990s

■ £18 Average basket spend ■ £37 Average Basket Spend

■ Highest visitation frequency - 85% every week ■ 77% weekly visit to SC
■ Highest % of F&B purchases – 34% ■ Highest % of fashion purchases – 27%
■ 22% made fashion purchases ■ Highest % of Health & Beauty purchases – 22%
■ Least % spend on Gifts/Cards and Household - 1%/6% ■ Highest % of Discount/value purchases – 22%
■ Least fulfilled from experience 54% scoring 8-10 ■ Highest % of Entertainment purchases – 6%
■ 29% make weekly online purchase ■ Highest online purchase frequency – 41% every week
■ Lowest grocery spend or interest in convenience ■ 61% trips convenience goods related
■ SW highest spend on retail goods - £33 ■ SE Highest spend on F&B - £9

Generation X Baby Boomers

X Born 1960s-1970s Born 1940s-1950s

■ £42 Average Basket Spend ■ £30 Average Basket Spend

■ 75% weekly shopping centre visit ■ Grocery 47% purchased (highest)
■ Convenience most important driver ■ 14% bought fashion goods
■ 25% bought households goods ■ F&B – 16% least amount
■ 23% bought fashion goods ■ Lowest Health & Beauty purchases – 15%
■ 21% bought discount/value goods ■ Most fulfilled from experience - 65% scoring 8-10
■ Highest Jewellery purchases 3% ■ Lowest online purchase frequency – 75% <6 monthly
■ 45% monthly online purchase ■ 82% weekly shopping centre visit
■ NI Highest Spend all categories ■ Scotland Highest spend on retail goods - £37

10 | Spotlight: Retail Revolutions

Retail’s response
A closer look at top shopping centre brands

What are the brands most prevalent in Community shopping centres, provide While some portfolios have seen a
the shopping centre sector and what the core location type for most of the top marked decrease in portfolios since
is their growth story? This infographic 50 shopping centre retailers (including the GFC, particularly in the fashion
shows the brands with the largest the 32 shown here); accounting for 57% sector, this was not to the level expected
number of stores located across the of their shopping centre locations. by commentators.
shopping centre market and identifies
how their portfolios are split between Note that the total brand store counts The consequence is that these
different kinds of shopping centre. and portfolio change is across each brands require large portfolio’s of
retailer’s entire estate, whereas each stores, with a strong reliance on
What is clear is that Secondary shopping chart shows only the makeup of their Secondary shopping centres in order
centres, which includes the sub-sector shopping centre locations to reach their customers. n

Figure 11: Key shopping centre brands, their growth and their shopping centre location type distribution

n Regional Mall n Prime City Centre n London n Prime Town Centre n Secondary n Tertiary Key:

Fashion and accessories Goods 0% 50% 100% Total brand UK

store count
569 481 451 443
New Look (-6) Shoe Zone (-7%) Sports Direct (+67%) Next Portfolio change
(+1%)
2009- 2017

441 438 356 353

Peacocks (-15%) Clarks (-8%) Claire’s (-15%) Marks & Spencer (+4%)

333 290 277 255

JD (+12%) H Samuel (-13%) Bon Marche (-27%) H&M (+59%)

223 219 207 180

Pandora (+556%)
River Island (0%)
Warren James (+80%)
Select (+58%)

Comparison & General Merchandising Goods

1,179 1,007 814 812

Boots (+5%) WHSmith (+46%) Poundland (+187%) Card Factory (+77%)

777 690 725 699

Superdrug (-13%) Argos (-2%) Holland & Barrett (+27%) Specsavers (+10%)

563 471 470 382

EE (+100%) Vodafone (+21%) O2 (-2%) Wilko (+13%)

314 300 266 202

Game (-15%)
The Works (+33%)
Body Shop (-15%)
Perfume Shop (+25%)

Source: Savills Research/Ellandi

savills.co.uk/research | 11
Retail

Retail’s response
The role of convenience and value
continues to evolve in the retail place

