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UK Out of Town Retailing | Verdict Channel Report

  • February 2014
  • -
  • Verdict Retail
  • -
  • 59 pages

Summary
Sales through out of town are set to increase by 2.4% in 2014, outperforming both town centre, and neighborhood, for the first time in three years. However, while it starts out strong, this growth will plateau with both town centre and neighborhood passing it, in terms of sales growth, by 2019. In order to drive footfall, out of town must develop its overall mix to serve a wider customer base.

Key Findings
- Gain a greater understanding of the major issues set to impact out of town over the next five years. How can you capitalize on these changes?

- Use our winners and losers and sector analysis sections to benchmark performance against the market and your main competitors. How do you stack up?

- Shape future expansion strategies by comparing out of town against neighborhood and town centre across a number of metrics.

Synopsis
Food and grocery has dominated out of town in terms of its share of sales and space up to 2019 but sales densities are set to struggle. To reverse this, grocers need to drive traffic to stores, with click and collect being one option. However, inertia for click and collect exists among shoppers and grocers may have to coerce shoppers into using it.

One trend we expect to emerge within out of town is the continued shift towards softer sector such as clothing and general merchandisers as well as offering more leisure options. Such a change will be beneficial to retail park owners as it widens the potential customer base, drives footfall and increases dwell time.

While improving, sales densities through out of town will grow by only 2.8% between 2014 and 2019. This is due solely to grocers who will continue to expand despite the prevailing trend within grocery being the demand for smaller top-up shops. Densities will improve in the other sectors however as retailers remain cautious about opening new space.

Reasons To Buy
- How does out of town compare to other physical channels in terms of sales and space growth and sales densities over the next five years?

- How will grocery retailers compare to non-grocery up to 2019 and what issues will affect these retailers?

- After a torrid time throughout the downturn, how will the home related sectors (DIY and furniture and floor coverings) perform in 2014?

