As veteran property investors, we are always alert to shifts in consumer behaviour. Today, the UK’s shopping habits are changing fast. Under pressure from e-commerce, the high street is on the wane – but out-of-town retail warehouse parks are well-placed to capitalise on the changes.
Not only do retail parks offer more diverse, flexible unit sizes for retailers to choose from, but they are also more accessible for customers, as they tend to be located on arterial routes on the edge of town centres. Once there, customers can enjoy an open, safe and secure shopping environment and can make use of amenities such as free parking and wi-fi.
Embracing the internet
Out-of-town shopping experience embraces the internet and helps retailers to deliver ‘omni-channel’ retail strategies. In these strategies, ‘bricks’ and ‘clicks’ work together to give the consumer a seamless shopping experience.
‘Click and collect’ services are also increasingly popular in retail parks. These allow customers to combine the digital world with the familiar physical shopping experience. The ease of access and convenient parking afforded by the retail park make it easy for consumers to take advantage of this service.
Repositioning to thrive
These out-of-town successes go against the commonly held view that online shopping is killing physical retailing. Successful retailers still see the importance of physical stores and have found a way to ensure that that both channels work together to maximise sales. In contrast, many of the retail businesses currently facing a bleak outlook are simply those brands that have not adapted to the shifts in consumers’ shopping habits
Retail warehouses are needed both for the hybrid models that high-street retailers are adopting and for the out-of-town shopping experiences that shoppers increasingly prefer. In recent years, we’ve seen high-street brands both moving online and repositioning themselves as retail-park mainstays.
A focus on the future
In our opinion, the future of physical retailing will see a further reduction in the number of high-street and shopping-centre stores. The high street will continue to exist, and many retailers will still have representation there, but further store consolidation and closures will take place. As a result, the prime high street shopping pitches will become more concentrated. As consumer behaviour continues to evolve, the high street needs to change its ways and reshape itself for the 21st century.
Local authorities have been trying to support high-street retailers by restricting planning consents for out-of-town retail parks. In the longer term, this could help the high street recover. But in the immediate future, the reduced pipeline will further strengthen the investment case for retail warehousing.
Accordingly, retail parks are the area we favour most heavily in our portfolio – so much so that we’ve built one of our own. In developing a new retail park at Haddington, East Lothian, we’re harnessing powerful trends in consumer behaviour to deliver long-term growth for our investors.
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