The out of town (OOT) retail sector is certainly not immune to the structural changes affecting the UK retail market as a whole. Despite this, OOT retail has seen slightly above average new openings since 2015, driven largely by convenience brands. This highlights some positive news for a sector currently facing a number of challenges, including the various administrations and company voluntary agreements (CVAs) announced in 2018.

The seven-year average for annual OOT retail unit openings is 812, dipping to a low of 565 in 2014. Since then, unit openings have consistently been above average, totalling 882 in 2015, 895 in 2016 and 977 in 2017, led by retailers including Lidl, Aldi, The Food Warehouse, Smyths Toys, Home Bargains, The Range and B&M. With OOT unit openings reaching 484 in the first half of 2018, the market appears to be on track for another relatively robust year.

These results are heartening and perhaps reflect the beginning of a change in the composition of OOT retail schemes towards a greater focus on convenience retail. This could have a positive outcome for the sector because competition with online sales tends to have less of an adverse impact for convenience retailers than other types of brand, and many do not have an online offer at all.

Our research shows that annual OOT store openings by square footage have also consistently been level with or above the seven-year average of 10.8 million sq ft, reaching 11.2 million sq ft in 2017. The first half of 2018 saw 5.2 million sq ft of openings which, if repeated in the second half of the year, would see a full year total roughly on par with the longer term average. 

Since 2015, Aldi, Lidl, B&M, Home Bargains and The Range have opened 479 new OOT units in the UK, accounting for approximately 24 per cent or more of total OOT unit openings each year. Beyond the convenience-led value market, Tapi, M&S Food, Next, Oak Furniture Land, Wren, Go Outdoors and Mountain Warehouse have all been acquiring space in 2018, collectively accounting for 48 units or a further 10 per cent of total OOT unit openings.

Ultimately the OOT retail market is in a period of consolidation and rents currently achievable are generally lower than in the last few years, but it is also evident that the sector still appeals to retailers and consumers. We believe it will continue to do so.

The message is very much that despite particularly challenging conditions, there are a number of retailers that are still highly acquisitive at the correct rent. Many of the units that have or will become available through administrations and CVAs will be re-let speedily.

Further information

Contact Savills Out of Town Retail