PowerPoint Presentationhdh.co.uk/wp-content/uploads/2019/03/2019-Vitality-Index...Vitality Index Variables Page 4 Retail Centre Vacancy Rate (% of Total Floorspace) Kirkby 46.8% Stretford

2019 Vitality Index

March 2019

2019 Vitality Index

Page 2

The Vitality Index is a multivariate index that scores retail centres on the ‘retail health’ of each location. The top 1,000 centres in Britain havebeen assessed, ranging from neighbourhood high streets and small towns, to regional shopping malls and major city centres. Retail parks andoutlet centres have been excluded, as their remote locations mean they are usually not linked to a local population, and so their health does notimpact a community hub in the same way. The ranking highlights the ‘healthiest’ retail centres in Britain, which successful brands should targetwhen considering network expansion. While the major cities and strongest shopping centres are typically at the top of a retailer’s hit list, smallercentres should also be of interest to many retailers, given rents are often more affordable in the smaller centres. A small centre with a highvitality score – and the right shopper profile – could potentially yield strong profits for the right brands.

Vitality is measured through a combination of: the proportion of upmarket shops; the proportion of value-led shops; the vacancy rate; and theproportion of low quality retail operators – such as pawnbrokers, money lenders, and bookmakers. In addition, the retail mix is compared to thedemographic composition of the centre’s catchment area, and a greater score is given to areas whose stores are optimally adapted to the localcommunity.

Introduction

• The top 5 retail centres remain unchanged, with Cambridge topping the list once again. London retail centres have cemented their quality,holding 7 of the top 10 highest ranked retail centres.

• Many major retail centres, such as London’s West End, Birmingham City Centre, Glasgow City Centre and Oxford City Centre, have climbedmultiple places due to a growth in quality retailers, facilitated by new developments such as Westgate Oxford and Birmingham GrandCentral.

• Shields Road in Byker remains the lowest ranked centre in the list, although the bottom 10 ranked centres now include Scottish townsRenfrew and Annan.

• Towards the bottom of the list, certain regions are more prevalent – Scotland, North West England, the West Midlands and Greater Londonall have at least 5 centres in the bottom 50, whereas South West England and the East of England have no centres in the bottom 50.

• The weakening economy and large legacy estates that have led to a number of established retailers entering insolvency processes such asadministrations and CVAs have had a significant effect on the high street – 47 retailers have contributed to a loss of 11.9m sq ft of storefloorspace. While the strongest retail centres have been able to replace some of the closed stores with new tenants, many shopping centresand high streets are still reeling from the impact of significant losses.

Key Learnings

Methodology

Vitality Index Variables

Page 4

Retail Centre

Vacancy Rate

(% of Total

Floorspace)

Kirkby 46.8%

Stretford 33.5%

Stoke-on-Trent - Burslem 27.6%

Skelmersdale 26.7%

Prescot 26.4%

Among the most obvious signs of an ailing retail area are disused units. Rows of empty shops indicate that retailers do not perform well relativeto the cost of trading in that location. High levels of vacant units often cause a cycle of decline; as an area begins to look abandoned, consumersare quickly put off visiting, which dissuades new retailers from taking stores in that location.

Note that vacancy rate alone is a poor metric for retail centre health – new projects usually require existing tenants to move out beforeconstruction can take place, so the raw vacancy rate figure can penalise a centre in the process of regeneration.

Vacancy Rate

Higher vacancy rates tend to be found mostly in city centres and large towns, particularly outside of southernEngland, where there is often too much retail space spread across the secondary and tertiary streets. In shoppingmalls, where the entire property is owned by a single entity, vacancy rates tend to be lower as the landlord can bemore compromising on rents to better curate the retail mix.


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We have designated a class of occupiers as ‘low quality retail’; these are stores that damage the economic wellbeing of the local community byincreasing debt and feeding addition. The following categories of stores fall under this classification:

• Betting shops• Pay-day loan shops• Pawnbrokers

These retailers tend to cluster in areas of high deprivation and thrive in locations with low rents in which few other retailers perform well.

Low Quality Retail

While northern regions of Britain tend to have the most low quality retailers – the 5 centres with the highestproportions are all located north of the Midlands – neighbourhood high streets in London also stand out as havinglarge numbers of these undesirable tenants.

Retail Centre

Low Quality

Retail

(% of Total Units)

Manchester - Wythenshawe 17.3%

Huyton 16.7%

Rutherglen 16.2%

Gateshead 16.1%

Rotherham 15.7%


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A high number of value-driven stores indicates relative deprivation and a retail offer geared towards the lower end of the market. This includesnationwide chains such as Poundland, as well as charity shops.

These retailers are present in most shopping areas to some degree, alongside more mass market and high-end operators, but a highconcentration of value-orientated stores suggests that consumers in the catchment area with a larger wallet tend to shop in different centres.

Value Retail

Retail CentreValue Retail

(% of Total Units)

Grays 47.4%

Blackwood 45.8%

Llanelli 45.5%

Birmingham - Erdington 45.2%

Chester-le-Street 43.6%

Retail centres in which low-end retailers occupy a large proportion of total units tend to be found in Wales, theWest Midlands, the North West and North East of England, although the retail centre with the highest proportionof such tenants is Grays in Essex, which is positioned to cater to the less affluent consumers within the Lakesidecatchment – a large regional shopping centre that is a 10 minute drive from the town centre.


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Upmarket retail attracts aspirational customers, and with more money being spent, higher sales are usually reflected by better shoppingenvironments.

Of all retail centre types, city centres and out of town malls have the highest proportions of upmarket retail, at 19.8% and 17.6% respectively.These averages are generally consistent across these centre types in most regions in Britain, however, small market towns and wealthy urbanneighbourhoods in southern England buoy the average proportion of upmarket retailers in these regions.

