Introduction

Despite challenges from rising ecommerce, increased costs, structural shifts, a spate of CVAs, and the rhetoric that accompanies these issues, retail is not yet on its knees.

Online retail continues to dominate the growth story, but it is becoming increasingly clear that for many brands retail places remain a key outlet for customers to interact with their omnichannel offer.

Equally there are some brands that are so convinced that shops provide the best means for engaging with their customers that they provide no online offer at all.

While no sector will be entirely immune from challenges brought on by ecommerce, for many retailers the physical space is proving to be both a complimentary and synonymous part of their overall omnichannel strategy.

The community shopping centre market and other local convenience driven centres, will continue to be occupied by a blend of retailers. For some occupiers ecommerce will be a sideshow, while other brands will use the store as a core part of their supply chain; a means to bring the online and offline channels together and customers in store.

This report considers whether convenience and community based shopping centres are impacted by ecommerce by looking at the consumer trends that surround them and the online businesses of the retailers that occupy them.

Our aim, far from implying that challenges to the retail sector from online do not exist, is to demonstrate that not all retail places are equal. Certain niches, despite the challenges present, will continue to have an important role in fulfilling consumers’ needs in the future.

HEADLINES

Hot market issues

• Footfall is down, but consumer spend is up
• There are pressures on retailers from rising costs, but not all retailers are affected in the same way
• Ecommerce and Click & Collect (C&C) increasing
• The impact of CVAs on community retail space is not all bad news

Ecommerce in community shopping centres

• The range of goods and services on offer in community shopping centres is different from that in prime regional schemes, with a strong focus on goods and services that are not as readily available online
• 68% of Top10 brands in community shopping centres have an internet offer, compared to 80% in regional malls
• Online accounts for 12% of UK sales for Top100 community shopping centre brands compared to 20% in regional malls. This difference is echoed across most goods sectors with online sales for community shopping centre brands accounting for half the levels of brands in regional malls
• With a greater proportion of retailers with no-online offer, or online accounting for a low proportion of their UK sales, while not immune from the impact from online, the stores in community shopping centres remain a core and relevant part of the retailers’ businesses and the best opportunity for them to engage with their customers

Consumer insights

• Online shopping does not appear to adversely impact visitation in local and community shopping centres
• Many of the goods on offer are complimentary to online needs
• C&C has a positive impact on basket spend
• Millennials are as important to the vitality of local high streets and community schemes as Baby Boomers

Importance of retail places in online fulfilment

• While there are less sales online for brands in community schemes, C&C plays a critical role for those with online businesses
• The store also plays a key role in returning unwanted goods, which supports providing a better service for shoppers and is more efficient within the retailer’s supply chain
• C&C also fits well with the role of convenience of local high street and shopping centre locations
• Key synergy between C&C/online fulfilment, local retail spaces and non-retail town centre functions

METHODOLOGY

Ellandi has commissioned a survey of 9,500 shoppers in 30 community shopping centre scheme to assess centre and online visitation and usage. This has provided a useful insight into the changing behaviour of consumers in these kinds of location and their relationship with online and shop based retail.

Savills has analysed the online businesses of the top 100 community shopping centre and top 100 regional mall brands, accounting for a sample of 180 shopping centre schemes and 9,000 occupied units. This has enabled us to assess the proportion of key retailer occupiers’ businesses that are currently made online and through click & collect and compare the importance of each proposition within community and regional shopping centres.

Key brands in community and regional shopping centres are identified as the Top100 when ranked by number of stores in each scheme type. Note that the analysis looks at national store/ online sales for brands and not specifically the performance of stores in community and regional shopping centres.