Property News Retail market could get worse before it gets better, says Colliers

Retail Research

The latest retail research from Colliers International shows that although the Central London retail market remains resilient, the rest of Great Britain is not faring quite so well.

The report focuses on prime retail rents - one of the key indicators of the relative health of the retail market – and provides an analysis of the change in values over the 12 months to June 2011 on a national and regional basis.

The publication highlights the best and worst performers in terms of rental growth and assesses the outlook for the market as retailers continue to feel the impact of high inflation, falling disposable incomes and low consumer confidence.

Sarah Banfield, Associate Director, Research & Forecasting said: “Our prime rents analysis highlights considerable variations in performance in different parts of Great Britain. London, and the West End in particular, continues to buck the trend having achieved healthy rental growth over the 12 months to June 2011.  However, the Midlands has suffered from significant falls in rental values of over 20% in a number of locations.

“It is clear that outside the Capital, the retail market continues to show significant signs of fragility – not helped by rising inflation, which is forecast to increase further in the coming months, and weak earnings growth squeezing disposable incomes and impacting on footfall and sales. Effective cost management is a key priority for the remainder of 2011 and retailers need to be able to recognise the warning signs and adjust their cost bases quickly, whilst communicating successfully with their customers and providing excellent service and convenience through a number of different channels.

“The market is going through a long term structural change and, at present, it remains a difficult trading environment. Retailers that fail to acknowledge this and react accordingly could find themselves in the same fate as Jane Norman and TJ Hughes.”