Upmarket Retail

Retail CentreUpmarket Retail

(% of Total Units)

Wimbledon Village 55.6%

Knightsbridge 53.8%

Portobello Road/Westbourne Grove 48.4%

Kings Cross (London) 42.9%

Westfield London 41.9%

While more high-end retail tends to indicate higher rents, these smaller retail centres in affluent parts of thecountry tend to have lower asking rents than large towns and cities, which can result in strong profit margins forthe right retailer.


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0.565217 0.26087 0.173913 0.2553 0.374749 0.369952

0.2553 0.374749 0.369952

0.294118 0.647059 0.058824 0.241849 0.19012 0.568031

0.241849 0.19012 0.568031

0.333333 0.52381 0.142857 0.13269 0.378512 0.488798

0.13269 0.378512 0.488798

0.230769 0.615385 0.153846 0.233056 0.608707 0.158237

0.233056 0.608707 0.158237

0.689655 0.310345 0 0.652683 0.312138 0.035179

0.652683 0.312138 0.035179

0.133333 0.433333 0.433333 0.197417 0.401035 0.401548

0.197417 0.401035 0.401548

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Ilkley

Wokingham

Wandsworth

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Brighton - Queens Road

Motherwell

% Value Retail % Mass Market Retail % Upmarket Retail

% Least Affluent Shoppers

% Mid-Affluence Shoppers

% Wealthy Shoppers

Retail composition

Catchment demographics*

*For detail on HDH Shopper Groups, see appendix

For a retail centre to be considered a healthy community hub, it is important that the offer is suitable for the type of shoppers in the local area.HDH has assessed the positioning of the retail supply in relation to the demands of the local customer, given their demographic make-up. Aretail centre with high vitality has a retail mix that serves the needs of its local population, whether that means lower, middle or upmarket retail.

The retail composition has been quantified by assigning hundreds of major UK retailers into value, mass and upmarket categories. We have runa correlation between the retailer composition and the proportion of the catchment population falling into three categories of HDH ShopperSegments – the wealthiest category (groups 1, 2 and 3), is generally attracted to upmarket retail, the middling-affluence shoppers (groups 4, 5, 6and 7) generally shops mostly at mid-market stores, and the least affluent groups (8, 9 and 10) shop mostly at value-led shops.

Below are examples of three centres with high correlations of retail offer vs shopper type, and three centres where the retail mix is less suitableto the catchment demographics.

Suitability to Local Consumer

Variable Retail CentreProportion of

Retail - 2019

Proportion of

Retail - 2014

Change

(2014 to 2019)

Kirkby 46.8% 22.6% 24.2%

Ilkeston 8.8% 21.1% -12.3%

Dunoon 6.4% 3.3% 3.1%

Uttoxeter 6.6% 9.1% -2.6%

Shirley 42.9% 25.0% 17.9%

Twickenham 14.6% 23.3% -8.6%

Hackney - Mare Street 14.6% 0.0% 14.6%

Walton-on-Thames 6.8% 13.6% -6.9%

*As a proportion of total retail floorspace

**As a proportion of total retail units

Vacancy Rate*

Low Quality Retail**

Value Retail**

Upmarket Retail**


Page 9

The final input into our retail centre scoring is the change in quality over time.Retail centres that have improved over the past 5 years, according to theaforementioned variables, receive an additional boost in score, while centrescurrently on a downward trajectory are penalised.

The table below gives the centres with the largest differences in the variableswe have assessed from 2014 to 2019. These include Kirkby town centre,where over the past 5 years the vacancy rate has skyrocketed to 47% of totalfloorspace, causing the already ailing shopping centre to fall 5 places in theranking to 998. A local regeneration project is in progress, and will eventuallyextend to include the replacement of tired units with the construction of121,000 sq ft of retail, including a large supermarket and cinema.

The proportion of upmarket retail at Hackney’s Mare Street area has beenboosted by the construction of the Hackney Walk outlet centre, completedsince the last iteration of our index was published. The new developmentbrings a mix of desirable brands, reflecting the changing face of the typicalHackney resident.

Change Over Time

Rendering of the new retail development planned for Kirkby

The Hackney Walk outlet retail development

Vitality Ranking

Vitality

RankCentre Region

Number of

Stores2017 Rank

Change Since

2017

1 Cambridge City Centre East of England 587 1 0

2 Westfield London Greater London 395 2 0

3 Knightsbridge Greater London 258 3 0

4 Chelsea Greater London 407 4 0

5 Bluewater South East 340 5 0

6 Richmond Greater London 386 7 +1

7 Wimbledon Village Greater London 118 6 -1

8 Canary Wharf Greater London 465 8 0

9 London West End Greater London 6,830 14 +5

10 Marlborough South West 189 9 -1

11 Westfield Stratford City Greater London 321 12 +1

12 Reigate South East 215 13 +1

13 Bath City Centre South West 852 10 -3

14 Berkhamsted East of England 179 16 +2

15 Edinburgh City Centre Scotland 710 17 +2

16 Sloane Street Greater London 185 11 -5

17 Cobham South East 112 19 +2

18 Cribbs Causeway South West 130 20 +2

19 St Albans City Centre East of England 429 15 -4

20 Kingston upon Thames Greater London 525 18 -2

21 Brighton City Centre South East 1,143 22 +1

22 Harrogate Yorkshire and The Humber 544 23 +1

23 Meadowhall Yorkshire and The Humber 299 28 +5

24 Chiswick Greater London 378 21 -3

25 Guildford South East 546 24 -1

Vitality Ranking

Page 11

Top 50 Ranked Retail Centres

This year, the top 5 retail centres remainunchanged. Cambridge tops the list once again, andLondon retail centres at the top of the ranking havegrown in quality, now occupying 7 of the top 10most vital retail centres. They also span a range ofdifferent centre types – including a globallydominant city centre, a major shopping centre, aworker-orientated retail hub, affluent cityneighbourhoods and a small suburban high street.

