The start of 2024 was always going to be a crucial time for the UK retail sector, and in turn retail property. Economic uncertainty is receding and inflation is on the way down, both of which are likely to have positive effects on consumer confidence and spending power in the long term.
For now, Q1 2024 comes off the back of a slightly disappointing retail performance from the Christmas period. The Office for National Statistics reports a 3.2% downturn over the festive period which surprised many who saw a stronger than normal November and projected that confidence forward.
Overall in 2023, retail spending fell by 2.8%, putting annual sales at the lowest level since before the Covid-19 pandemic began.
CBRE notes that while meaningful growth may not return until 2025, online sales have broadly returned to pre-pandemic levels and it is expected that physical retail will do so in the near future as well.
The agency further notes that profit margins will be under pressure over the next 12 months, but that businesses can leverage their physical premises to maximise their income. This is especially true when it comes to ‘safe bet’ locations with a history of performing.
Number one on the list is shopping centres which provide consumers with recognised retail destinations which still continue to draw millions of people each year.
The high street is far from dead, but for now shopping centres are seeing an uptick in activity.
And when it comes to retail units to rent, that activity is more than simply shopping. Take the Brunel Shopping Centre in Swindon as an example. The food and beverage hall is busier than ever and Football Fiesta has moved in to provide leisure opportunities alongside the range of high street names that have moved into the Brunel in the last year.
Another example of this trend towards shopping centres is the expansion of Greggs at North Point Shopping Centre in Hull. This centre has footfall of more than six million people each year which has persuaded Greggs to make a major investment in an expanded retail space.
In this way, shopping centres are diversifying and maximising their potential. They represent a fantastic opportunity and a vibrant venue for any business looking to expand their retail footprint in Q1 2024 and beyond.
Retail Think Tank Co-chair, Gary Whittemore, notes: “While there will still be pressure on the high street and the push to out-of-town, a well-executed omnichannel approach will be the winning formula.”
Another retail area which looks likely to see growth in 2024 is the second-hand retail market. James Sawley, Head of Retail & Leisure at HSBC, said: “The pre-loved movement will continue to gain momentum, fuelled by the desire or need for value [and] we’ll see greater demand for durability, traceability and more transparency in retailers’ circularity efforts.”
Indoor market spaces like Bygone Times might, then, be looking at another growth year. Retailers in this sector can make the most of the trend towards ‘pre-loved’ retail and capitalise by expanding their retail footprint.
Want to learn more about the retail property market and our forecast for the months ahead? See our available retail opportunities in proven ‘safe bet’ locations and get in touch with the team today.
