Town centre retailing: forces impacting the vitality

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Town centre retailing forces impacting the
vitality viability
Dr Les Dolega e-mail L.Dolega_at_liv.ac.uk

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Content

• Forces shaping UK town centres performance
• Response of UK retail centres to the economic
  crisis and austerity
• Cross-regional empirical evidence
• Intra-urban (local scale) evidence
• Conceptualisation - resilience of British retail
  centres

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Forces shaping town centre performance

• Competition from out-of-centre retail
  developments and adoption of town centres first
  policies
• Rapid expansion of online retailing
• Economic crisis and austerity
• Shifting consumer behaviour and progressive rise
  of convenience culture
• Changing demographics

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Impact of retail planning policies

• Free for all approach (Guy, 2007)
• Town centres first regulatory tightening
• Prioritisation of UK town centres by PPG 6
• Adoption of the sequential test
• Promotion of the vitality viability of town
  centres by PPS 6
• Social inclusion and urban regeneration
  agendas

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Effects of policy tightening on retail
developments

• Decrease in large retail developments
• Adjustment of the major retailers to the planning
  regime
• Policy friendly stores - located
  in/edge-of-town centre
• Store formats flexibility
• Retail-led urban regeneration
• Food deserts and social
• inequality agendas
• Mezzanine floor loophole

Source Griffith and Harmgart, 2008
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Progressive rise of online sales

• Online sales reached 12 of total sales in the UK
• Amazon - 8th biggest retailer in the UK
• Major retailers transformed into bricks
  clicks
• Impact on traditional high streets

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• Response of UK town centres to the economic
  crisis and austerity

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Cross-regional analysis

• 267 centres with retail composition surveys
  completed after the collapse of CCI - Oct 2008
• 119 in South West
• 31 in East Anglia
• 93 in North West
• 24 in West Yorkshire
• Pre-crisis surveys completed in 2006 2007
• Within-crisis surveys carried out either in Q4
  2008 or 2009

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Cross-regional study descriptive results

• Change in retail categories
• Large increase in vacant retail
• Relative change 28.2
• Absolute change 2.7pp (increase from
  10.4 to 13.1)
• Major contributors to closures
• comparison retail (-5.3)
• financial services (-3.2)
• Convenience retail more resilient
• Leisure services - positive growth in all regions

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Cross-regional study change in comparison
retail

• Most fragile
• Department stores -29.5
• Music, video and photography -26.5
• Florists -12.1
• Furniture shops -9.9
• Booksellers -9.2
• Gift and Toys -9.2

• Most resilient
• Phones accessories 15.9
• Household discounters 8.0
• As a result of filling vacant space
• Charity shops 6.9

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Cross-regional study change in convenience
retail

• Most fragile
• Butchers Fishmongers -8.2
• Greengrocers -7.9
• CTN Off licences -7.1

• Most resilient
• Convenience Stores
• Multiple 42.2
• Independent 25.2
• Symbol Group 21.4
• Grocers delicatessen 5.6

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Modelling cross-regional change in vacancy rate
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Response Variable

• Change in retail vacancy rates response
  variable
• Spatial variability in vacancy rate
• up in 185 (69.3) centres
• down in 61 (22.8) centres
• unchanged in 21 (7.9) centres
• The average cross-regional increase in vacancy
  rate
• 2.2pp for fixed boundaries
• 1.9pp for variable boundaries

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Explanatory variables

• Changes in Vacancy Rates have been filtered
  through two systems
• 1. Regional economic system in which centres are
  located
• NorthSouth divide
• Affluent catchments

• 2. Existing local economic structures
• The mix and interdependencies of businesses
  (balance of retail vs. services, diversity and
  presence/entry of a corporate foodstores)
• Local supportive/unsupportive institutional
  structures (car park charges, town centre
  manager, BIDs schemes or attracting key magnet
  stores)
• Physical configuration of a centre (size,
  proportion of larger modern shops and level of
  structural harmful vacancy)

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Best supported model
Explanatory Variable Parameter estimate Standard Error T-value
Constant -0.076 0.019 -3.998
South-North divide -0.016 0.004 -4.170
Centre size (Log) 0.013 0.002 5.743
Retail diversity pre-crisis -0.027 0.013 -2.139
Corporate food store entry -0.008 0.004 -2.081
Retail vs services pre-crisis 0.095 0.021 4.463
Structural vacancy pre-crisis 0.060 0.010 6.130
Std Avg Store Size x Std magnet store floorspace -0.349 0.082 -4.243
parameter estimate significant at 1,
significant at 5. R squared 35.6 N
259 P-value for normality test of residuals
0.84 Durbin-Watson d value 2.17 Condition
index value 28.61 ------------------------------
--------------------------
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Characteristics of resilient town centres

• southern rather than northern
• smaller rather than larger
• diverse measured by higher proportions of
  independent stores
• experienced corporate foodstore entry
  (in/edge-of-centre)
• higher proportions of service relative to retail
  units in pre-crisis
• low levels of structural vacancy in the
  pre-crisis period
• physical structures are both relatively
  attractive and capable of re-configuration
  proxied by the multiplicative variable

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Impact of the cross-regional study

• Published in EPA (Oct 2011)
• Attracted large interest in the UK and
  internationally
• Nominated for the AESOP best published paper prize