Notable movers this year include London’s WestEnd, which has risen from 14th to 9th. Since 2017, anumber of retailers have chosen the West End fortheir first foray into UK retail. Canada Goose openedtheir store on Regent Street in late 2017, Microsoftare due to open their flagship store on Oxford Circusin the coming months, and H&M chose RegentStreet for the first ever store for their newfashion/lifestyle brand, Arket. Its global reputationas a mecca for shoppers means the West Endremains relatively insulated from the pressuresfacing UK high streets in recent years. Despite a fallin UK consumer confidence after the Brexitreferendum, the West End continues to prove a lurefor shoppers, many of which come from abroad andhave benefitted from the fall in the value of thepound. Its strength is reflected in enduringly highlevels of footfall, and sustained interest from home-grown and international retailers seeking flagshipstores.

Cambridge Canada Goose, Regent Street

Vitality Ranking

Page 12

Top 50 Ranked Retail Centres

King’s Cross is another strong performer this year.The ongoing regeneration of the 67 acre site hastransformed an industrial wasteland into a thrivingLondon neighbourhood. At the heart of adevelopment filled with impressive state-of-the-artresidential and office buildings, is the new CoalDrops Yard shopping district designed by ThomasHeatherwick and built around two Victorian coalsheds. Development is nearing completion, but theprogress made so far is responsible for pushingKing’s Cross up 14 places to 37.

Some major cities have climbed multiple places dueto a growth in quality retailers, facilitated by newdevelopments such as Westgate Oxford andBirmingham Grand Central. This indicates thatconsumers and retailers in the UK continue togravitate towards the strongest retail centres, inmany cases at the expense of smaller ‘satellite’centres, such as nearby towns and local high streets.

Out of town shopping centres remain strongperformers. Since 2017, out of town malls are themost unchanged retail centre type – the averagechange in rank since the previous iteration is just 0.2places throughout the entire ranking.

In terms of retailers, the top 50 is home to a largeproportion of upmarket stores, including 48% oftotal Hugo Boss’ UK stores, as well as a large numberof cafes – including 151 Costa Coffees.

Westgate Oxford Coal Drops Yard, Kings Cross

Vitality

RankCentre Region

Number of

Stores2017 Rank

Change Since

2017

26 Sherborne South West 173 27 +1

27 Bristol - Clifton South West 180 26 -1

28 Henley-on-Thames South East 247 25 -3

29 Ilkley Yorkshire and The Humber 253 29 0

30 Sevenoaks South East 231 30 0

31 Birmingham City Centre West Midlands 1,221 34 +3

32 Chichester City Centre South East 441 31 -1

33 Glasgow City Centre Scotland 1,559 38 +5

34 Leeds City Centre Yorkshire and The Humber 1,119 35 +1

35 Isl ington - Upper Street Greater London 669 32 -3

36 Marlow South East 214 39 +3

37 Kings Cross (London) Greater London 259 51 +14

38 Muswell Hill Greater London 204 36 -2

39 Tenterden South East 150 37 -2

40 Kensington Greater London 356 33 -7

41 Fulham Road Greater London 304 40 -1

42 Oxford City Centre South East 485 48 +6

43 Hampstead Greater London 208 44 +1

44 Trafford Centre North West 272 45 +1

45 St Ives (Cornwall) South West 265 42 -3

46 Chester City Centre North West 639 43 -3

47 York City Centre Yorkshire and The Humber 927 46 -1

48 Liverpool City Centre North West 1,015 47 -1

49 Lakeside East of England 254 49 0

50 Manchester City Centre North West 1,590 52 +2

Vitality

RankCentre Region

Number of

Stores2017 Rank

Change Since

2017

1000 Newcastle upon Tyne - Byker Shields North East 177 1,000 0

999 Stretford North West 90 998 -1

998 Kirkby North West 94 993 -5

997 Harrow Road Greater London 180 999 +2

996 Tonypandy Wales 143 997 +1

995 Liverpool - Walton Road North West 235 996 +1

994 Gateshead North East 132 994 0

993 Renfrew Scotland 128 990 -3

992 Burnt Oak Greater London 244 995 +3

991 Annan Scotland 125 989 -2

990 Cowdenbeath Scotland 115 986 -4

989 Brownhills West Midlands 110 988 -1

988 Forest Gate Greater London 247 983 -5

987 Glasgow - Shettleston Road Scotland 164 991 +4

986 Mexborough Yorkshire and The Humber 152 987 +1

985 Leyton Greater London 226 985 0

984 Prescot North West 146 973 -11

983 Skelmersdale North West 124 980 -3

982 Ellesmere Port North West 174 981 -1

981 Portslade South East 161 984 +3

980 Gants Hill Greater London 159 982 +2

979 Aldershot South East 278 979 0

978 Birmingham - Selly Oak West Midlands 150 992 +14

977 Wednesbury West Midlands 173 977 0

976 Huyton North West 114 969 -7

Vitality Ranking

Page 13

Bottom 50 Ranked Retail Centres

At the bottom of the ranking, Shields Road in Bykeris again the lowest scoring retail centre in Britain,with little change since the previous iteration.Stretford has fallen to 2nd from bottom, as despitesome development to the entrance of the scheme,the retail offer continues to stagnate.

Towards the bottom of the list, certain regions aremore prevalent – Scotland, North West England, theWest Midlands and Greater London all have at least5 centres in the bottom 50, whereas South WestEngland and the East of England have no centres inthe bottom 50.

Centres classified as small towns andneighbourhoods also dominate the bottom end ofthe list – only 4 of the bottom 50 retail centres havegreater than 300 units, whereas over half of the top50 do. This demonstrates the fact that the primaryshopping destinations are, in general, growing instrength, whereas the number of small but healthyretail centres is waning.

