Maldon District Retail Assessment

Maldon District Retail Assessment

1. Introduction

1.1 This document provides a qualitative assessment of the retail sector in Maldon, taking into account general market trends and developments in the sub-region, which may affect the local retail environment. The purpose of this report is to support the Maldon District Local Development Plan 2014-2029 and assist in the assessment of planning decisions pertaining to large retail developments.

1.2 The report builds upon earlier studies that have assessed the retail economy in the District in greater depth. These include a series of reports by GVA Grimley, who were commissioned to provide detailed analysis of retail capacity in the District. The 2006, North Essex Retail Study and the subsequent 2006 update identified a minimal requirement for the expansion of comparison goods floorspace, between 2009 and 2024. This minimal expansion was to account for a latent demand for increased bulky-goods retail warehouse space (with existing DIY warehouse stores having been identified as overtrading, based on their sales density).

1.3 A third update The Maldon District Retail Impact Assessment; The Causeway (GVA Grimley, 2010), provided an impact assessment for a hypothetical retail development in the Causeway Industrial Area, an edge-of-centre location in Maldon Town. This report also updated the retail capacity requirements set out in the 2006 and 2009 studies, and projected a greater need for additional retail space. However, as in the earlier studies the 2009 report proposed that demand for this expansion would largely be derived from a bulky-good retailing.

1.4 As noted, the purpose of this paper is to help define Maldon District Council’s approach to retail development in the District. The objective of this report is not to provide a detailed quantitative assessment of retail floorspace requirements. As such, this document sets out trends and projections within the UK retail market, before examining the local and sub-regional context. The paper proceeds to consider the potential for long-term increases in consumer expenditure and population growth. The report then provides a qualitative assessment of demand for new retail floor space in Maldon, taking into account the potential impact of new developments across the sub-region.

1.5 This report is divided into the following sections:

1) Introduction

2) Trends in the UK Retail Market

• Recent Trends and Near-Term Predictions
• Medium-Term Projections
• Long-Term Projections
• Projected UK Retail Spending Trends and Floorspace Requirements

3) Summary of the Local and Sub Regional Retail Offer

• The Local Retail Offer
• The Sub-Regional Picture

4) Evaluation of Local Retail Capacity Requirements

• Summary of Existing Evidence
• Projecting Retail Expenditure in Maldon District
• The Scope for Future Retail Development in Maldon District

5) Conclusion and Recommendations

• Conclusion
• Recommendations

6) References

2. Trends in the UK Retail Market

2.1

Experian retail assessments are widely used for analysing the health of the retail sector and for projecting future retail demand. The company produces Retail Planner Briefing Notes on a regular basis, and these offer a broad assessment of trends in the UK retail sector which can support interpretation of the local retail market. The analysis in the following section draws heavily from this industry recognised source.

2.2 Recent Trends and Near-Term Predictions

2.2.1

The Experian Retail Planner Briefing Note 10.1 (Sept, 2012) suggests that the protracted recession and sluggish recovery continues to have a major impact on retailing across the UK. Several national retail operations have collapsed, resulting in gaps on high-streets and retail parks.

2.2.3 Household spending:

The retail sector is, by definition, highly susceptible to changes in levels of household spending and patterns of consumption. Following the crash of 2008, household spending has remained constrained as consumer confidence and incomes have fallen, and inflation has exceeded modest income growth. As such, household spending was some 6% below its pre-recession peak, in 2007. Exacerbating factors include; a weak housing market, restricted consumer credit, an uncertain labour market and the high propensity of part-time working.

2.2.4 Retail spending:

Whilst household spending has fallen, spending on retail goods has remained reasonably resilient, relative to consumption as a whole. Indeed, in 2012 q2, retail spending increased by 1.4%, excluding petrol. Demand for big-ticket purchases has proved relatively more elastic, with consumers responding to the economic climate by cutting expenditure on foreign holidays and recreation. In 2012 q2, online retail spending has grew by 12%, whilst department stores saw sales rise by 10%. Conversely, spending on clothing and footwear fell by 1.6% and spending in ‘predominantly food stores’ fell by 1.1% as consumers seek to reduce costs by opting for cheaper product lines.

2.2.5 Retail Capacity and Retail Developments:

Many planned retail developments have stalled and growth in the bulky goods retail warehouse market has halted throughout much of the UK.

