The volume of retail sales in June 2016 is estimated to have increased by 4.3% compared with June 2015. The underlying pattern in the quantity bought, as suggested by the 3 month on 3-month movement, increased by 1.6%.
The amount spent in the retail industry decreased by 0.9% compared with May 2016, and increased by 1.5% compared with June 2015.
The value of online sales increased by 14.1% in June 2016 compared with June 2015, and increased by 0.5% compared with May 2016. (Office National Statistics.)
The UK remains the world’s 5th largest economy and for all the market concern about Brexit a greater issue for the High Street has been the continually wet and cold winter like weather, which only ended at the beginning of July 2016, which has caused a lot of discounting as Spring and Summer goods failed to sell.
London tourism is as busy as ever and the fall in the pound’s value has boosted exports and will be doing the same for tourism.
The back end of 2015 was unseasonably warm again hitting retailer’s sales with the wrong merchandise in stock. Clothing and shoes were the weakest sectors as one might expect due to the weather with sales down by 6.1% over the past 12 months as a result.
A lot has been said in the press about frozen funds due to Brexit, but then the Saudis have just made a £1.3B offer for Grosvenor House Hotel. It was previously sold for £470M in 2010.
The biggest UK trend is the growing move for a high food and entertainment spend and we will see more and more cafes restaurants springing up, with new brands emerging almost every week as shoppers move more spend to treating themselves and not eating at home.
As the quality of food offers continue to improve, all food operators will have to up their game.
No omnichannel retailing. No business.
51% of retailers are now focusing on multichannel retailing. (Source PwC) so 49% are being left behind.
Sainsbury bought Argos for £1.4bn to create a multi-product, multi-channel retailer and as many as 200 of Argos’s 845 stores could close, which will solve some of Sainsbury’s issues over excess space in their large stores, which many of the major Superstore groups face.
The Office for National Statistics showed online sales increasing by 9% in March year on year.
With the UK now having lower unemployment there is more disposable income, but retailers have not yet won enough discretionary spending, which has gone more on leisure and holidays. Some Cities like Newcastle upon Tyne have suffered as a result with a 10% decline on shopper numbers.
Expectation is all in our “internetworld” and retailers will either be in stock or deliver the same day.
Mobile phone platforms for the product to order by barcode in a seamless world of real and virtual shopping.
With Amazon piloting same day deliveries by drone to your Amazon doormat beacon which is expected to be in operation within 5 years, long gone will be the days of “sorry it’s out of stock”. Other retailers will have to arrange their own system or be forced to sell on Amazon.
No reason food could not be delivered in the same way as well as fashion and electrical goods. We might object to a washing machine landing on our heads though!
High Street shops will remain a product showroom, while allowing brands to differentiate themselves with theatre and an environment in keeping with the brand, which purely internet retailers cannot do. Amazon, the hottest tech retailer, is clearly a model of this, with many stores planned in the States.
Across London retailing remains growing and highly competitive. There has been a massive explosion of coffee shops and other healthy food restaurants and all manner of world food on offer.
Fashion across London has grown over the last 10 years with new fashion quarters developing and a lot of service traders being forced out due to increasing rents.
Rents across the board are generally rising as competition remains fierce.
Areas of London have adapted too to changing tastes with what is effectively a luxury outlet at High Street Hackney named, Hackney Walk, with names such as Anya Hindmarsh, Aquascutum, Bally, Burberry, Gieves & Hawkes, Joseph, Matches, UGG & Pringle.
In traditional areas like Covent Garden Levis recently acquired 119 Longacre Covent Garden the ex Ben Sherman shop, being a 3800 sq ft shop at £700 Zone A, a record for the area.
St Paul’s One New Change scheme will soon have a new Hackett store to shop by the preppy menswear brand and in Leeds and Tokyo before the end of 2016 bringing it up to 110. Turnover rose 2.8% to £110 million in the year to March 31 2015 with the UK accounting for £32 million of sales and a strong performance at its Regent Street flagship store along with improved online sales.