The Concourse Centre, Skelmersdale

Centre Type as a Proportion of the Top 50

City Centre

London District

Town - Small

Out of Town Mall

Town - Large

Neighbourhood

Centre Type as a Proportion of Bottom 50

Town - Small

London District

Neighbourhood

Town - Large

Vitality Ranking

Page 14

Bottom 50 Ranked Retail Centres

The biggest climber in the bottom 50 is Selly Oak inBirmingham, which has benefitted from the openingof the Selly Oak shopping park in late 2018, bringinga number of new retailers to the area, includingNext, JD Sports and M&S Foodhall.

A number of relatively large town centres towardsthe bottom of the list have been damaged by theopening of retail developments nearby. Many retailparks are attracting high street retailers to competedirectly with town centres, and retail parks aretypically favoured by shoppers who own cars due togreater accessibility and free parking provisions.

For example, Rotherham has been harmed by thedevelopment of such retail parks, but also byMeadowhall, a large out of town regional shoppingcentre that moved 5 places to #23 in the Index thisyear, and is set for an additional £300m extension.

Renfrew is another example of a high streetdamaged by out of town retail developments –situated less than one mile from intu Braehead, oneof the top shopping centres in Scotland, Renfrewlanguishes in the bottom 10 retail centres in ourranking.

The bottom 50 is dominated by value-led and lowquality retailers. William Hill has a presence in 38 ofthe 50 worst centres, while centres in the bottom 50are home to 7.8% of the total Heron Foods stores inthe UK and 10% of all Pound Bakery outlets.Meadowhall CentreRotherham Town Centre

Vitality

RankCentre Region

Number of

Stores2017 Rank

Change Since

2017

975 Watney Market Greater London 255 978 +3

974 Birmingham - Cotteridge West Midlands 105 974 0

973 Norbury Greater London 169 976 +3

972 Edinburgh - Leith Scotland 467 975 +3

971 Walkden North West 111 972 +1

970 Liverpool - Prescot Road North West 125 966 -4

969 Chelmsley Wood West Midlands 73 970 +1

968 Archway Greater London 156 967 -1

967 Swinton North West 99 956 -11

966 Harlesden Greater London 297 968 +2

965 Rotherham Yorkshire and The Humber 309 962 -3

964 Wigston East Midlands 150 960 -4

963 Girvan Scotland 127 964 +1

962 Fleetwood North West 199 951 -11

961 Wishaw Scotland 219 953 -8

960 Acton Greater London 255 965 +5

959 Larkhall Scotland 139 952 -7

958 Cardiff - Cowbridge Road East Wales 209 963 +5

957 Fraserburgh Scotland 187 971 +14

956 Walworth Road Greater London 274 959 +3

955 Mitcham Greater London 156 955 0

954 Rhyl Wales 316 958 +4

953 Evesham West Midlands 307 954 +1

952 Ebbw Vale Wales 141 946 -6

951 Goodmayes Greater London 133 950 -1

Vitality Ranking

Page 15

Regional Analysis

0

5

10

15

20

25

30

SouthEast

SouthWest

East ofEngland

Yorkshireand TheHumber

GreaterLondon

EastMidlands

NorthEast

Scotland WestMidlands

NorthWest

Wales

Retail Centre Performance by Region

No of Centres in Vitality Rank Top 100 No of Centres in Vitality Rank Bottom 100

Analysis at a regional level shows that retail centres in some parts of Britain tend toperform better than others. The chart below shows the number of retail centres inthe top and bottom 100 for each region, highlighting the strength of the south ofEngland compared with the rest of the country.

The South West is notable for having 15 centres in the top 100 and none in thebottom 100 of the ranking, this is compared with Wales, which despite theproximity has just one retail centre in the top 100, and 9 of the 100 lowest scoringcentres.

County/Urban Area

Average Rank

of Retail

Centres

Count of Retail

Centres in Top

1,000

No of Centres

in Top 100

No of Centres

in Bottom 100

Berkshire, Buckinghamshire and Oxfordshire 307 30 7 0

Dorset and Somerset 341 28 2 0

Surrey, East and West Sussex 354 50 7 3

North Yorkshire 360 13 2 0

Inner London 385 37 13 5

Bedfordshire and Hertfordshire 390 27 3 1

Devon 395 23 2 0

Cornwall and Isles of Scilly 395 15 2 0

South London 396 37 7 2

Gloucestershire, Wiltshire and Bath/Bristol area 399 35 9 0

Herefordshire, Worcestershire and Warwickshire 424 21 2 1

Lincolnshire 429 12 1 0

Kent 436 29 5 0

Hampshire and Isle of Wight 441 32 5 3

Cumbria 444 13 0 2

East Anglia 469 35 1 1

Highlands and Islands 473 8 0 0

Essex 478 23 1 1

Cheshire 482 14 2 1

Leicestershire, Rutland and Northamptonshire 499 20 0 1

County/Urban Area

Average Rank

of Retail

Centres

Count of Retail

Centres in Top

1,000

No of Centres

in Top 100

No of Centres

in Bottom 100

West Yorkshire 509 27 3 1

Eastern Scotland 513 36 3 3

Northumberland and Tyne and Wear 540 19 2 3

North London 555 22 2 5

South Yorkshire 556 12 1 3

North Eastern Scotland 568 4 1 2

Derbyshire and Nottinghamshire 578 27 1 1

Lancashire 582 23 0 2

Tees Valley and Durham 583 18 1 1

West London 586 28 2 6

East Yorkshire and Northern Lincolnshire 594 15 1 1

East Wales 599 14 1 2

West Midlands 614 37 2 8

Southern Scotland 618 20 0 3

West Central Scotland 622 23 2 5

Shropshire and Staffordshire 627 25 1 4

West Wales 628 39 0 7

Greater Manchester 640 39 2 7

East London 643 44 3 9

Merseyside 650 26 1 6

Vitality Ranking

Page 16

County/Urban Area Analysis

The tables below give regional performance at a more granular level, and sorted by average rank of the retail centres in each. This perspectivehighlights the retail health of the more affluent and rural counties, particularly in southern England. The presence of small but prosperousmarket towns across these areas, and lack of formerly industrial cities and declining suburban high streets, results in a strong average rank.