2.3 Medium-Term Projections

2.3.1

In assessing the retail market it is important to analyse the present and near-term future retail environment. However, to plan effectively, and to meet future demand, it is essential to take a longer view that considers, first; the medium-term outlook and second; long-term projections for growth.

2.3.2

Over the medium-term, the economic outlook is likely to be one of constrained growth, in which the UK economy will be less buoyant than in the decade prior to the financial crash in 2008. GPD growth is expected to be 0.9% in 2013, rising to 1.5% in 2014 (IMF, July 2013). Experian predicts that annual UK output growth will rise to an average of 2.3% from 2015 to 2019. Throughout the same period, consumer expenditure is expected to rise by average of 2.5% per annum. This level of growth reflects an economy which is recovering slowly and is vulnerable to economic shocks from (for example) a Eurozone crash and renewed global recession. As such, retail growth is likely to remain slow compared to the pre-recession era, in which consumer spending rose by an average of 3.4% per annum.

2.3.2 Summary of Medium-Term Factors

• Public Sector Contraction: Entering into a period of austerity programmes, which began 2010, the UK public sector is experiencing a profound reduction in spending, which is expected to continue until 2020

(Financial Times, 2013). Employment in the non-market sectors accounts for 27% of jobs in the UK, and large scale redundancies across the public sector are likely to hinder consumer spending patterns.

• Household debt: A significant factor in the growth of retail consumption, in the decade preceding the 2008 financial crisis, was the injection of consumer credit made possible by cheap lending. In the medium-term, the banking sector is likely to be much more cautious, and this situation will continue to result in reduced expenditure.
• Increased Propensity to Save: Compared to pre-recessionary environment, consumers will show an increased propensity to save, as job insecurity and the need to provide for pension funds factor more significantly in the management of household budgeting.
• Falling Investment: Investment, as a component of GDP, was down 14% in 2008-12, compared to pre-recession levels. The cancellation or postponement of major projects will inevitably depress medium-term growth.
• Slower Growth in Dominant Sectors: In contrast to the pre-recessionary environment, growth in the business services and financial sector will be more modest, and the housing market will be weaker.
• Threat of External Shock: The risk of a further Eurozone crisis or further slowdown in global growth will remain significant over the coming years. Even if a shock does not occur, the on-going risk is likely to hamper confidence across the economy.

2.4 Long-Term Projections

2.4.1

Moving beyond the medium-term projection, it is likely that some of the constraints currently limiting UK growth will dissipate. However, the UK faces other trends which will perpetuate fiscal restraint. The ageing population will influence patterns of expenditure as the need to provide for retirement and healthcare, will encourage a propensity to save. Similarly, the trend toward restricted public expenditure is likely to be a feature of the British economy in the long-run. As such, the economy will not benefit from the large-scale creation of employment in the public sector, which was a feature of the economy from 1997-2008. Increasing energy costs are also expected to act as a break on consumer expenditure, with low carbon energy infrastructure taking considerable time to come on stream (Experian, 2012; Maldon District Council, 2013).

2.4.2

In view of the trends described above, projected levels of GDP growth are likely to be constrained when comparing future economic performance, with 1995-2007 levels (where annual growth averaged 3%). Experian (2012) predicts that average annual growth at 2.5% from 2020-2029 (or an average of 2.4% for 2015-2029).

2.4.3 Impacts on Comparison and Convenience Goods Retailing

2.4.4

Consumption of comparison goods will continue to drive retail growth over the next 15 years. However, growth is expected to be more modest than during the pre-recessionary environment. Average annual growth in the comparison sector, between 2012-2029, is predicted to be 2.8%/annum. This compares favourably to spending on convenience goods which will remain relatively stable, showing a projected 0.7% average annual growth rate over the same period. However, the projected growth of the comparison sector is significantly below the 1991-2011 annual average (8.8%). The projected growth of the retail market is illustrated in Figure 1 below.

2.4.5

The slower growth of the comparison goods sector partially reflects the constraints described in paragraph 2.4.1. However, more significant is the fact that the comparison goods retail sector is now a well-developed market in the UK. The boom in retail from the 1970-2010 reflected a growth in incomes, but also profound changes in the global economy. Globalisation reduced the price of consumer goods across the board. The liberalisation of financial markets facilitated an expansion of consumer credit which fuelled demand. Finally,

the post-war, baby-boomer generation (which enjoyed high income growth, increasing social mobility and the expansion of the housing market) increased structural demand for comparison goods. These exceptional circumstances acted to boost retail growth in the past, but they are unlikely to be repeated. Indeed, an increase in global retail consumption is likely to concentrate on emerging economies (MDC, 2013).