Leicester Square is undergoing a rejuvenation with much redevelopment and at 48 Leicester Square Lego have taken a 7000 sq ft store completing this winter as more “shopentertainment” as their agents C&W say. This letting formed part of a massive new building on Coventry Street Leicester Square opposite the M&Ms store. There will also be a new Odean Cinema and Edwardian Hotel and a Hotel at Victory House. Nickelodeon’s retail store opened last year too at 1 Leicester Square and there is now consent for a further Hotel and leisure by Criterion Property.
The luxury fashion streets remain Bond Street, Mount Street, Dover Street, Albemarle Street, Conduit Street and Sloane Street, but pressure for more space is pushing the boundaries to adjoining Streets like Maddox Street now. Other Streets are emerging like South Audley Street.
Emphasising the importance of streets off Bond Street Aston Martin has taken 9 Dover Street, which was Ladbrokes, being a 1730 sq ft showroom on a 15 year lease at £500,000pa. It will house a single car.
Even in Clifford Street which is a mainly office Street linking Savile Row with New Bond Street, Chopard is opening a small unit.
New Bond Street saw the highest Zone A achieved at £2000 per sq ft on 14 New Bond Street Hublot (LVMH) relocating from 31 New Bond Street. This was £250 Zone A more than 31 Old Bond Street at £1750 and the £10M premium paid by Patek Phillip in 2014 for 16 New Bond Street and doubling in value since 2013.
Dior have recently opened their new flagship store at 160/162 New Bond Street.
Paiget’s Freehold at 169 New Bond Street was bought for a 2.25% equivalent yield and was already let at £1.1M pa.
Mulberry and Pinet’s Freehold is under offer to Reichmont at £210M continuing last year’s trend of LVMH buying in a large Freehold at £500M and other purchases before.
The Crossrail/GPE development on New Bond Street is at last taking shape on the New Bond Street frontage with new shops to be provided up to Basler at 73 New Bond Street.
Asprisati the luxury jeweller with 4 shops in Europe are looking for 400/1000 sq ft in Bond Street.
Rimowa opened their flagship London store at 153 a New Bond Street of about 2500 sq ft.
Gormley & Gamble is Savile Rows first ladies wear tailor opened at the first floor of 31 Saville Row, in a UK first. Selling Saville Row quality as an “investment” that will last, as an alternative to fast premium fashion but at Reiss prices.
Elsewhere other designer fashion Streets attracted luxury brand Italian Sloware who paid £750,000 premium for 25 Marylebone High Street at £178,000 pa for 1200 sq ft in this fashionable area.
Gant have relocated from 185/191 Regent Street to 184/6 Regent Street post Brexit at £1Mpa for 7800 sq ft on a new 10 year lease.
Other news being is following Jaeger’s closure, Coach and Stuart Wiseman have taken half of the store each.
Could be pedestrianised by 2020 as announced by the new Mayor, which could boost footfall by over 22% and sales by nearly 38.7% (Savills). However, transport issues remain in a 1.2-mile- long street.
The new Crossrail Station in Oxford Street at the junction with Tottenham Court Road is boosting demand for this end of the Street and will also push values higher in Tottenham Court Road.
At the Marble Arch end opposite Selfridges, Dyson and Tesla Cars opened flagship stores at 447 and 449 Oxford Street.
Tesla is to open in 14 outlets in the UK in premium locations from Leeds to Solihull and have just taken one at 8 Multrees Walk, Edinburgh for their cars that cost £50,000 plus. Each store will have configuration suite. It takes only 20 minutes to charge ones of their cars.
Dyson sold 10 million machines globally last year and in Oxford Street they show their main products of the new hairdryer, robotic vacuum cleaner and hand held ones along with fans which one can buy from the store. Zone A achieved were believed to be about £850.
Another Oxford Street deal saw Stradivarius (900 stores in 62 countries) owned by Zara’s Amancio Ortega, the Spanish billionaire take a 16,000 sq ft at 311 Oxford Street from Aldo at £2.4M pa.