While the Greater London area has been noted as a strong performer throughout this research, the table shows that some parts of the capital –particularly East London – are on par with the worst performing areas in the country, in contrast to the inner London boroughs and suburbanSouth London. However, such is the nature of the retail landscape in the capital that even in the more deprived corners, quality retail centresstill thrive.

Similarly, while the northernmost regions of England have been noted for the lack of quality retail centres as a whole, the rural areas of NorthYorkshire and Cumbria, whose natural beauty attracts large volumes of tourists and retirees, perform far better than surrounding areas.

Retail CVAs & Administrations

Retail CVAs and Administrations

Page 18

Retail Centres Worst Hit by Insolvency-Related Store Closures

HDH have tracked the recent spate of retail insolvencies and identified store closures due to administrations and company voluntaryarrangements (CVAs). Across the 1,000 centres surveyed for this study, a total of 11.9m sq ft of retail and restaurant floorspace has closed since2016. The table gives the 25 centres that have lost the largest proportion of floorspace to administrations and CVAs. In many cases, tenantshave come in to replace the failed retailers or the properties have been repurposed into office or residential spaces, but a significant proportionof these units remain vacant, particularly in the less desirable retail centres.

While we have counted the store closures by 47 retailers since 2016,the loss of major anchor stores such as Bhs and Marks & Spencer, andlarge space users such as Homebase, Staples and Multiyork, have hadthe biggest impact on vacancy rates in the retail centres surveyed.

By total volume of floorspace, Birmingham city centre has had the moststore closures – a loss of 442,900 sq ft from 12 stores due to retailadministrations or CVAs, including closures of Bhs and House of Fraser.However, with 25 retailers and restaurants shuttered, London’s WestEnd has lost the most individual stores, although this adds up to just0.8% of total retail space in the area.

The Grafton in Cambridge provides an interesting contrast to the GrandArcade and Cambridge’s primary shopping district. While the historicheart of the Cambridge has ranked number 1 in our Vitality Index forthe second year in the row, situated roughly 1km to the east, TheGrafton has slipped down 33 places to 423. The largely mass marketcentre has suffered multiple blows from store closures in recent years,including Bhs, HMV and Mothercare, that have contributed to theoverall vacancy rate of the area doubling over the past 5 years.Cambridge’s catchment area is generally affluent, and so retailerspresent in The Grafton are less well placed to serve the needs of theaverage Cambridge resident, while tourists and day visitors rarelyventure beyond the primary retail areas.

Retail Centre

Retailers Lost to

Administrations/

CVAs

Store Floorspace lost to

Administrations/CVAs

(Sq Ft)

Lost Floorspace as

a % of Total

Basildon 8 156,300 8.5%

Warrington 8 134,930 8.3%

White Rose 3 65,300 8.2%

Hull City Centre 10 286,390 8.0%

Northampton 6 183,130 7.5%

Cambridge - The Grafton 3 56,300 7.5%

Ocean Terminal 3 39,700 7.5%

Woking 4 117,300 7.4%

Merry Hill 5 130,100 6.8%

Durham 4 49,350 6.6%

Fareham 4 64,800 6.5%

West Ealing 4 43,000 6.5%

Liverpool - Belle Vale 3 18,200 6.4%

Lincoln City Centre 7 139,260 6.2%

Chichester City Centre 3 80,620 6.2%

Horsham 4 75,400 6.0%

Stevenage 2 62,140 6.0%

Birmingham City Centre 12 442,900 5.9%

Watford 8 112,800 5.8%

Cribbs Causeway 4 37,800 5.7%

Stockport 8 137,700 5.6%

Slough 5 78,000 5.5%

Weston-super-Mare 3 71,340 5.4%

Luton 6 106,200 5.3%

Ashford 3 52,500 5.2%

Retail CVAs and Administrations

Page 19

Store Closures by Retail Centre Type

Shopping centres have been disproportionately affected by storeclosures, due to the loss of anchor stores that make up a largeproportion of the total retail space in a mall – on average, out of townmalls lost 3.6% of space, compared to the average of 2.6% for allcentre types. Landlords of the best malls are typically quick to fill thespace – Cribbs Causeway, for example, lost 5.7% of total floorspace asretailers like Coast and HMV left the scheme, yet the vacancy rateremains similar to 5 years ago. However, some centres have not beenable to react quickly; Merry Hill, the dominant out-of-town shoppingcentre in the West Midlands, suffered extensively from retailinsolvencies since 2016, as Bhs, Maplin, HMV and Poundworld have allclosed, but the centre still has a number of units of various sizescurrently vacant.

The 10 centres worst hit by store closures are not geographicallyclustered in any particular region, but almost all are located close to afar stronger shopping destination. This is likely a result of the growingstrength of the primary retail centres at the expense of smaller cities,towns and shopping centres.

Centre Type

Average % of Floorspace

Lost to CVAs and

Administrations

City Centre 2.8%

London District 2.2%

Neighbourhood 2.3%

Out of Town Mall 3.6%

Town - Large 2.8%

Town - Small 1.9%

Average 2.6%

Appendices

Wealthy Urbanites

Annual Salary Per Capita £70,000

Adult Age 20-59 yrs

Child Age Few Children

House Price Very High

Geographical Area Inner City / Suburbs

Social Group AB

Qualifications Very High

Employment Type Professional

Newspaper Readership Financial / Quality

Car Ownership Low

Internet Usage Very High

Example LocationsKensington, Chelsea,

Knightsbridge, Notting Hill Gate

Page 21

HDH Shopper Segment 1: Wealthy Urbanites

Wealthy Urbanites include singles and couples that live in exclusive urbanneighbourhoods, such as fashionable city centres or expensive suburban areas.Residences are rented or mortgaged – occasionally wholly-owned – and highprices are not a barrier to occupation. Car ownership is low due to their city living.

