Consumers’ appetite for shopping hold key

Roland Smyth finds reasons to be cheerful about retail

With a number of high street names becoming insolvent this year, including Jaeger, Jones the Bootmaker and Brantano, you could be forgiven for thinking that some elements of the retail sector are in managed decline.

A Scottish Retail Consortium (SRC) report this month cast some further gloom, highlighting how Scotland's shop vacancy rate was up from 9 to 9.2 per cent between January and April, described as a "modest but nonetheless worrying" increase by the organisation. These statistics are consistent with an emerging pattern over recent years, indicating a decline in the traditional retail sector as we know it.

The demise of some long established businesses (Jaeger began trading in 1884), combined with the rise in online shopping, is also creating challenges within the commercial property sector, which relies on a strong retail presence as many shop units are let to retailers who pay rent to commercial landlords. But there are reasons to be cheerful.

Here in Scotland, the Edinburgh St James redevelopment serves as a prime example of a key trend in the sector. The scheme, which will boost Edinburgh’s place in the UK retail rankings from 13th to 8th, is replacing the old 1970s shopping centre with 850,000 square feet of retail space, a luxury hotel, up to 150 new homes, 30 bars and restaurants, and a multi-screen cinema. A number of well-known retail, leisure and hospitality operators have already committed to the new development, underlining a gradual move away from dated and inflexible high street units towards bigger ones that are easier to reconfigure. The transformational redevelopment also epitomises the trend towards place-making.

People are still coming into city centres – the SRC also reported a 3.2 per cent increase in shopper numbers in April, the fastest growth rate seen in Scotland since July 2014. This rise is mainly in “destination” shopping areas in and around the big cities where retailers are increasingly focusing their attention on larger flagship branches complemented by restaurants and leisure facilities. This does lead to more vacant units in other areas coming onto the market, some of which are being taken over by smaller independent retailers, from discounters through to high-end fashion, depending on the locality’s social and economic vibrancy, with others converting to leisure or residential.

Whilst “clicks not mortar" is still a threat to traditional retailing, the rise of internet shopping is also having some positive impact on retailers’ property requirements. With consumers first researching online then often buying in store where they can handle the goods, physical stores are increasingly important as shop windows to showcase goods. Innovations such as Amazon Go stores (where sensors allow customers using a smartphone app to make purchases without having to queue at a counter) mean the line between online and traditional retail is blurring quickly, creating new opportunities for well-informed retailers who can deliver the multi-channel experiences their customers want.

Provided attention is given to providing adequate parking and transport links, footfall in city centres can continue to thrive. The City of Edinburgh Council’s plan is that visitors coming in by car will park at the east end (the Edinburgh St James redevelopment will include 1,600 parking spaces) or the west end, and then access the rest of the city centre on foot.

The recent statistics show a mixed picture for retail; while the number of vacant units appears to be on the rise, so is consumer footfall in city centres and retail parks. This points to a challenging but overall positive future for the sector where mixed use centres, such as Edinburgh St James, will play an important role.

This article was first published in The Scotsman.