New Faces Buoy Retail Market But Tough Times Not Over Yet
10 March 2010There is no doubt that that 2009 was something of an “annus horribilis” for the local retail market with either the demise of high-profile retailers or the re-structuring of a number of well-known brands grabbing most of the headlines. However, there were also some signs of improvement during the second half of the year marked by new lettings accompanied by a significant decrease in vacancy levels across the province. Furthermore, the retail landscape continues to develop with major retailing names including Decathlon, Lakeland and Republic all committing to new stores for the first time in Northern Ireland, which clearly demonstrates their confidence in the local retail market.
The French-owned sports clothing and equipment retailer, Decathlon, has taken a 40,000 sq ft store at Holywood Exchange on the outskirts of Belfast. This is Decathlon’s first store anywhere in Ireland and extends the retail offer of sporting goods substantially beyond what is available currently in any one location on these shores.
Meanwhile, leading UK fashion retailer, Republic, is also making its Northern Irish debut by taking a 10,000 sq ft store over two levels at CastleCourt Shopping Centre on the prominent corner of Royal Avenue and Berry Street, Belfast. The new store, which was occupied formerly by Zavvi, is scheduled to open mid March and demonstrates owner, Westfield’s continuing commitment to securing strong brands for the centre. Indeed, CastleCourt is a prime example of a dynamic shopping centre that has adapted its retail offer to suit the needs of its customers by introducing a selection of middle to value-level retailers whilst maintaining the quality and variety of its overall tenant line-up. This is borne out by a significant increase in footfall despite continuing economic difficulties.
Over at Balmoral Plaza on Belfast’s Boucher Road, Lakeland, one of the largest UK kitchen and homewares companies has signed a lease on a 10,000 sq ft store, which will be the company’s first store on the island of Ireland. Starting out as a small, family-owned business supplying polythene bags to farmers in England’s Lake District back in the 1960s under the name of Lakeland Plastics, the company now supplies over 4000 products to customers all over the world by mail order, on-line and through its network of 44 stores across the UK.
In addition to injecting new lifeblood into the local retail market, these new arrivals will undoubtedly help to sustain cross-border shopping, which has acted as something of an economic buffer during the past eighteen months. Obviously, continuing points of difference between the Northern Irish and Republic of Ireland’s retail offer such as marked price differentials and currency rates are also important factors in the equation.
Although the local retail sector benefitted from a strong Christmas and post-Christmas sales period, the reality is that retailers have almost without exception experienced a more difficult trading environment during January and February, which was due mainly to a combination of bad weather and continuing financial pressures on consumers. It is hardly surprising that most retailers are saying that they are expecting 2010 to be another difficult year. Wider political and economic issues including the forthcoming General Election, uncertainty regarding public sector cuts and further job losses realistically indicate a long road towards economic recovery.
A key issue last year was the re-alignment of rental values across all retail centres both in and out of town. Although this proved a painful exercise for landlords, the majority worked hard to overcome vacancies by being more imaginative in terms of structuring deals and securing tenants. Indeed, during the second half of 2009, we saw a raft of new lettings, a decrease in vacancy levels and a return to more normal levels of occupancy. Admittedly, challenges remain for landlords in terms of rental levels and incentives required to secure tenants, however, the market appears to have stabilised. While 2010 will still be a year of tenant opportunity, landlords are now regaining some ground and demand is apparent across most sectors.
Therefore, even though the retail landscape remains unsettled, it is clear that the private sector stakeholders, namely landlords and retailers, are adapting quickly to market conditions with rental levels and costs being squeezed significantly. This has been a painful exercise for all concerned and landlords, in particular, have had to make difficult decisions along this path. However, in order to maximise the recovery of the retail sector, it is vitally important that the public sector also plays a role in this process. Consequently, an efficient planning system that recognises the benefit of retail development and job creation is imperative along with a more open-minded approach to potential change of land use within the context of planning policy. Given the nature of the public sector, this is clearly a big “ask” and therefore must be a real focus for local politicians if it is to make a difference.