With the trend of retailers buying investments they can occupy one day if they wish to, H&M have bought Debenhams 366,000 sq ft Freehold at 334/8 Oxford Street at a 2.75% yield for £400M and let to 2039.
Kensington High Street is losing Top Shop at number 44, Gap at 110, and Tesco Metro at 158 as the Street has underperformed since Westfield White City opened and with a major extension planned with John Lewis is likely to suffer further. Rents have been stagnant and have fallen in the past.
A problem is the multiple ownership and the inability to create another “fashion quarter” as a result.
UK High Street fashion
Debenhams sales however rose as it stocked fewer coats and sold more perfume and beauty products, increasing online sales by 12% so it is more down to the retailer and how they stock that will determine sales and not to blame it as always on the weather.
Their typical customer is a 41-year- old woman interested in fashion, looking for newness and a broad choice of brands and likes to have a cup of coffee or glass of prosecco when she comes into Debenhams once a week. “It’s a much younger customer than the M&S customer, and much more fashion-interested.” Cheshire of Debenhams said: “Clothing as a share of total consumer expenditure is going down over time.” However, consumers were spending more on health and beauty, he said, with beauty spending going up by 3% or more, as well as food and gifts – trends that Debenhams wants to tap into.
The department store has been courting younger customers by introducing Ed’s Easy Diner, Costa Coffee and Patisserie Valerie into its shops. It has also brought in more brands and cut back on promotions, and wants to introduce more beauty services such as nail bars to offer “express treatments”.
Primark, the bellwether of value chains whose retail business’s operating profit on total sales rose 5% to £2.7bn. Primark does not sell its clothes online and so is reliant on its stores.
M&S performed poorly and said fifty something women had been neglected as the firm chased younger shoppers. Sales of clothing and homeware at established stores dropped by 5.8% during the past three months.
Joules with over a 100 stores saw its sales climb last year and with catalogue sales being a third of its business.
French fashion brand IKKS with 2000 shops in 40 countries intends to open 25, 6000 sq ft shops
Pink want more stores of 300/600 sq ft in the City.
Donna Karen was sold by LVMH for £650M.
Next with 540 stores, is suffering from its high rate store credit cards and a move to the internet. Even as Directory sales increased, it lost 74,000 credit customers and non-Next store card purchases increased by 42%.
EE mobile phones are very much in an expansion mood looking for 1220/2000 sq ft shops across the UK and along with Vodafone are the main players in the market.
Pound land’s 750 shops were bought by Steinhoff International at £597M.
Ismash, which specialises in personalisation and repair of smart phones & tablets and computers is looking to open 50 UK shops. It has 11 shops of 150 to 500 sq ft. They have stores in areas like Kensington, Fleet Street, Victoria Station, Canary Wharf and Kingston
CEX has been another explosive retailer expanding in most UK towns, being a franchise, selling second hand hi tech ware from mobile phones to games.
Value fashion brand Pep & Co (backed by Chritso Wiese of New Look) is hoping to open 35 shops over the next year having taken 50 in 50 days.
Other retailers on the hunt for space include Superdrug 2000/2500 sq ft; Paddy Power betting, Cross Eyes opticians (a Danish chain), Bon Marche with 317 stores, 1800/5000 sq ft on short leases across the UK, Savers Health, 2000/3000 sq ft and Body Shop 800/1500 sq ft. Holland & Barratt remain though one of the most successful brands expanding in 1000/2500 sq ft stores.
DFS are now seeking High Street sites of 2500/5000 sq ft on the High Street from Bluewater to Manchester for 12-month pop up shops to start with to presumably see if the formula works.
Wilko the value variety store is expanding London wide looking for 3000 sq ft plus.
Cycle shops never stop expanding with the UK craze now well established and now perhaps the number one informal sporting activity. Cycle Republic want 10 more 2500/6000sq ft in 2016 in London and Evans countrywide.
Card shops grow apace with Cardsdirect wanting 8 in 2016 of around 1500sq ft in the Midlands and south.