The challenges of the last decade realised this trend even prior to the GFC, locations, while Value Fashion accounts
affected many retail brands in different successfully shaking up the sector to for less than 15%. In both Secondary and
ways. While there have been a raft of sell affordable fashion goods that would Community shopping centres however,
failures, there were a significant number support less affluent shoppers, as well Aspirational Fashion falls to below
of opportunists too. as wealthier but prudent shoppers 10%, while Value Fashion increases to
looking for cheap essential clothing that 55%/65%, respectively.
Responding to a drive for smaller may then allow more indulgent fashion
baskets and more localised spending purchases to be made elsewhere. The type of fashion goods sold is
habits, the biggest supermarket brands different and so is the reliance on
increased their Convenience offer by The merging of Convenience and Value fashion as the most significant sector
1,600 stores 2009-2016. has ultimately altered the retail landscape represented. In regional malls and major
beyond recognition. It has also made city centres, fashion accounts for 40%
During the same period, by responding a clearer distinction of how many store of tenants, whereas this is only 18% in
to demand for a more sensitive price locations different brands need in order Community shopping centres.
point, the Value and Discount goods to reach their customers and in turn the
sector has increased by over 5,000 kind of locations they need to trade from. It has often been suggested that post
stores. In fact, Value retail goods and Aspirational fashion, which is not a GFC and the arrival of ecommerce,
services have accounted for 87% of all Convenience or Value based purchase, all brands require portfolios of less
brands store growth since 2009. is the main stay of the regional mall, or than 80 stores. While possibly true for
prime city centre destinations, accounting Premium brands due to their offer being
Convenience no longer refers to grocery for around 42% of retail brands in those experiential and destination driven, this
alone. Any brands that provide an
affordable, essential and increasingly
local offer can fall under the umbrella of
Convenience.
“The need for larger store portfolios inevitably
means a strong reliance on shopping centre
One specific sector that falls into this
category is Value Fashion. Supermarkets
locations in more secondary markets”

12 | Spotlight: Retail Revolutions

fails to recognise the way that many
FIGURE 12: Proportion of fashion units by VAMP for different kinds of shopping centres
retailers engage with their customers.
The drive for more local and needs n Value Fashion n Mass Fashion n Aspirational Fashion
based retail, means that many brands 100%
90%
require far larger portfolios and it is not 80%
surprising that brands with more than a 70%
few hundred stores are predominantly 60%
Value and Mass market retailers. 50%
40%
30%
The demand for a more functional 20%
retail offer, to purchase more locally 10%
0%
on high streets and in smaller shopping
Regional Prime City London Prime Town Secondary Community Tertiary
centres is a trend that has driven the Mall Centre Centre
Value and Discount market since the Source: Savills Research/Geolytix
downturn. Given the number of high
streets and shopping centres serving
FIGURE 13: Store portfolio sizes by VAMP
a more local shopper, this means that
some brands need large portfolios in n Value n Mass n Aspirational n Premium
order to reach their customers, with the 100%
immediacy of product and focus on value 90%
demanding local physical presence. The 80%
70%
growth in the discounter, sportswear,
60%
opticians and coffee shop sectors are 50%
all tied to this evolution. 40%
30%
20%
While there has been significant
10%
consolidation of store portfolios for some 0%
brands, particularly in the fashion sector, <25 25-50 50-75 75-100 100-200 200-300 300-400 400-500 >500
Portfolio Size
Source: Savills Research/Geolytix

this has not been to the degree anticipated, the potential to be a complimentary
with many of the UKs strongest brands offer. Card Factory, The Works and
still operating from several hundred stores. The Entertainer are good examples of
There are also many growth stories, such businesses that have grown rapidly
as Poundland, Wilko, Card Factory, Sports despite online competition. Each brand
Direct, Specsavers and Pandora, increasing has a significant proportion of their
their portfolios by the hundreds. portfolios located in Secondary and
Community shopping centres that offer
The need for larger store portfolios cost effective space with ready access to
inevitably means a strong reliance on cost sensitive customers. n
shopping centre locations in more
local markets.
FIGURE 14: Key sector growth since 2009
Retailers in many local retail schemes
are performing well compared to prime Store
retail destinations, but what of the threat Growth Sector Increases
from online? since 2009
Value & Discount
+5,000
There is also increasing evidence that market
suggests a Value and Convenience based Value Homeware &
1,500
retail offer is less impacted by ecommerce Variety Stores
than the retail offer of larger destination Charity Shops 1,500

5,000
schemes. It is a challenge to replicate
immediacy at low cost on-line and local Branded Coffee Shops 1,700
shops are well positions to meet the ‘needs
Value Fashion 300
additional retail brands’ based’ culture of the modern consumer.
shops since 2009 Branded Restaurants 700
Furthermore, there has been some press
Outdoors & Sportswear 400
coverage that suggestst click & collect
can be higher in local markets due to its
convenience factor, and therefore has Source: Savills Research/Geolytix
*2009 used to reflect bottom of the market

