Yesterday I had the pleasure of presenting to the British Council of Shopping Centres North conference in a lovely hotel just outside Chester. The title given to the conference was ‘More for Less’ and I was asked to present on the title ‘Convenience is Cool’.
When I first thought about this my gut feeling was ‘yes- convenience retail (supermarkets, c-stores etc) have been expanding rapidly in shopping centres and in many cases have become the new anchor’. Further investigation of the data told me that I was right – if I was in 2013. However, as I sit and typed in June 2015, I am wrong. Many people at the conference were also surprised by what I had to tell them based on LDC’s physical walking and analysis of the top 700 shopping centres.
The first point to note about the presence of convenience retail in shopping centres is that there is NOT a common picture when you look up and down the country. Some centres, like Govan Cross (Glasgow) have over 40% of their total offer being convenience retail and others have a mere 1% or 2%. The average is in the region of 11% if you strip out the extreme outliers such as Govan Cross. See slide image below.
Another point of note is that the change in the presence of convenience retail in shopping centres varies significantly by region if one looks at the last five years. This is illustrated by the fact that the East Midlands centres have increased their offer by 3% and the South East by nearly 14%!
When I was preparing the presentation the key data point that challenged my original presentation title was the change in the number of supermarkets and convenience stores in shopping centres since 2010. The facts are that in 2010 there were 527 which rose to a peak in 2014 of 582 and in 2015 this has dropped back to 572.
So whilst you might think I am premature in calling the peak the data does show a cooling off in the occupation of supermarkets and convenience stores in the nation’s shopping centres.
These changes in supermarkets mirror a national picture which we published in our recent report on the Discounters v the Supermarkets that appeared in the FT where we looked at the rise of the discounters in the catchment of the big four supermarkets – see below.
The net change in stores overall also implies that the peak in numbers might have been reached as the slide below shows.
So what will replace the supermarkets and convenience stores that might close in some shopping centres?
Well the answer is food & beverage (F&B) as this is the ‘hot’ occupation trend currently happening, and you could argue means that shopping centres are increasingly no longer just ‘shopping’ centres but ‘destination’ centres or in some cases the heart of many towns!
The average F&B presence in shopping centres is 14.2% but if you look at the BCSC/LDC top 30 then it is 17.1%. Examples of new shopping centres where this figure is even higher include Union Square, Aberdeen at 33% and Trinity Leeds at 32% – units not floorspace.
So change is afoot and this could be considered good news for shopping centre landlords as F&B operators like to sign for 25 years and spend anywhere from £250k to £1m on fitting out to create the right environment for their consumers to dwell, eat and be merry!
That said the churn rate of FB can be high and they are not immune to administrations as the last couple of years have seen. With such a hot shopping centre investment market then we can expect more changes but with everything it will not be everywhere so we will keep tracking and tell you where!