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• Intra-urban study Bristol

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Intra-urban study design

• Main aims
• Validate cross-regional results at local scale
• Model the performance of UK retail centres during
  austerity

• 47 retail centres in Bristol surveyed by Goad
  down to a shopping parade with 12 units
• All centres surveyed in three different periods
• Pre-crisis (Jul 2006)
• Within-crisis (Oct 2008-Feb 2009)
• Austerity period (Feb-Mar 2012)

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Characteristics of Bristol centres

• Main characteristics of Bristol centres in
  pre-crisis
• 75 centres small - average centre size 88 units
• High ratio of services (1.7) relative to retail
• High diversity - independent retailers 73

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Modelling of VRC between pre-crisis and
within-crisis
Best supported model
Explanatory Variable Parameter estimate Standard Error T-value
Constant -0.099 0.047 -2.124
Retail vs services pre-crisis 0.168 0.069 2.428
Centre size (Ln) 0.020 0.008 2.415
Retail diversity pre-crisis -0.110 0.033 -3.321
Structural vacancy pre-crisis 0.098 0.028 3.506
Corporate supermarket presence -0.039 0.017 -2.258
Income deprivation 0.101 0.057 1.755
R squared 48.4 N 47

• Cross-regional findings hold well at local scale
• Four of seven explanatory variables retained the
  same, however
• No North-South divide
• Corporate foodstore entry replaced with presence
• Income deprivation significant variable
• Multiplicative variable insignificant

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Model of VRC between pre-crisis and austerity

• Only three variables remained significant
• Proportion of retail vs. services
• Diversity in pre-crisis
• Presence of policy-compliant corporate foodstore
• Significance of centre size, structural vacancy
  and income deprivation waned

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Conceptualising our work

• Intriguing question in economic geography
• why some regional economies manage to renew
  themselves, whereas others remain locked in
  decline? (Hassink, 2010)
• Resilience of economic systems recently
  attracted wide-spread attention of social
  sciences
• Resilience is defined as
• the ability to recover form and position
  elastically following a disturbance of some form

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Three concepts of resilience (Martin, 2011)

• Engineering resilience (physical science) the
  resistance of a system to disturbances and the
  speed of return (bounce back) to its pre-shock
  state
• Ecological resilience (biological science) - the
  scale of shock a system can absorb before it is
  destabilised and moved to another configuration
  (tipping point notion).
• Adaptive resilience (complex system theory)
  anticipatory or reactive reorganisation of the
  form and/or function of a system to minimise the
  impact of the external/internal shock

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Adaptive resilience of town centres

• Evolution of UK town centres affected by
• Unexpected shocks economic crisis
• Slow burns competition from online and
  out-of-town retailers, changes in consumer
  culture

• Consolidation
•  
• PERIOD OF STABILITY
• LOW RETAIL CHURN
• SLOW RESPONSIVENESS TO CHANGE
• INCREASING RIGIDITY
•  
• RESILIENCE DECLINING
•  

• Growth
•  
• INNOVATION CREATIVITY HIGH
• NEW RETAIL UNITS OPEN UP
• HIGH RETAIL CHURN
•  
•  
• RESILIENCE HIGH
•  

The Adaptive Cycle

• Town centre adaptive resilience linked to
• pre-crisis position in adaptive cycles
• knowledge and innovation of various actors
• successful interventions across multiple scales

• RESILIENCE INCREASING
• Reorientation
• EMERGENCE OF INNOVATION
• NEW INTERDEPENDENCIES AND SYMBIOTIC
  RELATIONSHIPS
• INSTITUTIONAL SUPPORT
•  

• RESILIENCE LOW
•  
• Release 
• INCREASING VACANCY RATES/ SHOP CLOSURES
• ECONOMIC OR COMPETITIVE SHOCK TRIGGERS CHANGE
•  
•  

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Reconfigured town centres?

• Reorientation may be spontaneous or controlled
• Four main drivers
• Supportive institutional structures
• Knowledge of actors
• Innovation and creativity
• Changes in consumer culture

• Emerging versions of reconfigured high streets
• High growth Britain
• Low growth Britain
• Emergence of new interdependencies

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E-resilience of town centres

• Role of geo-demographics in predicting town
  centres performance and internet shopping
  patterns
• E-resilience linked to an extent to which retail
  centres are exposed to consumers who heavily
  engage with ICT
• Aims of the study
• Estimation of conventional catchment areas for
  evolved retail centres
• Defining characteristics of e-resilient centres
• Measures of the engagement with ICT at small area
  level (LSOA)

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Changing face of internet use and online shopping

• Emergence of a new demographic group the
  digital generation'

• Demographics of internet use
• Geography of online shopping
• e-commerce, m-commerce

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Value added

• Systematic evidence on cross-regional and
  intra-urban high street performance during
  economic crisis and austerity provided
• First multiplicative modelling of drivers of that
  performance
• Evidence on both diversity and corporate food
  store entry benefiting
• the economic health of retail centres,
  despite being portrayed as
• polar opposites
• Conceptualisation of adaptive resilience of UK
  high streets
• Exploring the relationship between the
  geo-demographics and e-resilience of town centres

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• Any questions?