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03/06/2019
1
Retail-What Lies ahead?Presented by – Tim Appleton Bsc MRICS
Director of Retail, Lambert Smith Hampton
Background- Retail Data/Economy/Property Market
Page 1- Political Uncertainty Prolonged
Page 2 - Economic Sale
Page 3 – Retail Sales
Page 4 – Retail Investment Market
Page 5 – Property Returns
03/06/2019
2
Source: ONS (Living Costs and Food Survey), UKEA
0
2
4
6
8
10
12
14
16
-
5,000
10,000
15,000
20,000
25,000
30,000
%£UK HOUSEHOLD DISPOSABLE INCOME & SAVINGS RATIO
Disposable income (£, median) Savings ratio (%)
AVERAGE WEEKLY HOUSEHOLD SPEND BY CATEGORY CHANGE FROM PREVIOUS YEAR 2013-2017/18
2013 2014 2014/15 2015/16 2016/17 2017/18
Food & non-alcoholic drinks
Alcoholic drinks, tobacco & narcotics
Clothing & footwear
Household goods & services
Communication
Recreation & culture
Restaurants & hotels
Source: ONS, Living Costs and Food Survey
03/06/2019
3
Source: LSH Research
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
2
4
6
8
10
12
14
16
18
20
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
UK RETAIL INVESTMENT VOLUME (£BN)
Retail Warehouse
Shopping centre
Shops
Retail as % allInvestment (RHS)
REAL ESTATE INVESTORS AVERSE TO RETAIL
Source: Trevor Wood Associates, LSH Research
0
2
4
6
8
10
12
14
16
18
20
22
24
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
M S
Q F
T
RETAIL DEVELOPMENT ACTIVITY – 1990-2022
Scheme completed Under construction Planning permission granted Planning application ongoing
03/06/2019
4
UK Retail
Page 1- Changes
Page 2 – Growth
Page 3 – Online Sales
Page 4 – CVA / Closures
-5
0
5
10
15
20
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036
%£bn
RETAIL SALES AND GROWTH - 2006-2036
In-store Online Growth online (%) Growth retail (%)Source:
FORECAST
03/06/2019
5
THE GROWTH OF ONLINE
NEXT: Year to end January 2019
Instore sales: 8% £1.95bnOnline sales: 15% £1.92bn
“No one knows what the High Street will look like in ten years, but one thing is certain: the people walking down it will be wearing clothes.”
(Next Annual Statement, March 2019)
UK RETAIL: A SECTOR IN LONG-TERM DECLINE?
80
90
100
110
120
130
140
150
160
170
180
CAPITAL GROWTH INDEX (2000 = 100)
Retail capital growth Industrial capital growth
Source: MSCI, LSH Research
03/06/2019
6
-5
-4
-3
-2
-1
0
1
2
3
4
RENTAL GROWTH (YOY, %)
Shops South East
Shops Rest of UK
Shopping Centre
Retail Warehouse
RENTS ARE FALLING, ACROSS THE BOARD
Source: MSCI, LSH Research
2018 - THE YEAR OF THE CVA
0
1000
2000
3000
4000
5000
6000
7000
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (YTD)
Stor
es a
ffec
ted
Adm
inis
trat
ion
& C
VA
Administration CVA Stores affected
03/06/2019
7
The Brexit Factor
Retailer Assessment – Strategy – Labour– Financial – Supply Chain
Retailer Adaptability – Online Pressure– Shopping Experience
Rating - Its effect on Retail
Rating Impact – Example Debenhams
03/06/2019
8
Winners and Losers
Page 1 – The Losers - CVA’sPage 2 – The WinnersPage 3 – Retail Re-invention
FUTURE TRENDS
03/06/2019
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Source:
0%
5%
10%
15%
20%
25%
30%
35%
40%Ju
n-07
Oct
-07
Feb-
08
Jun-
08
Oct
-08
Feb-
09
Jun-
09
Oct
-09
Feb-
10
Jun-
10
Oct
-10
Feb-
11
Jun-
11
Oct
-11
Feb-
12
Jun-
12
Oct
-12
Feb-
13
Jun-
13
Oct
-13
Feb-
14
Jun-
14
Oct
-14
Feb-
15
Jun-
15
Oct
-15
Feb-
16
Jun-
16
Oct
-16
Feb-
17
Jun-
17
Oct
-17
Feb-
18
TOWN CENTRE COMPOSITION 2007 to 2018
Convenience Comparison Retail Service Leisure Service Financial & Business Service Vacant
RE-PURPOSING RETAIL
Frenchgate Shopping Centre – former BHS Cityside Retail Park – former restaurant & void space
Forestside Shopping Centre – void space
CHQ Dublin – Co-working spaceWestway Shopping Centre – demolition for mixed use scheme Distribution Centres – The future?