Table Of Contents

UK Out of Town Retailing | Verdict Channel Report
Table of Contents
1 Outlook
Out of town to be strongest growing physical channel in 2014
However, the channel will be unable to build on this momentum
Food and grocery continues to dominate channel
Grocers must overcome inertia in combining online and out of town stores
Home-related sectors set to experience a resurgence
OOT offer set to shift toward softer sectors and leisure
2 Retail Issues
The mix of OOT retail parks is changing
2.1.1 Clothing retailers and general merchandisers set to outpace other non-grocery sectors
2.1.2 Driving footfall a challenge for clothing retailers
2.1.3 Landlords aiming to achieve a greater mix of retailers
2.1.4 Private equity backing will drive the expansion of general merchandisers
2.1.5 Value retailers grow their presence out of town
Grocers' space expansion set to continue, though use set to change
2.1.6 The vast majority of new space to enter out of town will come from food and grocery
2.1.7 Supermarkets remain the dominant format, but online and convenience offer more potential
2.1.8 Click and collect will help drive sales…
2.1.9 …with advantages to both the grocer and customer
2.1.10 Following successful trials, grocers are developing their click and collect offer rapidly
2.1.11 Despite this investment, inertia exists among customers
2.1.12 Raising the delivery charge is one option, though this is risky
2.1.13 Incentivising could help shoppers convert
Leisure increasingly important to out of town
2.1.14 More leisure activities are appearing on retail parks
2.1.15 More leisure activities offer a number of benefits
2.1.16 Activities for children should be considered
2.1.17 Applying for change of use can cause delays
Out of town retailers set to reduce space by sub-letting
2.1.18 More traditional out of town retailers are actively looking to reduce their space
2.1.19 Sub-letting has been used mainly by DIY retailers
2.1.20 Sub-letting offers a number of advantages for DIY retailers
2.1.21 Grocers are also considering sub-letting space, primarily to non-retail activities
3 Strategies for Success
Adjusting offer to appeal to more customers is key
3.1.1 Aim to attract different retailers to increase diversity
3.1.2 Include more leisure activities to engage families and increase dwell time
3.1.3 Grocers need to convince shoppers to use click and collect
3.1.4 Grocers should focus on growing densities rather than space
3.1.5 Improve like-for-like sales
3.1.6 Remain ruthless with underperforming space
4 Winners and Losers
Grocers and better financial prospects support out of town
4.1.1 Supermarkets dominate out of town
4.1.2 Dunelm Mill set to outperform in 2014
4.1.3 Home-related sectors set to flourish as conditions improve
4.1.4 Out of town retailers actively aiming to be more efficient
OOT sales - majors breakdown
4.1.5 Asda and home related retailers gain ground
Total sales
4.1.6 Better conditions support DIY
Operating profit
4.1.7 Biggest gains made by Dunelm and Sainsbury's
Operating margin
4.1.8 Cost management becomes key for retailers
Space
4.1.9 Space slows significantly in financial years to 2014e
Store numbers
4.1.10 While space is slowing, retailers continue to open stores
Advertising
4.1.11 Advertising spend sacrificed to keep cost bases down
5 Location Comparison
Physical retailers set to return to growth yet underperform non-store retail
Retail sales by location
5.1.1 An improved housing market drives sales through out of town
5.1.2 After four years of declines, town centre returned to growth in 2013
5.1.3 Neighbourhood continues its recent strong performance
Retail spend by location
Space by location
5.1.4 Out of town space grows at the expense of town centres
5.1.5 Space growth occurs in neighbourhood for the first time in Verdict's history
5.1.6 Improvement by all channels driven by neighbourhood
Sales densities by location
Store numbers by location
5.1.7 Store numbers overall continue to fall, but neighbourhood suffers most casualties
Channel forecast up to 2019
5.1.8 Momentum within neighbourhood set to continue
Retail spend by location
5.1.9 Non-store set to drive overall retail growth
Space by location
5.1.10 Out of town space growth will be strong due to IKEA and grocers
Sales densities by location
5.1.11 Town centres will achieve the greatest uplift in sales densities
Store numbers by location
5.1.12 Food and grocery through neighbourhood and out of town drive store growth
6 Space Performance
Sales densities by retailer
6.1.1 Big ticket specialists' greater caution over opening space boosts densities in 2014
Grocery space performance vs non-grocery
6.1.2 Non-grocery space will outperform toward 2015
Sales densities by sector
6.1.3 Specialist electricals retailers benefit from consolidation
7 Sector Summaries and Forecasts
OOT sales breakdown by sector
7.1.1 Grocers increase share of OOT sales as online growth impacts other sectors
OOT consumer spending by sector
7.1.2 Neighbourhood expansion dents out of town in grocers' mix
OOT sales by sector
7.1.3 Electricals is only sector to decline between 2014e and 2019e as it shifts further to online
OOT space sector breakdown
7.1.4 Continued dominance of grocery reduces share of other OOT sectors
Year-on-year change in total OOT space
7.1.5 OOT space to recover as economic upturn supports channel
OOT store numbers sector breakdown
7.1.6 General merchandisers and grocers overtake store numbers in slimmed down furniture market
Year-on-year change in overall OOT store numbers
7.1.7 Numbers to recover as fewer retailers are forced out of the channel
Average store size by sector
7.1.8 DIY is only sector where space declines as it aims to make existing space work harder
Clothing and footwear
7.1.9 Discount-led formats support OOT clothing and footwear market
DIY and gardening
Electricals
7.1.10 Comet closure dents OOT sales in 2013
Food and grocery
7.1.11 Grocers' OOT growth slows
Furniture and floorcoverings
7.1.12 Housing market recovery helps sector achieve strongest growth in last decade
General merchandisers
7.1.13 Value- and hobby-based retailers ensure general merchandise remains ahead in OOT
8 Appendix
Abbreviations
9 Appendix
About Verdict Retail
Disclaimer

