Park life

Pre and post-Christmas, Pragma has seen considerable interest and activity in the UK retail park sector. Over the next few weeks, we will provide a review of the sector from the perspective of the consumer, occupiers and investors, to highlight the drivers of activity and the potential opportunities going forward.

Format of choice during Covid

Retail park footfall has been more robust during the ongoing pandemic. In summer 2020, retail park footfall* was down a third vs. 2019 compared with footfall at shopping centres and high streets, which was two-thirds down on the previous year. Use type has played a role – retail parks typically have occupiers providing grocery, garden, household and pharmacy goods that have been able to trade throughout. But the ease of access, wide open spaces, extended evening trading hours and free `at the door' parking that the majority of retail parks possess has provided consumers with a feeling of control that town centres and shopping centres have struggled to replicate.

Dovetail well with increasing online use

COVID-19 has significantly accelerated the proportion of sales that go online. 54% of Next's sales in the last financial year were online, a 12% increase vs. the previous year, whilst their in-store sales were down 5%. Click & Collect and use of the store to facilitate returns has become and will continue to be a key feature of physical stores going forward. Stores on retail parks are generally a more convenient option for consumers to facilitate these transactions than their shopping centre or high street alternatives.

More relevant for future consumer behaviour

The increase in sales that are committed online is not equal by merchandise category. Fashion has been most strongly impacted, the demise of Debenhams and Topshop and their pending purchase by Boohoo and Asos are both evident and highly symbolic. We are increasingly moving to a dynamic where the majority of clothing and footwear purchases, particularly by shoppers outside the reach of major city centres, will be online, largely through sheer lack of alternative. Whilst high streets and shopping centres struggle to support and replace their numerous fashion occupiers, retail parks are comparatively well-placed, containing a lower proportion of fashion occupiers, and are less compromised in the eye of the consumer as a result.

Retail parks that possess fashion occupiers tend to be occupied by large format stores from the likes of Next, Primark and TK Maxx. These large, multi-national operators are likely to be `last man standing' in terms of physical provision of fashion in regional locations and have increasingly favoured retail parks for their stores. Similarly, the demise of BHS, Debenhams and the repositioning of House of Fraser has seen many regional town centres lose the entirety of their homeware offer. The likes of Dunelm, HomeSense and Oak FurnitureLand have been clear beneficiaries, each occupier again favouring the retail park format.

In addition to existing attributes and a strengthening position in fashion and homewares, retail parks are well placed to benefit from two further trends. Health and fitness is of increased importance to all consumers and retail parks have increasingly been occupied by a variety of gym operators, increasing their relevance to consumers. And with active leisure expected to be a significant beneficiary post-covid, retail parks will likely benefit as the 'go to' location for leisure occupiers looking for large, standardised space at comparatively low rents.

For consumers, the relevance of retail parks vs. their high street and shopping centre counterparts has never been higher and is likely to continue to grow in the future.

Andrew McVicker

*Source: British Retail Consortium and ShopperTrak