The UK town centre retail market is forecast to rise 0.2% in 2018 and will continue to grow to 2022, according to a new report.
Sales in the town centre market will be driven by convenience goods, particularly in the food and grocery sector, the report reveals.
However, the town centre retail market, which has been in decline since 2015 and was worth £108.3bn in 2017, will underperform against the overall growth of total physical retail sales in the UK over the next five years, which will be driven by retail parks and supermalls, according to GlobalData, a leading data and analytics company.
The company’s report UK Town Centres 2017-2022 reveals that shoppers are looking to more attractive physical locations as well as the online channel to satisfy rising expectations for experience, product choice and convenience.
Occupied retail space in UK town centres is estimated to decline by 0.8% in 2018 as retailers choose to close underperforming stores in high street locations where footfall has weakened and they continue to focus investment on destination stores in more attractive locations, while food service and leisure operators also move in to satisfy changing consumer needs.
Charlotte Pearce, Retail Analyst at GlobalData, comments: “Town centres are losing their appeal as the online channel is increasingly offering shoppers greater convenience and supermalls like Westfield Stratford are providing a superior all-round experience for consumers looking to shop, dine and socialise in one place.
“With retailers investing in flagship stores in these key locations, town centre stores are often neglected, particularly by retailers with a large number of stores. As these regional stores become less attractive over time, it is inevitable that spend will shift to more attractive channels which offer a greater experience for shoppers.”
GlobalData’s report also forecasts that food and grocery expenditure in town centres will rise 3.6% in 2018, making it the fastest-growing sector within the UK town centre market.
It will benefit from overall growth in the sector and the continued shift in consumer behaviour towards top-up shops and purchases of food-for-tonight and food-on-the-go items, following investment from grocers.
Pearce adds: “Food and grocery spend will prop up the town centres market while non-food sales in these locations will continue to decline as more clothing and footwear retailers close underperforming stores in the channel. Though this can have a damaging effect on a town centre, it presents an opportunity for other retailers to move in and capture shopper spend.
“While rising costs are becoming increasingly problematic for retailers, investment in smaller town centre stores is needed in order for these locations to remain an attractive destination for shoppers. Despite waning appeal, town centres are still a key retail location, accounting for more than a third of total retail spend in the UK in 2017.”