List of Tables
Table 1: 10 Key retailers' estimated share of out of town sales (%), 2009-14e
Table 2: 10 Key out of town retailers' total UK retail turnover record (£m), 2009-14e
Table 3: 10 Key out of town retailers' operating profit (£m), 2008-13
Table 4: 10 Key out of town retailers' operating margin (%), 2008-13
Table 5: 10 Key out of town retailers' total selling space (000 sq ft), 2009-14e
Table 6: 10 Key out of town retailers' store numbers, 2009-14e
Table 7: 10 Top 10 profiled out of town retailers by advertising expenditure (£m), 2012
Table 8: 10 Retail location definitions, 2014
Table 9: 10 Retail spending by location at current prices (£m), 2004-14e
Table 10: 10 Floor space in all physical channels (m sq ft), 2004-14e
Table 11: 10 Sales densities by location (£/sq ft), 2004-14e
Table 12: 10 Store numbers by location, 2004-14e
Table 13: 10 Retail spending by location at current prices (£m), 2014e-19e
Table 14: 10 Floor space in all physical channels (m sq ft), 2014e-19e
Table 15: 10 Sales densities by location (£/sq ft), 2014e-19e
Table 16: 10 Store numbers by location, 2014e-19e
Table 17: 10 Key out of town retailers' densities (£/sq ft) based on overall sales (ex VAT) including online, 2008-14e
Table 18: 10 Superstore/out of town sales densities (£/sq ft), by sector, 2004-19e
Table 19: 10 Superstore/out of town sales densities (£/sq ft), by sector, 2004-19e
Table 20: 10 Sales derived from out of town channel (%), by sector, 2004-19e
Table 21: 10 Out of town sales (£m), by sector, 2004-19e
Table 22: 10 Out of town sales (£m), by sector, 2004-19e
Table 23: 10 Out of town space (000 sq ft), by sector, 2004-19e
Table 24: 10 Out of town space (000 sq ft), by sector, 2004-19e
Table 25: 10 Out of town store numbers, by sector, 2004-19e
Table 26: 10 Out of town store numbers, by sector, 2004-19e
Table 27: 10 Clothing and footwear specialists' out of town sales (£m), 2004-14e
Table 28: 10 Clothing and footwear specialists' out of town space (000 sq ft), 2004-14e
Table 29: 10 Clothing and footwear specialists' out of town store numbers, 2004-14e
Table 30: 10 Clothing and footwear specialists' out of town sales densities (£/sq ft), 2004-14e
Table 31: 10 DIY and gardening specialists' out of town sales (£m), 2004-14e
Table 32: 10 DIY and gardening specialists' out of town space (000 sq ft), 2004-14e
Table 33: 10 DIY and gardening specialists' out of town store numbers, 2004-14e
Table 34: 10 DIY and gardening specialists' out of town sales densities (£/sq ft), 2004-14e
Table 35: 10 Electricals specialists' out of town sales (£m), 2004-14e
Table 36: 10 Electricals specialists' out of town space (000,sft), 2004-14e
Table 37: 10 Electricals specialists' out of town store numbers, 2004-14e
Table 38: 10 Electricals specialists' out of town sales densities (£/sq ft), 2004-14e
Table 39: 10 Food and grocery specialists' out of town sales (£m), 2004-14e
Table 40: 10 Food and grocery specialists' out of town space (000 sq ft), 2004-14e
Table 41: 10 Food and grocery specialists' out of town store numbers, 2004-14e
Table 42: 10 Food and grocery specialists' out of town sales densities (£/sq ft), 2004-14e
Table 43: 10 Furniture and floorcoverings specialists' out of town sales (£m), 2004-14e
Table 44: 10 Furniture and floorcoverings specialists' out of town space (000 sq ft), 2004-14e
Table 45: 10 Furniture and floorcoverings specialists' out of town store numbers, 2004-14e
Table 46: 10 Furniture and floorcoverings specialists' out of town sales densities (£/sq ft), 2004-14e
Table 47: 10 General merchandise specialists' out of town sales (£m), 2004-14e
Table 48: 10 General merchandise specialists' out of town space (000 sq ft), 2004-14e
Table 49: 10 General merchandise specialists' out of town store numbers, 2004-14e
Table 50: 10 General merchandise specialists' out of town sales densities (£/sq ft), 2004-14e

