Resilience in retail: the cities, shops and sectors currently outperforming the market

  • London, Oxford, Cambridge, Brighton, Watford, Edinburgh and Glasgow are retaining strength in retail
  • Shopping parks are outperforming competition
  • Current consumer habits support growth in health and beauty sector, as grocery sector is tipped for further growth

Research published today by global real estate advisor, CBRE, shows that despite the ‘perfect storm’ of turbulent conditions currently affecting UK retail, select cities, asset classes and retail sectors are proving resilient. The report, “Retail resilience: Sheltering from the perfect storm”, analyses a range of metrics to identify the factors currently supporting outperformance in the market. This follows a 2018 report, “Weathering the perfect storm in UK retail real estate”.

The report identifies cities marked out by their appeal to international visitors, university presence and affluent populations as proving the most resilient in the retail sector. London currently leads the way, with substantial rental and capital value growth during the last five years. Other pockets of resilience are represented by the historic university cities of Oxford and Cambridge, tourist favourite, Brighton, London satellite Watford and the Scottish cities of Edinburgh and Glasgow.

These towns and cities compare favourably to the rest of the UK in CVA analysis undertaken by CBRE, examining cities with at least 10 stores which have been through the CVA process in the last two years. Cambridge, London and Watford recorded an average rent reduction of less than 20% for stores impacted by CVAs. Oxford, Brighton, Edinburgh and Glasgow also recorded low levels of rent reductions, a measure which is reflective of their relative resilience in the retail sector.

In terms of asset classes, shopping parks are outperforming the competition. Regional city high streets and shopping centres have remained resilient but secondary locations have seen consistently falling footfall numbers. Visitor numbers at shopping parks have been supported by the increasing popularity of click and collect services and the growth of outlet centres, such as Bicester Village and the newly developed Icon at the O2, which are being boosted by investment in amenities. Whilst prime assets in affluent cities are proving resilient, as they benefit from expansive catchment areas, secondary properties require substantial investment and repositioning.

As the consumer market continues to be driven by health-conscious lifestyle trends, health and beauty retailers have experienced strong growth, implementing new store openings. Tactile in-store experiences such as virtual makeup mirrors and beauty counters have encouraged customers instore, providing an experience that online cannot compete with. With consumers still stating convenience as the most important factor for shopping, food and beverage retailers are proving equally resilient and analysis suggests the grocery sector will be the strongest growing physical retail sector over the next five years.

Rhodri Davies, Head of UK Retail at CBRE
“While online shopping is touted as a big threat to bricks and mortar, everyday retailers are improving their online capabilities to create a more integrated omnichannel offering for the consumer. Retailers can survive and thrive by adapting quickly to changing tastes, offering new experiences instore and by reviewing their respective property portfolios.”
Rhodri Davies, Head of UK Retail at CBRE