Town centre retailing: forces impacting the vitality & viability

1. Town centre retailing: forces impacting the vitality & viability • Dr Les Dolega • e-mail: L.Dolega@liv.ac.uk

2. 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

3. 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

5. 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

6. 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

7. 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

8. Response of UK town centres to the economic crisis and austerity

9. 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

10. 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

11. 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%

12. 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%

13. Modelling cross-regional change in vacancy rate

14. 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

15. Explanatory variables Changes in Vacancy Rates have been filtered through two systems: 1. Regional economic system in which centres are located • North–South 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’)

16. Best supported model • **parameter estimatesignificant 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 • --------------------------------------------------------

17. 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

18. Impact of the cross-regional study • Published in E&PA (Oct 2011) • Attracted large interest in the UK and internationally • Nominated for the AESOP best published paper prize

19. Intra-urban study: Bristol

20. 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)

21. 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%

22. Modelling of VRC between pre-crisis and within-crisis • Best supported model • 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

23. Model of VRC between pre-crisis and austerity • Onlythree 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

24. 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’

25. 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

26. 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

27. 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

28. 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)

29. 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

30. 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

31. Any questions?