Retail Vacancy Rates Top 10%, Footfall Drops In July

Lower demand for ‘pop-up’ shops has aggravated the number of retail units lying vacant across the UK, according to a new report. Additionally, overall footfall levels were down during July, adding to the gloom.

The quarterly research report by the British Retail Consortium and research group Springboard found that retail vacancy rates rose to 10.1% in the three months to end-July, up from 9.6% in April 2016.  This is the first time the index has risen above 10% since April 2015.

Pop-ups tend to have six month leases on a shop, and the number of such outlets soared in the run-up to Christmas 2015, but dipped in the new year.

Diane Wehrle, a director at Springboard, said: “Between October and January vacancies went down, partly on the back of more pop-up shops. Since then, temporary lets have not become permanent lets. The key thing is to see if pop-ups start increasing again coming into Christmas.”

Helen Dickinson, chief executive of the British Retail Consortium, added: “After a long run of shop vacancies being below 10%, seeing them rise over that threshold once again will be a bitter disappointment to many.”

However, in some positive news, the BRC and Springboard also found that footfall during July was up 0.3% year-on-year on the UK high streets, compared to the 3.7% drop in June. However, footfall across the whole retail sector was down by 0.4%, hurt by a 2% drop in shopping centres and a 0.3% decline at retail parks.

Wehrle noted: “Some high streets in London and other major cities saw the changes in exchange rates produce increased spend from overseas visitors, who could get incredible value with seasonal sales and strong exchange rates providing an unbeatable shopping offer”.

NAM Implications: 
  • Allowing for a possible return of pop-up shopping in the last quarter, it would appear that there is at least 5% over capacity in the high street
  • …meaning that seeking alternative use might prove less dilutive of the remaining shop-base…
  • Meanwhile, suppliers might try innovative use of pop-up shops for the Christmas season?