Innovation and investment in physical retail space curtailed by business rates, says BRC chief exec

In Industry Comment, Industry News On

According to figures released by the British Retail Consortium (BRC) and Springboard, footfall in January decreased by 1.3% compared to the same period a year ago.

The national town centre vacancy rate stayed stable, at 9.4% in January 2017, down from 9.5% in October 2016.

High Street footfall fell 0.8% in January on the year before, when it had risen by 0.2%. Footfall in retail park locations fell year-on-year for the third consecutive month. In January 2016, footfall grew 5.2% in retail parks, making it a tough comparable to grow upon the BRC notes.

Footfall in Shopping Centres fell for the twelfth consecutive month in January, a further deceleration on the 1.9% fall in December.

BRC chief executive Helen Dickinson OBE commented: “The relentless downward trend in footfall picked up pace again in January as shopper numbers fell by 1.3% over the same period in the previous year, following a 0.2% decline in December. It was a fairly consistent picture across different retail locations; with the high street, which saw a modest bounceback the previous month, failing to draw in shoppers.

“January’s sluggish non-food sales, which undoubtedly corresponded with the dip in footfall below last year, go some way to explaining these underwhelming figures. Stores bore the brunt of the sales slowdown; posting their deepest three-month decline on record as online was the preferred shopping channel for the month’s clearance sales.”

She continued: “Our quarterly vacancy rate data shows shop vacancies virtually unchanged at 9.4% of all shops compared 9.5% in October. On a regional level, it was London that saw the strongest improvement, with the proportion of empty shops falling from 9.5 to 8.4% over the three months to January. However, in some parts of the country the number of empty shops remains worryingly high and act merely as a blot on landscape of local communities. And while the overall rate has tended to remain around 9 to 10% since July 2015, the variation between successful and vulnerable locations grows ever wider.

“At a time when retail is being re-imagined as customers seek more engaging experiences in our high streets, town centres and retail parks and centres, the incentive for retailers to innovate and invest in physical space is being curtailed by the upward only trajectory of business rates. This disincentive needs to be removed and the burden reduced thereby encouraging, rather than deterring, investment to the benefit of those local communities most impacted.”

Springboard marketing and insights director Diane Wehrle added: “The -1.3% drop in footfall across the UK’s bricks and mortar destinations in January may be a sign of tougher things to come in 2017. Not only was it a noticeably larger drop than the -0.2% in December, but it was the steepest decline since June 2016, when footfall was impacted in the preceding weeks and in the immediate aftermath of the EU referendum.

“The results are consistent with longer term footfall trends, with an underperformance of shopping centres against high streets and retail parks. Of significance is that footfall is correlating closely with retail sales, with all sales results published so far showing a poorer performance in January than in January 2016. Springboard’s own data on bricks and mortar sales showed a -1.5% drop in January from January 2015.

“The UK vacancy rate improved from 9.5% in October to 9.4% in January. This can be partly explained by the churn of occupancy from retail to hospitality, a feature of the last year, but is also due to the fact that the vacancy rate reflects footfall and sales, and so lags behind these as a performance indicator. But it does demonstrate that retail destinations are adapting, with new occupiers offering a much demanded all round customer experience.”

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