Retail News Spring 2012

The national trend in on line retailing will slow eventually as the sector matures, so selection of High Streets will be the key to growth and London and the South East and Cathedral towns will always remain popular. It has a long way to go yet though, as only 3.4% of shopping is done on line in Europe as compared to 4.6% in the US. It is anticipated to grow by 16% this year. Click and Collect stores may come into fashion.

Shop sales rose by 0.9% in January. A 4.8% rise in household goods drove the sales. Christmas sales were very good with £100M being spent in the week to New Year in the West End.

Supermarkets will diversify more into non-food but have failed in standalone non-food stores. A balance has to be achieved to be successful.

As new large retail shopping scheme development has stalled retailers have to compete for what good space there is thus driving up rents in the right locations.

The Portas Review of the decline in some town centres was a non –event. The large supermarkets are simply to blame for the decline of smaller centres nothing more, which was not understood. There seemed to be a lack of understanding of what drives retailing and how retail evolves. Shoppers will switch to larger schemes, good out of town retail parks, or specialist High Streets, as well as ordering goods on line. Run down town centres should not be preserved but changed to other users such as residential.

The average lease is now 7/8 years with none of more than 10 years being taken with many retailers wanting break options at year 5 where they can.

Larger stores of about 5000 sq ft are most in demand in larger shopping centres for fashion retailers wishing to expand. There has been a change too in larger retailers focusing on larger centres, as 90 stores in key shopping centres now gives access to 50% of the UK population.

Independents opened 3 times more stores than multiples last year 15,000 to 5000 odd according to Local data Co. The net change was +2.4% and multiples declined by -.25%. (Local Data Company). Nail bars grew by 16.5%.

Scotland and the North East declined for independents by -1% reflecting the poorer performance of the economy in those areas.

Best retail shop growth areas were accessories, charity, pet shops, fashion, food and general clothing, hairdressers, fast food and health and beauty. The worse hit were garden centres, menswear, sport, toys, cycles (surprisingly) and hobbies.

Apple, Hollister, Forever 21 continue to expand but Superdry now has a profits warning this year. Ted Baker was 15.7% up in 3 months of last year and Paul Smith sales rose from £17.6M to £24.2M.

Agent Provocateur is to double its 55 stores with sales up 15% and Next posted 6.6% profits. Hermes were up by 31.2%

Oxfam (11% up in 5 weeks to last Christmas) and Mulberry (45% up) were some of the best performers last year. In fact Charity shops have grown by 28.5% since 2008 (Local Data Co)

Designer Outlet Centres are enjoying a boom with designer label sales soaring by 56%.

LONDON

Growth in house prices were up 12.1% last year and 40% since 2008 showing the buoyancy of London.

More shop stock is on the market in Oxford Street due to failed brands and with all of the Starbucks located there for sale due to many hundreds of thousands rent, which no coffee shop can sustain.

Only one prime shop is available in Bond Street, showing its strength. Salvatore Ferragamo paid a record rent to stay in Old Bond Street at £1059 per sq ft Zone A (30ft Zones) nearly double in 5 years.

Prime Regent Street is without vacancies.

PPR the French group saw a 11% rise in international sales with its Gucci,Alexandre Mc Queen,Stella McCartney and Yves St Laurent brands.

Baldini are after a flagship store while Renne Jeweller is looking for the West End as are the French brand American Vintage.

Kew 159 ladies fashion brand want more in London along with Rapha the cycle clothing brand, for a flagship store.

Cowshed cosmetics, Superga Shoes of Italy and Jacadi Paris high end children’s shoes want more shops.

Lee Jeans are pulling out of Westfield White City.

OUTSIDE LONDON

THE CATERING SECTOR

Apostrophe wants more London sites for their café concept as do West Cornwall Pasty Co.

Café Nero are looking to expand in London and the South and West in 750/1400 sq ft.

Carluccios want another 120 stores -10 a year- of 2550/4000 sq ft mainly in London and key UK cities.

Costa and Muffin Break continue their relentless expansion throughout the UK.