2.5 Projected UK Retail Spending Trends and Floorspace Requirements

2.5.1

Understanding trends in retail growth allows for the forecasting of estimated retail floorspace requirements. When considering these requirements it is important to remember that the current climate of financial constraint and slow growth is unlikely to reflect the long-term trend. It is highly likely that demand for retail space will increase over the next 15 years, however (as noted) we should not expect a reoccurrence of the pre-recessionary boom.

2.5.2

Figure 2 considers the relationship between floorspace requirements, total retail sales and sales density. The chart suggests that the UK will require an additional 124mn sq.ft of retail space by 2029.

2.5.3

As stated in paragraph 2.4.1, expansion of the convenience goods sector is projected to be slow. Indeed, between 2011 and 2029 convenience goods sales are expected to rise by just £20bn. This compares poorly to comparison goods (as illustrated in Figure 2). While constrained, the growth in the convenience retailing

Fig. 1 UK Retail Spending
UK retail spending (including non-store) and income spending
Revenue	2013	2012	2011	2010	2009	2008
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...
Revenue	...	...	...	...	...	...

Fig. 2 Retail Sales Density and Floorspace Requirements (UK)
Revenue	2013	2012	2011	2010	2009	2008
Total retail floorspace (millions of sq.ft)	612	620	638	643	670	709
Retail sales (ton/2009 prices)	304.9	305.9	316.6	322.8	351.6	433.1
Sales density (ton)	468.4	493.0	496.2	502.9	523.1	544.4
Density growth rate (%)	0.1	1.0	0.6	1.4	1.4
Experian, 2012

market is expected to necessitate an increase of 27mn sq.ft of additional retail floorspace across the UK. This is illustrated in Figure 3.

Experian, 2012

2.5.5 As stated previously, comparison retailing is expected to expand more significantly. Sales in this sector are expected to rise by £112bn, over the 2011 to 2019 period, necessitating an additional 98mn sq.ft of retail space. It should be noted that the trend towards modern and efficient floorspace is likely to continue, and comparison retailers will look to demolish older premises in favour of new builds (Experian, 2012). This has significant implications for town/city centres that lack the space for large retail developments, and may perpetuate demand of edge of centre/out of town retail developments. The projected gross floorspace requirements for UK comparison goods retailing is illustrated below in figure 4.

Experian, 2012

Fig 3. Retail Sales Density and Floorspace Requirements; Convenience Goods
Convenience goods	2011	2012	2013	2014	2015	2016
Total floorspace (millions of sq ft)	149	150	152	153	153	175
Convenience sales (ton/2009 prices)	106.5	103.5	10.2	11.0	11.5	12.2
Sales density (sq ft)	729.2	730.2	724.8	725.4	725.8	733.4
Density growth rate (%)	-3.8	0.1	-0.7	0.1	0.1	0.2

Fig 4. Retail Sales Density and Floorspace Requirements; Comparison Goods
Convenience goods	2011	2012	2013	2014	2015	2016
Total floorspace (millions of sq ft)	475	478	484	489	511	572
Comparison sales (ton/2009 prices)	196.1	200.4	205.4	211.9	236.4	308.6
Sales density (sq ft)	412.9	419.2	424.4	433.1	426.6	537.9
Density growth rate (%)	0.8	1.5	1.2	2.1	2.1	1.8

3. Summary of the Local and Sub-Regional Retail Offer

Fig 5. Retail Uses in Maldon District
Retail category	Typology Coding	No. Units	% of total 2012	% of total 2011
Convenience A1
CTN & Convenience Store	1	18	3.1%	2.9%
Groceries & Frozen Food	2	3	0.5%	0.6%
Baker	3	9	1.6%	1.7%
Butcher	4	5	0.9%	0.6%
Greengrocers	5	1	0.2%	0.4%
Fishmongers	6	1	0.2%	0.2%
Off licence	7	5	0.9%	0.2%
	Total Convenience	42	7.3%	6.8%
Comparison A1
Footwear & repair	8	2	0.3%	0.4%
Clothing	9	17	2.9%	3.6%
Furniture, carpets & textiles	10	8	1.4%	1.7%
Books, art/crafts, stationers/copy, photo	11	7	1.2%	1.3%
Electrical, home ents, phones, video	12	8	1.4%	1.5%
DIY, hardware & household goods	13	18	3.1%	4.4%
Gifts, china, glass, leather goods	14	17	2.9%	3.3%
Cars, motorcycles & accessories	15	8	1.4%	0.4%
Chemists, toiletries & opticians	16	12	2.1%	2.1%
Variety, department & catalogue	17	2	0.3%	0.4%
Florists & garden	18	5	0.9%	1.0%
Sports, toys, cycles & hobbies	19	12	2.1%	1.7%
Jewellers, clocks & repairs	20	5	0.9%	0.3%
Charity shops	21	10	1.7%	1.6%
Other comparison	22	21	3.6%	5.8%
	Total Comparison	152	26.5%	27.6%
Service
Restaurants & cafe (A3), sandwich	23	55	9.5%	9.8%