Dixons Carphone is shutting 130 stores to roll out electrical superstores merging all brands of PC World Curry’s and Car phone warehouse and will move staff to other stores.
Barkers with 7 stores trading now in affluent towns is a new concept store especially for dogs designed to put dogs first, creating an all-round destination for canines. Shops comprise a food hall, accessory shop and dog spa, with 85% of the range exclusive to Barkers designed to be perfect for dogs, with interactive toys, running fresh water, sensory zones, calming room odourisers, paint colours that reflect the colour spectrum of a dog’s eyesight. Why not for humans too!
The drive for the small food store concept remains undiminished with Little Waitrose wanting 4000/4500 sq ft in London and wealthier counties, while Budgens, Sainsburys and the Coop want 3000/10,000 sq ft. Aldi are after 6000/10,000 sq ft with no parking in the Cities up to 14,000/18200 sq ft. Lidl 1.2 acres.
McColls acquired 300 smaller neighbourhood Coop stores as the Coop said they are to concentrate on their larger 2500 sq ft local store type format.
Burger King continue to expand into in and out of town locations, along with McDonalds and KFC and many more Burger Brands are entering the market now like US Chain
Smashburger who just opened in Glasgow in 4000 sq ft restaurant and now wants 35 more in the UK. Five Guys, burgers now with 43 restaurants are pushing ahead with more stores across the UK.
Shake Shack the US burger chain has opened its 5 th restaurant in Leicester Square on a 4500 sq ft restaurant at 1/2 Coventry Street (ex KFC).
Pizza Express are looking for 150 A5 delivery sites throughout the UK of 800/1000 SQ FT.
Coffee Shops & Restaurants
Bills Restaurants continue to expand in most UK towns while Prezzo are pushing for more and more sites too. Grind are expanding in London too wanting 10 more sites.
Pret a Manger & Costa & Greggs remain the dominant brands in the UK but with Muffin Break & Café Nero all wanting more shops. Some of the lesser brands have not been so active recently.
Even Walls has a pop up shop selling Magnum ice creams in South Molton Street, London at £6 a go!
New Artisan Bakeries are expanding with Maison Kayser opening its first 4650 sq ft restaurant at 10 Portman Square along with Gails with 24 stores open. In London Café Concerto are looking to expand nationwide. A new kid on the block are Black Sheep Coffee, who now have 4 shops open and want more around 1500 sq ft in London.
BHS 164 store chain is closing having failing to sell as a going concern due to lack of adequate investment and innovation, since Sir Phillip Green bought the Group in May 2000 for £200M.
It was sold via Lady Green’s company ownership, in March 2015 for £1 to Dominic Chappell, a three-time bankrupt, with a reported BHS £571M pension fund deficit. Most stores will be broken up and as Woolworths before and most will be let eventually but it is little consolation for all the staff.
A German fashion brand – and well before Brexit – was seeking to sell all their branches in Dublin, Solihull, Bishops Stortford, Westfield White City & Stratford, Chichester & Oxford and focus on the internet and concessions and maybe reposition themselves elsewhere.
All Saints Retail Ltd trading as Ben Sherman went into receivership this year. US Marquee Brands, which is backed by private equity finance had bought the brand name of Ben Sherman in July 2015. Marquee will continue to own the brand and a new licensing agreement has acquired by BMB Clothing to operate a few concessions and then to open new outlet stores.
Plus Brands retailer Simply B & Jacamo at 138/140 Oxford Street is leaving and it is now to let at £1.2M pa.
Brantano shoes went into receivership with its 140 value stores and 60 concessions.
Austin Reed’s brand name was bought by Edinburgh Woollen Mill’s owner Philip Day along with Country Casuals with just five concessions in Boundary Mills discounter outlets.
Austin Reed Group’s 100 standalone stores and 50 concessions will close and be broken up along with the group’s flagship Regent Street store now sold to its landlord Hermes Real Estate Investment Management. Some stores are likely to go to retailers such as Sports Direct.
This seems is a growing trend now to take out the brand name and dump all the stores on receiverships.
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