savills.co.uk/research | 13
Property

Property perspectives
The footprint of a successful location

It would be remiss to suggest that it has been underestimated in terms of the takeaways, not a full dining offer. This is
been plain sailing for retailers and ignore importance and increasing relevance perhaps counter to the assumption that a
the challenges that have affected many of some secondary retail locations. comprehensive leisure offer is the saviour
high streets and shopping centres across Even tertiary retail places can provide a of a shopping centre.
the UK over the last decade. relevant function if they synchronise the
offer to the catchment. In Community shopping centres,
High void rates, the rise of ecommerce the need for schemes to fit and
and changing levels of consumer In town centres this includes thinking effectively service the local catchment is
spending are all issues that can affect beyond retail; it includes social and public crucial, but with the right retail mix and
even the most successful retail places. realm, health and services, community environment the property performance
and civic, mixed use and leisure. There can be compelling.
However, too often commentary on these has been a revival of market stalls, which
issues masks the fact that many retail when done successfully can bridge the Successful Community based
places work hard to successfully meet divide between functional retail and schemes tend to have above average
the needs of the consumer, or that even leisure shopping trips, with a positive occupation rates, with unit voids in
where high voids persist, occupied space impact on footfall and helping to revive Ellandi’s portfolio at 7.8% in 2016;
might still be performing well. and regenerate the high street. more than half the rate across the wider
Secondary shopping centre sector.
Secondary retail locations are often too Premium shopping centre destinations
readily dismissed as being over spaced, draw shoppers in through their size and The below average vacancy rates within
irrelevant and of low quality to shoppers, range of brands, aspirational fashion, the Community shopping centre sector in
retailers and ultimately to investors. department stores and extensive dining particular, demonstrates how a strong ‘fit
There are around 1,400 shopping centres and leisure offer. While much of the offer to catchment’ can have a positive impact
of all designations in the UK. Savills track competes with ecommerce, the point of on occupational demand, which in turn
around 850 of these (the others being too difference is in theatre and experience improves footfall. This is apparent when
small to be monitored) and classify 390 that cannot yet be replicated online. comparing the demographics of Ellandi’s
(46%) as Secondary. Community shopping centres have a centre exit surveys with that of the local
higher proportion of space taken up catchments. The Acorn profiles of both is
Within the Secondary sector there are by convenience and retail services. almost identical, which implies that their
various subclasses of shopping centre, However, as has been identified from our schemes’ appeal is drawing in shoppers
including Community shopping centres consumer research, these centres still from across their catchments as opposed
(220 schemes). With varying degrees of require a broad range of brands including to being skewed to a certain demographic
quality and performance it is fair to say fashion and comparison goods. group. The result has seen quarterly retail
that not all schemes are equal. So how sales improve on the majority of centres,
do we spot the winners? The appropriate leisure offer for typically between 2-7% yoy.
Secondary shopping centres needs
Fundamental is fitting the offer to particular consideration. Restaurants are The evidence that Secondary and
the catchment and giving shoppers what relevant to leisure shopping trips, but are Community shopping centres with an
they need given an increasing array of not the answer for all locations and could optimised retail mix can be successful,
choice for different consumer journeys. be excessive in Convenience based even where a large retail destination is
Successful retail places acknowledge locations. As our research has shown, in close proximity, is compelling. The
competition and seek to provide a in local schemes F&B is an important Strand shopping centre in Bootle is one
point of difference. This is not a new resource, but the average spend will such example, where unit void rates have
phenomenon, but is one that has often often only support the need for cafes and fallen from 22.5% to 7.7% since 2014,

FIGURE 15: Shopping centre unit FIGURE 16: The footprints of different types of shopping centres
vacancy rate by location type n Fashion Goods n Comparison Goods n Restaurant n Quick F&B n Leisure n Grocery n Retail Services

6.7% Regional Mall Regional Mall

11.0% Prime City Centre Prime City Centre

9.9% Prime Town Centre Prime Town Centre

Secondary
14.7% Secondary
London
6.7% London
Community
7.8% Community
Tertiary
19.7% Tertiary 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Savills Research/GOAD Source: Savills Research/Geolytix

14 | Spotlight: Retail Revolutions

and annual footfall has improved 8% FIGURE 18: Fit to catchment (Ellandi portfolio)
yoy, despite being within 4 miles from
Liverpool city centre. n Affluent Achievers n Rising Prosperity n Comfortable Communities n Financially Stretched n Urban Adversity