3.1 The Local Retail Offer

3.1.2

Maldon Town Centre, the Causeway, Full bridge, Wycke Hill and Heybridge (Bentalls) are the major retail areas in and around, Maldon Town. They represent the most significant shopping areas in the District. Outside of Maldon and Heybridge, Burnham-on-Crouch is the main retail location and predominantly serves a local market (The Maldon District Retail Impact Assessment; the Causeway (GVA Grimley, 2010)).

3.1.3

The importance of the local retail/wholesale sector is significant. Approximately 8% of businesses within the Maldon District are in the retail sector and these employ around 3,600 staff, equivalent to 15% of all jobs within the District (MDC, 2013)

3.1.4

The retail make-up of Maldon District is weighted towards independent shops which are slightly more prevalent than the national average (MDC, 2012). Conversely, national chains are slightly less prevalent than the national average.

3.1.5

Figure 5 provides a breakdown of retail uses in Maldon District. It reveals that the primary retail use is for retail services (40.4%), followed by comparison goods (26.3%) and convenience goods (7.3%). Retail vacancy rates (6.6%) are well below the national average (14%).

3.1.6 In assessing the relatively strong performance of retail in the District, it is important to note that the status of Maldon Town as a significant local retail and amenity centre has helped to protect the District's retail sector from major decline. Other smaller retail centres have fared less favourably and Burnham-on-Crouch has, over the last 15 years, lost its status as a significant retail town. Nevertheless, new independent retail businesses continue to develop in the town, and these have tended to be more successful where they are boutiques, or other similar niche shops, aligned with the higher-wealth tourist market segments and the 'amount commuter' segment of the resident population (MDC, 2013).

3.1.7 While relatively resilient, the District is not immune to long-term trends leading to the decline in shop numbers on UK high streets. Despite this outlook, there are opportunities for small retail businesses to develop a strong online retail presence, complementing their conventional high street presence. Several retailers in the District have already taken this approach and whilst an online presence does not guarantee success, tech-savvy proprietors, who are able to utilise social media and run efficient online purchasing operations, will almost certainly outcompete those retailers that fail to evolve in an 'always on-line' business environment (see Figure 6 below for a medium-term projection for UK internet retailing). Similarly, diversification from conventional retail into upmarket leisure and boutique store segments, supported by closer integration with the tourism offer and better links between visitor locations, may also help to sustain and improve the vibrancy of the towns centre offers. Taken together, the convergence of these trends is likely to result in an increase in the prevalence of retail services and convenience goods on the high-street, whilst the high-street retailing of comparison goods declines (in favour of larger edge-of-centre retail units and internet retailing).

Bar (A1)
Drinking establishment (A4)	24	24	4.1%	3.3%
Hot food takeaway (A5)	25	25	4.3%	5.2%
Internet café (A1)	26	0	0.0%	0.0%
Hairdressing, beauty & health (A1)	27	54	9.3%	9.0%
Bookmaker (A2)	28	2	0.3%	0.4%
Laundernette (S/G)/ dry cleaners (A1)	29	5	0.9%	0.8%
Travel agent (A1)	30	4	0.7%	0.8%
Banks, financial (A2) and other professional services (A1/A2)	31	39	6.7%	7.9%
Money transfer	32	0	0.0%	0.0%
Estate agent (A2)	33	16	2.8%	2.9%
Employment agencies (A2)	34	4	0.7%	0.2%
Post Office (A1)	35	6	1.0%	0.4%
	Total Service	234	40.4%	40.8%
Vacant Uses	36	38	6.6%	8.2%
Other Uses	37	109	18.8%	16.1%
Mixed Uses	38	4	0.7%	0.4%
	Total	579	100%	100%
Maldon District Council, 2012