How does the severe lack of information regarding retail property in the UK affect the sector?
The latest White Paper from the spring meeting of the KPMG/SPSL Retail Think Tank (RTT) – the group of leading industry figures which provides a non-partisan guide to retail sector health – addresses the surprising lack of information on the composition of the retail sector in the public domain.
The White Paper, the group’s eighth, available at www.retailthinktank.com, or on request (see below), reveals that planners, retailers, consumers and the city are completely in the dark as to the current make-up of the sector, its footprint and the affects of any planning applications on overall retail space, traffic flows or demand. In short, the lack of data, much of which dates back to 1971, has been holding back and seriously affecting the health of the sector, whilst also having a negative impact on planning and, in turn, the environment.
RTT member Mark Teale of CB Richard Ellis posed the question: With green issues central to public debate, is it not more important than ever to inform planning decisions with hard facts rather than via guestimates and popular opinion? In the absence of regular censuses of distribution, it is difficult to see how future retail sector needs can be effectively planned for at all.”
Key findings from the White Paper include:
- There is approximately 1.4bn sq ft of gross retail space in Great Britain, which makes every consumer in the UK individually responsible for the support of 23 sq ft.
- The last Census of Distribution, a decennial attempt to identify sales at local trading location level, was published in 1976 based on data collected over 37 years ago, in 1971. No spatial data linked with key local sales data has been published since then.
- The property stock has been growing at just 1% per annum since the early 1970s, well below the rate of sales growth.
- The Competition Commission’s recent review of the UK grocery market must in itself be at least partly based on inadequate data.
- Many private sector bodies collect data, but this is neither publicly held nor used in public policy or regional and national planning decision-making.
- Information regarding shop floor space is available periodically for England & Wales from the Valuation Office but not for specific shopping areas.
- The Valuation Office figures also do not identify net sales areas or the usage of the space by shop type to calculate turnover per sq foot estimates. Without this information it is not possible to verifiably measure impact, a central concern in the planning field and one highlighted in the Competition Commission report.
- Over half the population now shops in less than 80 major non-food trading locations, mostly major town and city centres, down from over 200 in the early 1970s; a major market share shift
- UK population censuses, unlike in other countries, do not include questions on household income; a key requirement for measuring and comparing prosperity at local level.
The RTT concludes that the lack of data detracts from the overall health of the sector. Better information would be beneficial to all key stakeholders; retailers, planners, consumers, the government, the economy and the City. The question remains as to whether there is the will to collect detailed national retail data, how it should be done and who should finance it.
Date Published: 6/1/2008 5:25 PM
Note to Editors:
The RTT panellists rely on their depth of personal experience, sector knowledge and review an exhaustive bank of industry and government datasets including the following:
Members of the RTT are:
- Nick Bubb – Independent Retail Analyst
- Dr. Tim Denison – Ipsos Retail Performance
- Jonathan De Mello – Harper Dennis Hobbs
- Martin Hayward – Hayward Strategy and Futures
- Maureen Hinton – Conlumino
- James Knightley – ING
- Richard Lowe – Barclays Retail & Wholesale Sectors
- David McCorquodale – KPMG
- Martin Newman – Practicology
- Mike Watkins – Nielsen
First mentions of the Retail Think Tank should be as follows: the KPMG/Ipsos Retail Think Tank. The abbreviations Retail Think Tank and RTT are acceptable thereafter.
The RTT was founded in February 2006. It now meets quarterly to provide authoritative ‘thought leadership’ on matters affecting the retail industry. All outputs are consensual and arrived at by simple majority vote and moderated discussion. Quotes are individually credited. The Retail Think Tank has been created because it is widely accepted that there are so many mixed messages from different data sources that it is difficult to establish with any certainty the true health and status of the sector. The aim of the RTT is to provide the authoritative, credible and most trusted window on what is really happening in retail and to develop thought leadership on the key areas influencing the future of retailing in the UK. Its executive members have been rigorously selected from non-aligned disciplines to highlight issues, propose solutions, learn from the past, signpost the road ahead and put retail into its rightful context within the British social/economic matrix.
Definitions: The RTT assesses the state of health of the UK retail sector by considering the factors which influence its three key drivers.
1. Demand – Demand for retail goods and services. From a retro-perspective, retail sales, volumes and prices are the primary indicators. When considering future prospects, economic factors such as interest rates, employment levels and house prices as well as others such as consumer confidence, footfall and preferences are used
2. Margin (Gross) – Sales less cost of sales; the buying margin less markdowns and shrinkage. Cost of sales include product purchase costs, associated costs of indirect taxes and duty and discounts
3. Costs – All other costs associated with the retail operations, including freight and logistics, marketing, property and people
The Retail Health Index – how is it assessed?
Every quarter each member of the RTT makes quantitative assessments of the impact on retail health of demand, margins and costs for the quarter just completed and a forecast of the quarter ahead. These scores are submitted individually, collated and aggregated in time for the RTT’s quarterly meeting. The individual judgements on what to score are ultimately a combination of objective and subjective ones, drawing upon a wide range of hard datasets and softer qualitative material available to each member. The framework follows the example of The Bank of England Agents’ scoring system on economic intelligence provided to the Monetary Policy Committee.
The aggregate scores are combined to form the Retail Health Index (‘RHI’) which is reviewed at that meeting and occasionally revised after debate if members feel it appropriate. The RHI tracks quarter on quarter changes in the health of the UK retail sector and as such provides a useful and unique measured indicator of retail health. The index ‘base’ of 100 was set on 1 April 2006. Each quarter, it assesses whether the state of health has improved or deteriorated since the previous quarter. An improvement will lead to a higher RHI score than that recorded in the previous quarter, and with a deterioration leading to a lower score. The larger the index movement, the more marked the shift in the state of health.
The RHI has two main benefits. Firstly, it aims to quantify the knowledge of the RTT members in a systematic way. Secondly, it assesses the overall state of health of the UK retail sector for which there is no official data.
For media enquiries please contact:
Max Bevis, Tank PR
Tel: +44 (0)1159 589 840