Retailers are having to re-evaluate the merits of outlets in the high
street and out-of-town sites, writes David Leggett
When John Major indulged in some nostalgia for a lost way of English
life, he picked on village greens, cricket, bicycles and beer. In ten
years’ time, when another prime minister gets misty-eyed about the past,
it could be the high street and its mix of grocers, clothes shops,
butchers and banks. Despite slight signs of a retail revival, the in-
town shopping centre has never been under such pressure.
In the past ten years, superstores have increased their share of all
retail space from 12.8% to 23%, according to Verdict Research. Share of
sales has grown even more strongly, from 11.7% in 1986 to 29.2% in 1996.
As Richard Perks, senior retail analyst at Verdict, puts it: ‘People are
voting with their feet.’ They are driving to out-of-town retail parks
for their weekly shop, or to buy major consumer durables, DIY products
Banking on change
One outcome is the development of new, cross-category brands, such as
the possible move by Tesco into retail banking. Consumers used to have
to go where the money was, which meant the high street. Now the money is
following them to where they are, in out-of-town retail parks.
This means that shops have to work harder. ‘A whole load of retailers
have got customers because they are simply there,’ says Helena Packshaw
of strategic marketing consultancy Helena Packshaw Associates. Retailers
invested in outlets on the high street because the passing trade was
This leaves many retailers with outlets in town centres that have
declining footfall, but which they are unable to get rid of due to long
leases or freeholds.
An undeniable force behind this change has been the the car: without the
M25, there would never have been a Lakeside Thurrock. The DoT predicts
that the number of cars per person will rise from an index of 100 in
1994 to 117 in 2005 and 130 in 2015.
How can the high street compete against such a powerful market force?
‘Landlords, councils and retailers need to take responsibility for
upgrading high streets to compete,’ says Packshaw. ‘It is an issue of
choice and where the shopper thinks she is best served. Environment
matters, it needs to be safe and preferably undercover.’
Some councils, such as Birmingham, are even talking of handing over the
management of town centres entirely to private companies.
Last year, environment secretary John Gummer issued guidance note PPG6,
which effectively put the brakes on out-of-town development. ‘Initially,
retailers were not best pleased,’ says Andrew Carter, research and
policy officer at the British Urban Regeneration Association. ‘Now they
seem to be more prepared to look at the town centre as a viable option.’
He points to other planning changes which are helping to revive the town
centre, based on new forms of activity. If workers remain in town until
10pm, eating out and pursuing leisure activities, rather than joining
the commuter set at 5.30pm, they will spend more.
Carter also points out that over the next 20 years, ‘we need to find
room for over four million new households, and they are not going to be
on greenfield sites’. Regenerating cities by changing property use to
residential is one solution. In London, Islington council agreed to 2000
new residential developments in former office and industrial properties
in the past year alone, and this trend is likely to grow.
Retail brands have been working hard to adjust their offering to these
new circumstances. Food retailers were first, with Tesco Metro and
Safeway introducing smaller, tightly defined product lines which suit
the lunch-time ‘stepping out’ and ready-to-eat, evening-meal trade.
Marks and Spencer has probably taken this further than most by
converting some of its general stores entirely to food.
Other retailers are following. Woolworths has researched the shopping
patterns within its 800 stores, which account for 360 million customer
visits every year. According to marketing director Alan McWalter, the
chain needs to adapt to the fact that shopping is influenced by the
‘In smaller locations, it is convenience, top-up shopping, whereas in
large centres, they are a destination for planned and, to some extent,
leisure-oriented shopping,’ he says. ‘The things they shop for are
different. In major centres, it tends to be considered purchases, with
more competitive shopping for higher-ticket items. Smaller centres are
about convenience, low ticket and frequency of purchase.’
Woolworths is now adapting its product categories, store layout and
services to fit these patterns.
Another high street stalwart is proving that it is possible to pick up
trade which others have abandoned. Post Office Counters, with nearly
20,000 outlets, has added National Lottery ticket sales, bureaux de
change and fishing-licence sales to its core portfolio.
