MARKETING FOCUS: Town and out

Retailers are having to re-evaluate the merits of outlets in the high street and out-of-town sites, writes David Leggett

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

and furniture.



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

there.



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.



Urban options



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

retail location.



‘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.



Counter revolution



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

parks.



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

leisure.



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.



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Where has all the retail gone?

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                     Food Clothes Household  Non-food  Banking  Building

                                    goods   specialist         societies

Major city           1.02   0.86    1.02       1.44      0.50     0.33

centres %

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 %

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

areas %

UK total %          13.85   5.65    8.88      11.95      3.34     2.41

Source: TDS Business Accumin

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