Patisserie Valerie/Druckers intend to double their 85 stores with sales up 21%.

Planet Organic is after 5 stores in London. Subway to continue relentlessly looking for 200 to 1200 sq ft cafes.

FASHION SECTOR

American Apparel are after pop up shops in London, Birmingham and Manchester.

Blue Inc aimed at 12-29 age groups continue to expand in the South mainly. Urban Outfitters have acquired about 9 stores and are looking for more to add to their high street multi brand Anthropologie and Urban Oufitters.

Butlers, the German Lifestyle homewear operator, wants 10 more stores in London and the South East.

Fabulous designer jewellery are looking to expand in the South East London and Midlands.

Gerald Darel are looking to expand in key UK towns like Bath, Cambridge, Harrogate, Winchester and Windsor as doSandro, both French brands, while Jo Malone are after 400/1500 sq ft in the South and South West.

Leading Labels want 7500 sq ft stores with parking to add to their 20 stores.

New Look will lose 100 shops over 3 years on lease expiry as the focus will be on larger towns and the impact of on line shopping. Signet sales were up.

NON-FASHION SECTOR

Scope are after 800 sq ft and many towns. Other charities that are expanding are BHF in their homewear format stores of 5000 sq ft.

Treds Shoes are after 1000 sq ft shops in the South and Midlands and WH Smith are back acquiring up to 2500 sq ft having taken 9 this year.

87% of ex Woolworths 813 stores are now occupied (Local Data Co) illustrating the demand which still exists for large High Street space in better towns.

… AND THOSE IN TROUBLE WERE

47 Past Times stores closed, post administration.

Azendi jewellers failed with 19 stores in some prime locations throughout the UK. Deloitte joint administrator and restructuring services partner Adrian Berry said: “Azendi has faced a downturn in trading as a result of the current difficult economic trading conditions.”

Barratts who went into administration again following their first collapse about 4 years ago have bought back 89 stores out of 360. A future for the brand will be very difficult unless they reinvent themselves.

Bench with 8 stores to sell up and Priceless Shoes went into administration.

D2’s-A&J Menswear 28 shops went down backed by Tom Hunter, that failed 2 years ago.

Desigaul the Spanish brand are closing Bluewater and Liverpool and seem to be vacating the UK but staying in wholesaling.

Fenn Wright & Manson, the mid-market fashion brand collapsed and we suspect that as the rents were not high and they had quality towns, the brand just lost its way.

French Connection with 70 UK Stores though cash rich had profits 32% down. UK sales growth was 0%. They need to downsize.

Game’s 670 shops finally went into Administration as we predicted last year which was more to do with internet shopping than anything. Comet and others have made an offer for the group though. Buying Game Station in 2007 overextended the company.

Hawkins Bazzar 67 stores failed, not so much high rents but more the product offer. Many remain.

HMV’s 252 stores seem to have survived for now with a deal with its bankers and suppliers.

JD Sports bought Blacks Leisure for £20M.

La Senza’s 160 shops were bought by Alshaya a Middle East operator with other brands.

Peacocks collapsed but most were bought by Edinburgh Woollen Mill and some going to Poundland and others with 139 left over remaining. Greedy deals at the height of the boom helped to bring them down with borrowing at nearly 100% of sales.

Radley the British bag maker had sales were down £2.5M on £45M of sales. The brand in our view looks tired now.

Shoon’s 18 shoes stores went down too. It seems surprising when the market is so strong for good shoes in the UK but they had a tired brand.

Thorntons sales have slumped with profits down to £618,000 from £8.3M. New franchisees are not beeing found easily. We see a bleak future for the company.
All the remaining UK stores of Esprit are now on the market.

MONTHLY RENTS

Only 7 countries out of the 42 in the EC have quarterly rents in advance now. 12% pay monthly rents according to CBRE. Kingfisher and Next both profitable companies have squeezed concessions out of landlords by taking longer leases.

Monsoon, Mothercare, Accessorize and New Look have approached landlords for monthly rents along with Phillip Green’s empire as cash flow is squeezed.