Retailers must adjust and adapt, according to DTZ
Published: 15 July, 2011
The rate of poor results, profit warnings and administrations gathered pace in Q2, according to DTZ’s latest Property Times report for the UK Retail Market. However, although the current environment is contributing to the demise of some retailers, it also offers opportunities for surviving firms who are prepared to adjust and adapt.
In April retail sales rebounded strongly, due to Easter and the extended bank holidays, but by May food and non-food sales both slowed markedly. Haldanes Stores, Life & Style, Jane Norman, Focus DIY, TJ Hughes, The HomeForm Kitchen and Habitat are all either currently in or entering administration. In addition, several high profile chains are struggling. All Saints, for example, was rescued in May by a consortium led by Lion Capital.
On a positive note, the report reveals that big US brands continue to target the UK and London in particular, which is contributing to the outperformance of London in relation to the rest of the UK as a retail destination. Examples included Kate Spade New York, which is to open a flagship store in Chelsea and US chocolate brand M&M’s which is opening its first shop outside the US in London’s Leicester Square.
Martin Davis, Head of UK Research at DTZ said: “There are a number of new entrants, in particular the big US brands, looking to open or expand in the UK market. However, this tends to be limited to prime locations, and initially often just to Central London. It will not help weaker secondary locations, which are struggling as a result of more general retailer weakness. Retailers looking to rationalise or downsize are likely to concentrate on retaining their more profitable outlets, which will more likely be in prime locations, to the detriment of poorer performing high streets and shopping centres.”
He added: “Whilst the current environment is contributing to the demise of a number of weaker retailers, it also offers ample opportunities for surviving firms prepared to adjust and adapt. Value is now top of the agenda for consumers, who expect their basics to last longer, and are becoming more selective in their discretionary spending patterns.”