Education levels are very high, and people are either employed in well-paidprofessional jobs or do not need to work due to family or accumulated wealth.They are ambitious and career-driven, meaning children are rare and levels ofdisposable income are very high. The number of company directors is also high –even amongst the younger members of the segment. Investment is another waythat they increase their wealth.

Wealthy Urbanites are early adopters of technology and fashion trends, as theyare interested in new ideas and have the money to afford being at the cuttingedge. They are also happy to pay for high quality service and products, withclothing tastes being modern and on-trend, whilst branding is also important.Money and international travel gives these consumers a global perspective.

WealthyShoppers

Page 22

HDH Shopper Segment 2: Maturing Affluence

Mature couples, often with grown-up children who have moved out, aredominant in the Maturing Affluence Shopper Segment. High ranking roles in largeorganisations, or their own companies, provide large incomes that allowownership of large detached properties in the countryside or the outer-suburbs.Rich retirees are also found in the Maturing Affluence category. Rural living islikely to have been motivated by a search for peace and quiet, after living inexpensive city areas that are classified in the Wealthy Urbanites Segment.

Savings built up over long careers add to their high income levels, and, withoutthe burden of mortgages, many have significant discretionary wealth. This isspent on the finer things in life, from foreign holidays and large technologyproducts, to wine and clothing.

Whilst keen for new experiences and quality products, tastes are relativelyconservative due to age. Their financial investments are lower risk for the samereason. However technological literacy is high as they embrace developmentsthat will make their life more comfortable and enjoyable.

Maturing Affluence


Adult Age 40+ yrs

Child Age 15+ yrs

House Price Very High

Geographical Area Suburbs / Rural

Social Group AB

Qualifications High

Employment Type Professional

Newspaper Readership Financial / Quality

Car Ownership High

Internet Usage Above Average

Example LocationsGuildford, Tunbridge Wells,

Epsom, Bath, Berkhamsted

WealthyShoppers

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HDH Shopper Segment 3: Prosperous Families

These families tend to have relatively young children, and have been attracted toaffluent rural and suburban areas by well-performing schools and spacioushouses & gardens. Household income is well above the national average, eventhough one parent is sometimes at home, caring for children. This segment isreaching the pinnacle of their careers in a range of capacities: senior positions inboth white and blue collar firms; taking responsibility for the running ofimportant corporate functions; and becoming key decision makers.

Whilst their careers may have a global aspect, their focus will also be local when itcomes to personal considerations. They are likely to be active in theircommunities, from school boards to local councillors, reflecting their desire toinfluence their offspring’s environment and have a positive impact generally.

Good quality is important to these shoppers, in terms of food, clothing andconsumer products. The children will have a strong impact on their purchasingdecisions, creating demand for technology, large cars and new retail trends.

Prosperous Families


Adult Age 30-64 yrs

Child Age 5-19 yrs

House Price Above Average

Geographical Area Rural

Social Group AB

Qualifications Above Average

Employment Type Professional, White Collar

Newspaper Readership Regional / Quality

Car Ownership Very High

Internet Usage High

Example LocationsSalisbury, Thame, Bury St

Edmunds, Grantham, Harrogate

WealthyShoppers

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HDH Shopper Segment 4: Settled in Suburbia

Consumers classified as Settled in Suburbia tend to live in medium-sized to largedetached or semi-detached homes in pleasant suburban neighbourhoods. Houseprices are not especially high as these suburbs are in towns across the UK, ratherthan London or a major city. Owner-occupation is common due to theaffordability of the housing relative to the reasonable incomes. Car ownership ishigh due to weak public transport links.

People will have settled in the area, with no immediate plans to move, creatingstrong community ties. Professional and white collar occupations dominate, withblue collar roles also present and consumers are often working in the same townin which they live. It makes local news more significant to them and there is lessinterest in worldwide trends. Conservatism (often with both a big and a small ‘C’)is common, and the Daily Mail will tend to reflect their views and aspirations.

Reliable, conventional retail brands are popular, with few people straying toeither end of the market. Affordability is important but these consumers will paymore to ensure higher quality.

Settled in Suburbia


Adult Age 30-74 yrs

Child Age 0-15 yrs

House Price Average

Geographical Area Towns / Suburbs

Social Group ABC1


Employment Type White & Blue Collar

Newspaper Readership Regional / Mid Market

Car Ownership High

Internet Usage High

Example LocationsRuislip, Clacton-on-Sea,

Maidstone, Potters Bar

Mid-Affluence Shoppers

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HDH Shopper Segment 5: Mixed Neighbourhoods

The consumers in the Mixed Neighbourhoods Shopper Segment are united by acomfortable level of affluence. They tend to be relatively securely employed, inmid-range white collar and blue collar jobs, and levels of wealth are just abovethe average allowing people to live in relative ease.

Diversity is common in these areas. Their lifestage can include younger couples,couples with young children, people living alone and older couples. Theneighbourhoods can be found in suburban, rural or coastal areas, containing arange of ethnicities. They are found in greater numbers at the extremes of thecountry - further away from London and the South East.

Education levels are lower than the more affluent segments, and whilst theymaintain steady jobs in local businesses, career is less of a driving force in theirlives. In the same way, these consumers are not as interested in new trends infashion or technology. Comfortable and well-made clothing is the priority, butthey are not willing to pay for expensive brands. A slight suspicion of theunknown creates a local bias to their thinking, strengthening community ties.