List of Figures
Figure 1: Change in out of town space mix (%), 2014-19e
Figure 2: Asda Drive Thru collection point
Figure 3: Customers still want home delivery option
Figure 4: Each key retailer - out of town vs overall sales growth, 2014e
Figure 5: Key out of town retailers' total sales growth (%), 2014e on 2009
Figure 6: Keyoutoftownretailers'totalsalesgrowth(%),2014eon2013
Figure 7: Key out of town retailers' total space growth (%), 2014 on 2009 (financial year end)
Figure 8: Key out of town retailers' total space growth (%), 2014e on 2013 (financial year end)
Figure 9: Key out of town retailers' total store number growth (%), 2014e on 2009 (financial year end)
Figure 10: Key out of town retailers' total store number growth (%), 2014e on 2013 (financial year end)
Figure 11: Growth of retail sales by location (excluding non-store), 2004-14e
Figure 12: Share of total retail expenditure by location (%), 2004-14e
Figure 13: L-f-l growth by location (%), 2004-14e
Figure 14: Deflation/inflation by location (%), 2004-14e
Figure 15: Y-o-y change in retail space by location (%), 2004-14e
Figure 16: Y-o-y change in retail store numbers by location (%), 2004-14e
Figure 17: Growth of retail sales by location, excluding non-store (%), 2014e-19e
Figure 18: Share of total retail expenditure by location (%), 2014e-19e
Figure 19: L-f-l growth by location (%), 2014-19e
Figure 20: Y-o-y change in retail space by location (%), 2014e-19e
Figure 21: Y-o-y change in retail store numbers by location (%), 2014e-19e
Figure 22: Change in sales density of key out of town retailers (%), 2014e on 2009
Figure 23: Change in sales density of key out of town retailers (%), 2014e on 2013
Figure 24: Grocery vs non-grocery space (million sq ft), 2009-19e
Figure 25: Grocery vs non-grocery sales densities (£/sq ft), 2009-19e
Figure 26: Change in sales density (%), by sector, 2019e on 2014e
Figure 27: Share of out of town sales (%), by sector, 2004, 2009 and 2014e
Figure 28: Out of town sales growth (%), by sector, 2004-09 and 2009-14e
Figure 29: Share of out of town space (%), by sector, 2004, 2009 and 2014e
Figure 30: Out of town space growth (%), 2004-19e
Figure 31: Share of out of town store numbers (%), by sector, 2004, 2009 and 2014e
Figure 32: New out of town store number growth (%), 2004-19e
Figure 33: Average out of town store size (000 sq ft), by sector, 2004, 2009 and 2014e
Figure 34: Clothing and footwear out of town sales growth vs clothing and footwear sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 35: Clothing and footwear out of town space growth vs clothing and footwear space growth in other locations and out of town space growth in other sectors (%), 2009-14e
Figure 36: DIY and gardening out of town sales growth vs DIY and gardening sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 37: DIY and gardening out of town space growth vs DIY and gardening space growth in other locations and out of town space growth in other sectors (%), 2009-14e
Figure 38: Electricals out of town sales growth vs electricals sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 39: Electricals out of town space growth vs electricals space growth in other locations and out of town space growth in other sectors (%), 2009-14e
Figure 40: Food and grocery out of town sales growth vs food and grocery sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 41: Food and grocery out of town space growth vs food and grocery space growth in other locations and out of town space growth in other sectors (%), 2009-14e
Figure 42: Furniture and floorcoverings out of town sales growth vs furniture and floorcoverings sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 43: Furniture and floorcoverings out of town space growth vs furniture and floorcoverings space growth in other locations and out of town space growth in other sectors (%), 2009-14e
Figure 44: General merchandisers' out of town sales growth vs general merchandisers' sales growth in other locations and out of town sales growth in other sectors (%), 2009-14e
Figure 45: General merchandisers' out of town space growth vs general merchandisers' space growth in other locations and out of town space growth in other sectors (%), 2009-14e

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