100%
These improvements demonstrate the 90%
advantages of both investing and actively 80%
managing shopping centres, with a strong 70%
60%
strategy to ensure the needs of both
50%
retailer and consumer are being met. 40%
30%
Tenant profitability is key to sustainable 20%
shopping centres and with many rental 10%
0%
levels having been rebased, rents Catchment Profile Shopper Profile
in Community shopping centres are
Source: Savills Research/CACI
advantageous for retailers. While sales
densities do not tend to reach the levels
of more premium retail destinations,
the favourable costs can compensate FIGURE 19: Shopping Centre Locations
for this and lead to strong margin and n Community shopping centres
store contribution. Clearly, strong
occupational performance provides Regional Mall
income security to investors. Prime City Centre
Prime Town Centre
Our analysis of shopping centre effort London
ratios, a measure than looks at total Secondary
occupational costs as a proportion of Tertiary
turnover, shows that local Community
0 50 100 150 200 250 300 350 400
shopping centres can outperform the
Source: Savills Research
wider Secondary shopping centre market
in many retail sectors.
support a local offer and there have been they are well placed to continue to be
There has been considerable reports that Click & Collect is higher in relevant, successful locations, despite
restructuring of the retail market since locations closer to where people live. persisting challenges to economic and
the GFC. Retailers have consolidated consumer sentiment.
or grown their portfolios to improve In the present political and economic
operational efficiency and successful climate there is a great deal of This is especially pertinent to Community
schemes and high streets have uncertainty and no one can yet predict shopping centre schemes, where the
become more in tune with what brands how the long term impact on retail. key focus is on Convenience and Value.
consumers want, where they want them. Yet, for shopping centres and high These factors are central to every day
streets that have already adapted their consumer journeys, and if shoppers
Further evolution of space is inevitable, retail and leisure offer to meet consumer tighten their spending in the years ahead
not least because the role of ecommerce and retailer needs, and reduced it is likely that this will only serve to
is still being worked out. There is certainly occupancy costs to affordable levels, increase their reliance on the affordable
potential for online shopping to better there is good reason to believe that retail offer in their own communities. n

FIGURE 17: Community Shopping Centre and Secondary Shopping Centre retailer effort ratios, by sector
n Community Shopping Centre Average n Secondary Shopping Centre Average
20% 18.9
18% 17.6
16.5 16.5 16
16% 15.4 14.9 15
14.5 14.6
14
14% 13.1 13.3
12.2 11.9
12% 10.6 11
9.6 10.3
10% 9 9.2
7.9 7.8
8%
5.8 5.8
6% 4.5
4%
2%
0%
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Source: Savills Research

savills.co.uk/research | 15
 Spotlight on community shopping centres
What are they? Scope of the Market
Community shopping centres are locally dominant retail locations There are c.220 Community shopping centres nationally.
which focus on delivering affordable and convenient retailing. They It is a relatively liquid market, from 2011 to 2015 there were
are typically in town centre locations and provide a range of civic 128 Community shopping centre trades with an aggregate
amenities and essential services that go beyond retail. value of £3.9bn.

The mix of uses and range of shops, with a strong emphasis The majority of Community shopping centre are privately
on Convenience and Value goods, encourages high frequency owned. Ellandi are the largest manager in the sector with
visits and access to retail that is accessible and convenient, New River being the only REIT with a large Community
fitting into busy everyday lives for millions of people. shopping centre portfolio.

This research highlights that this local needs based shopping What are the key benefits to investors?
also generates surprisingly high basket spend at an average Community shopping centres offer high yields, in absolute
£36 per visit. Community shopping centres compete less with terms and by comparison to prime shopping centres, with
other shopping centre destinations, rather they feed off an a yield spread of c.400bps. They are also considerably cheaper
immediate catchment within a 20 minute drive time. on a capital value £sq ft basis.

The core proposition of a Community shopping centre is Most rents have been rebased and are now low, by historic
offering immediacy and value to local people. This purpose standards. They are affordable to retailers who generate strong
based shopping is ingrained across geography and socio- effort ratios in good Community locations. The 2017 business
economic groups and highlighted by the fact that 78% of rates revaluation reduced rateable value for most Community
shoppers visit at least one a week and that 95% are satisfied shopping centres further reducing occupational costs for retailers.
customers who found what they came for.
Occupancy figures are typically strong. Ellandi’s stabilised
assets operate at 95% economic occupancy rate, comparable
Different to Secondary to prime centres.
The purpose and function of a Community shopping centre is
very different to that of a larger Secondary shopping centres Collectively, these factors contribute to strong and sustainable
that rely upon attracting comparison shoppers from a far greater rental income flows that can offer higher yields than other
catchment. Secondary schemes rely upon a broader range of mainstream property asset classes. As operating assets,
retailers and have to offer a higher degree of ‘experience.’ The Community shopping centres offer scope to add rental and
shopper has typically travelled further and their shopping trip is capital value through active asset management, bringing with
based on “want” not “need.” it sustainability of income for the investor.

Savills Research

Tom Whittington
Director
Savills Research
[email protected]
+44 (0) 161 244 7779

Savills RETAIL & Leisure

Savills Retail & Leisure is a multi-national, cross-sector offering covering all facets of a client’s retail needs. With our network Ellandi Research
of offices, and a strong foundation of research and insight, we have unparalleled market knowledge to put landlords,
developers and retailers at an advantage. From in-town to out of town, and a comprehensive approach to high street,
shopping centres and central London, our team is the most dynamic in the market and offers a truly holistic service to clients.

Our retail team is part of Savills plc, a global real estate services provider listed on the London Stock Exchange. Savills
operates from over 700 owned and associate offices, employing more than 30,000 people in over 60 countries throughout the
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Andrew Buckley
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Director
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16 | Spotlight: Retail Revolutions