Mixed Neighbourhoods


Adult Age 30-74 yrs

Child Age 5-15 yrs

House Price Below Average


Social Group BC1C2

Qualifications Average


Newspaper Readership Regional / Mid Market

Car Ownership Average

Internet Usage Average

Example LocationsGlasgow, Plymouth,

Birmingham, Leicester


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HDH Shopper Segment 6: Average Families

These consumers are generally families with children of varying ages, althoughsome live on their own. They can be found in less affluent suburban areas, oftenin functional semi-detached or terraced properties, located in the suburbs ofcities, towns and coastal areas. As they reflect an average British household,people classified as this Shopper Segment can be found in regions across the UK.

Affluence levels are moderate, and allow people enough money to meet essentialneeds, such as utility bills and groceries, as well as make reasonably regulardiscretionary purchases. High spending is not common, however.

Firmly mid-market brands are popular with these shoppers. Function and valueare desired equally, with people happy as long as their needs are met with littlefuss. Educational attainment is slightly lower than some but incomes achieved areaverage, as are indicators such as internet usage, car usage and credit risk. Theirchildren will be the main motivation for a significant number of householdpurchases. As Average Families play a less active role in the community, regionalnews is of less interest, and mid-market papers will direct many of their views.

Average Families


Adult Age 30-64 yrs

Child Age 5-19 yrs

House Price Below Average


Social Group C1C2D

Qualifications Below Average


Newspaper Readership Mid Market

Car Ownership Average


Example LocationsCoventry, Swansea, Torquay,

Swindon, Hastings


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HDH Shopper Segment 7: Students and Graduates

With a young age profile, these people tend to be students or recent graduates.They largely live in inner-city areas, near universities or in districts of cheaperhousing. Singles dominate in what are usually privately-rented or university-provided flats or small, terraced houses. Population densities are generally quitehigh although some nicer suburbs are included. The presence of these youthfulconsumers can lead to gentrification as independent but stylish retailers andrestaurants locate nearby to provide a convenient quality offer.

Levels of affluence are relatively low: students are usually not in employment,and the recent graduates are just starting out in their career - often with a largedebt to pay. However they spend well beyond their means: there is pressure towear the latest fashions, and funds are easier to access from parents or bankloans. As a consequence, relatively expensive retailers are popular in combinationwith better value options. These consumers are at the forefront of trends througha high level of interest and engagement, even if the products are not alwaysaffordable. They will both follow the new trends as well as creating them, findinginspiration from home and abroad due to very high levels of internet usage.

Students and Graduates


Adult Age 20-44 yrs

Child Age 0-19 yrs

House Price Low

Geographical Area Inner City / Suburbs

Social Group BC1


Employment Type Professional, White Collar

Newspaper Readership Quality / Mid Market

Car Ownership Below Average

Internet Usage Very High

Example LocationsBristol: Clifton, Leeds:

Headingley, Oxford: Headington


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HDH Shopper Segment 8: Struggling Workers

This Shopper Segment is found in poorer city suburbs and towns. Their homes aresmaller terraced or semi-detached units, often ex-council houses, and arepredominantly mortgaged or rented. Car ownership is low as the extra cost cannot be afforded and credit is hard to find, and consequently they are reliant onpublic transportation.

Due to weaker qualifications than found on average across the UK, StrugglingWorkers are restricted to low-paying white and blue collar jobs. Rising above thislevel is difficult given the competition for jobs from better trained citizens andnew employees entering the workforce each year. Levels of disposable incomeare low, as earnings tend to be swallowed up by essentials, such as groceries andhousehold bills. Value retail is the focus for these consumers, making theirincome go as far as possible. Function dominates their purchases with littleconsideration of new trends. Branded sportswear is popular, but is used for bothsports and home wear. Internet shopping allows bargain hunting for this group,but regional concerns are more relevant to them than international interests –the latter being guided by the tabloid press.

Struggling Workers


Adult Age 35-59 yrs

Child Age 0-15 yrs

House Price Low

Geographical Area Small Towns / Suburbs

Social Group C1C2D

Qualifications Below Average


Newspaper Readership Regional / Popular

Car Ownership Low


Example LocationsTottenham, Leyton, Burnley,

Stratford, Mansfield, Corby

Least Affluent Shoppers

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HDH Shopper Segment 9: Poorer Families

These families live in poor quality housing in some of the cheapest parts of citiesand their suburbs, as well as small towns. Economically-challenged parts ofnorthern England and Scotland are their most likely location. Socially rentedproperties are common and home ownership is often out of reach – council andhousing association tenants dominate.

Qualification levels are low and employment tends to be relatively menial andlow-paid. With large families being common, there are many stay-at-homemothers, meaning total household income is low. In turn, car ownership is alsolow, meaning that this consumer group does not travel far from their homes –trips to large retail centres are rare and shopping is a local, day-by-day pursuit.

Value is the dominating motivation when buying groceries and consumerproducts to enable their money to go as far as possible, especially when theirfamilies are generally quite large. Multi-line retailers are popular because theymeet the needs of the whole family, while not requiring much in the way ofdisposable income, and often allow cost-comparison within the same store.

Poorer Families


Adult Age 20-59 yrs

Child Age 0-19 yrs

House Price Low


Social Group C1C2D

Qualifications Low

Employment Type Blue Collar / Unskilled

Newspaper Readership Popular

Car Ownership Low

Internet Usage Low

Example LocationsColne, Bradford, Luton,

Blackburn, Braehead


Borderline Poverty


Adult Age 20-59 yrs

Child Age 0-19 yrs

House Price Very Low


Social Group C2DE

Qualifications Very Low

Employment Type Blue Collar / Unskilled

Newspaper Readership Popular

Car Ownership Very Low

Internet Usage Low

Example LocationsJarrow, Sheffield, East Kilbride,

Rhyl, Toxteth

Page 30

HDH Shopper Segment 10: Borderline Poverty

These people tend to be ‘on the breadline’, struggling to meet bill payments andpay for essentials such as food. Qualification levels are very low and, largely as aresult, unemployment rates are significant. Any employment that does take placeis usually insecure and poorly paid. Single parents are more common in thisShopper Segment, which compounds their poverty and reliance on the state.