Head of retail strategy Chester Wallace says: ‘Taking on the payment of
gas bills was a reflection that British Gas was closing a number of
showrooms, but still wanted to provide a counter service.’
With banks continuing to reduce their retail networks, he sees further
opportunities in providing financial services like insurance, together
with other products that fit with its counter staff’s skills.
Significantly, he notes that: ‘We have not seen a shift in our
customers’ shopping patterns.’
Instead, it is getting easier to find a Post Office, both because they
are moving to more visible, accessible sites on the high street, and
because of the growth of franchised outlets and sub-Post Offices, run by
the likes of Martin’s, Forbuoys and Dillons.
Clothes retailers face perhaps the hardest task. The high street remains
central to the comparison shopping which consumers carry out. Retailers
have a difficult balance to strike: how to carry a range broad enough to
compete with the out-of-town superstores, but which is tightly targeted
to what shoppers are likely to buy.
The Burton Group, for example, had modernised 76% of its 1400-plus solus
outlets by the end of 1995. Its aim in larger stores is to offer ‘a
merchandise mix designed specifically for the needs of city centre
‘expedition’ shoppers,’ according to its annual report.
Killers on the loose
Niche merchandising reaches its ultimate state with the ‘category
killer’ outlet. Still limited in spread in the UK, it is unclear whether
they will thrive better in a revamped high street, transformed into a
special destination for event shopping, or in the out-of-town retail
Packshaw says that there is a bottom line to how few products a store
can carry before shoppers feel they are not left with enough choice. ‘If
you tell customers something is a best seller, they don’t want to hear
that, they want to choose it themselves,’ she says.
In the US, niche outlets have also begun to develop into destinations in
their own right. Nike Town goes way beyond the trainers-and-kit sports
shop familiar to the British. By combining interactive demonstrations
and activities with retail, it is pulling in that elusive segment of
young, well-off males.
To date, UK consumers have proved rather more single-minded in what they
want from a retail location. ‘It is difficult to persuade the UK shopper
to do anything else than shop and refuel,’ says Ian Thurman, director of
retail services at CACI.
The best chance for high street survival lies in building strong brands
that consumers will seek out. These can still be ‘old-fashioned’
concepts - John Lewis has one of the highest drive-time tolerances among
its customers - but entirely new brands, like Toys ‘R’ Us, also pull in
customers from outside the classic 15- to 30-minute drivetime.
And, while the North London Ikea store has probably the largest
catchment area in the UK, the distance shoppers will drive to a food-
retail multiple has actually started to fall.
The investment in the high street - financial, political and cultural -
is deep enough to suggest it will come through, albeit transformed.
Whether co-ordinated by councils or private initiatives, the
pedestrianised, well-lit high street of the next decade will probably be
a mix of niche brands, financial and customer services, food and
It may be that the high street has less to fear than other areas.
‘Suburbs do have a particular problem,’ says Thurman. ‘It is a
conundrum. They are on the edge of affluent areas, yet they are in
decline because people are affluent enough to drive to other locations.’
Compared with the problems facing the small row of shops on radial
routes through out-of-town housing estates, the future of the high
street looks positively rosy.
Food retail has moved heavily out of town, to suburban and residential
areas, while clothes outlets retain their strongest presence in smaller
towns and city centres. Household goods and non-food retailers may have
the most to fear - their heavy presence on residential, suburban estates
is at risk from the declining fortunes of these ‘drive-by’ locations.
Where has all the retail gone?
Food Clothes Household Non-food Banking Building
goods specialist societies
Major city 1.02 0.86 1.02 1.44 0.50 0.33
Suburban industrial 3.21 0.69 1.74 2.24 0.53 0.30
areas, estates %
Smaller 2.61 2.11 2.52 3.27 1.06 0.92
Centres in 1.63 0.75 1.25 1.78 0.59 0.51
new towns %
Small towns 1.64 0.36 0.73 1.07 0.22 0.10
and suburbs %
Market towns, 0.43 0.05 0.17 0.24 0.05 0.01
agricult. areas %
Residential 3.30 0.83 1.44 1.90 0.40 0.23
UK total % 13.85 5.65 8.88 11.95 3.34 2.41
Source: TDS Business Accumin