The majority of people will be claiming some form of means-tested benefit, andsocially rented housing is very common. Poverty has taken hold, with residentsoften taking solace in fast food, gambling and alcohol. Pawnbrokers and loancompanies are also widespread in these areas and used to deal with cash flowproblems. Credit worthiness will be low however, resulting in unfavourableoffers.

Value-led occupiers are the only retail option for these consumers, and charityshops help them stretch their money further. Day to day survival means that theywill be less engaged with the wider world, and opinions will be guided by lower-end newspapers and media.


Gravity Model

Retail Centre Inputs

Shopper Flow By Postal

Sector

Shopper Flow Expenditure*

Aggregation of

Expenditure

Catchment Definition

Calculation of Market Shares

Total retail expenditure = The total amount of spend that is available in the catchment area.

Spend is calculated at a postal sector level in the UK, using a variety of sources. They include industry-standard purchasing power figures and theresults of the Household Expenditure Survey which is produced by each country’s statistical office. This enables the calculation of total retailexpenditure, along with retail product category breakdowns, at a postal sector level. Internet spend is then removed using online spendingpropensities for consumers at various levels of affluence, sourced from the local statistical office, and applied at a postal sector level andproduct category. The retail expenditure used to calculate retail centres’ catchment spends therefore equates to spend in physical routes tomarket only.

Shopper/weighted expenditure = The amount of spend that is attracted to a specific stand-alone mall, town or other type of retail centre. Thisis calculated by taking the market share at a local level for each retail centre and multiplying through the available expenditure in that area.These spends are then aggregated to show the shopper expenditure that is attracted to each retail centre from the catchment area.

Page 31

Gravity Modelling Overview

Harper Dennis Hobbs’ Retail Consultancy team make use of gravity modelling techniques to create realistic trade areas for retail destinations.We have done this in many countries around the world, from Brazil to Russia. We use as many retail centre variables as possible to calibrate thegravity model, such as accessibility/travel times, anchor and key retailer presence, and centre turnover data where available.

The principal gravity model output is the amount of ‘gravitated’ shopper spend attracted to a retail centre in a year. This is calculated by makinguse of accurate definitions of residential, worker and tourist spend across the country. Gravity modelling also determines how much marketshare a retail centre retains from its own catchment area, and how much is drawn away to competing centres.

Gravity modelling underpins all projects undertaken by Harper Dennis Hobbs’ Retail Consultancy team

Our Services for Retailers: Store Sales and Profitability Forecasting

Page 32

Harper Dennis Hobbs has been providing independent, strategic retail advice for over 26 years. Headquartered in London but offering a globalservice, its team of real estate professionals offer an end to end solution for retailers, providing quality, consistent, market-leading advice toeverything from the world’s leading brands, to the smallest start-ups.

The Retail Consultancy team at Harper Dennis Hobbs specialises in providing tailored solutions to the retail, retail banking and retail propertysectors. We provide strategic location planning services for retailers, acquisition appraisals for private equity companies, portfolio optimisationstudies for banks, and feasibility studies for shopping centre investors.

Please note that the attached documentation and materials together with all of the intellectual property rights contained within it belong to HarperDennis Hobbs © Copyright 2019. All information is to be kept strictly confidential and is only to be used for the purposes of assessing the suitability ofHarper Dennis Hobbs. This document is subject to Harper Dennis Hobbs’ standard terms and conditions, which are available on request.

For more information, please contact:

Andy Metherell Senior Consultant

T: +44 20 7462 8708

M: +44 7920 862 637

E: [email protected]

HARPER DENNIS HOBBSLangham House,

302-308 Regent Street,

London,

W1B 3AT

www.hdh.co.uk

Jonathan De Mello Head of Retail Consultancy

T: +44 20 7462 8703

M: +44 7824 143 563


Louis Brewer Consultant

T: +44 20 7462 8706


Louisa Thomson Consultant

T: +44 20 7462 8707


mailto:[email protected]

http://www.hdh.co.uk/




mailto:LouisaThomson

Rank Retail Centre Country Market Size

1 London West End United Kingdom € 10,394,465,281

2 Paris France € 9,734,413,154

3 Madrid Spain € 6,049,702,377

4 Rome Italy € 5,432,779,177

5 Berlin Germany € 5,327,190,888

6 Munich Germany € 5,289,799,566

7 Barcelona Spain € 5,289,380,488

8 Amsterdam Netherlands € 5,089,668,250

9 Milan Italy € 5,016,845,374

10 Zurich Switzerland € 5,008,829,671

Customer Demographics:Retail Centre Market Size:

Wholesale

Online

Flagship

Interaction with Other Markets:

Benefit to the Retail Eco-System:

Presence of Desired Adjacencies:

Mac

roM

icro

Op

erat

ion

al

Building Brand Equity:

Footfall Volumes:Local Shopper Profile:

Sales Forecasting and Profitability:

Retail LocationSales

Forecast

Margin

%

Carnaby Street Flagship £xx,xxx,xxx 6.9%

Covent Garden Flagship £x,xxx,xxx -17.8%

Page 33

Our Services for Retailers: Store Sales and Profitability Forecasting

Documents

PowerPoint Presentationhdh.co.uk/wp-content/uploads/2019/03/2019-Vitality-Index...Vitality Index Variables Page 4 Retail Centre Vacancy Rate (% of Total Floorspace) Kirkby 46.8% Stretford