Briefing on Retail

By David O’Connor

The New Year is well in and maybe its a good time to gather thoughts and reflect on the state of retail, a sector that seems to pass through its own pain barrier around this time of year.  This time, even more than last year, has been a portentous one with prophets of doom predicting tectonic changes in the sector.  Whether or not this will be the case, there is a lot happening in terms of the planning of the industry as well as its underlying market dynamics.

The sense that retail is in crisis is hard to avoid, given levels of vacancy, issues with rents, rates and other costs, growth in e-shopping (and now “m-shopping”, on your smartphone, that is) and the shortage of discretionary income among consumers.  Much of the media discussion has surrounded prospects for retailers.  In the UK and beyond, debate has revolved around the viability of not just shops but whole town centres.

This piece represents something of a briefing pack on recent and current reports to do with retail.  It is not intended to be an exhaustive or fully comprehensive outline of currents in retail planning sector.

What follows are a number of reports, articles, submissions and opinion pieces on retail both in Ireland, the UK and globally.  Particularly of note are the publication of draft Retail Planning Guidelines and also the Portas Report in the UK.

 

Draft Retail Planning Guidelines

The Draft Retail Planning Guidelines were closed for public consultation on 20th December 2011.  Perhaps the most notable aspect of the draft guidelines was the straighforwardness of the Minister in declaring that this was a review foisted on us by the IMF / ECB / EU Troika.  The Department replied with an incremental approach to modifying the retail cap (3,500sqm. raised to 4,000sqm. in the Greater Dublin Area; removal of the distinction between discount retail foodstores and conventional retail foodstores, etc.).  This moderate approach has, apparently been accepted by the Troika.  In addition, the guidelines increase emphasis on the sequential approach and encouraging town centre retail development.

http://www.environ.ie/en/DevelopmentHousing/PlanningDevelopment/Planning/News/MainBody,28537,en.htm

 

The Forfas Report

A precursor to the review is the Forfas “Review of the Economic Impact of the Retail Cap”, published in April 2011.  One of the conditions of the EU-IMF Programme for Financial Support for Ireland was that “the government will conduct a study on the economic impact of eliminating the cap on the size of retail premises with a view to enhancing competition and lowering prices for consumers and discuss implementation of its policy implications with the Commission services”.

The report emphasises the important societal effects of retail policy and the need for careful regulation of a complex market.

Among other things, the study revealed the dominance in our grocery retail sector of three brands – Tesco, Dunnes and Supervalue – who control more than 70% of sales between them.  Or is it even more than this?

http://www.forfas.ie/publications/2011/title,8585,en.php

 

Submissions to the Draft Retail Planning Guidelines

The IPI made a submission to the draft guidelines, singling out some important details regarding definitions and seeking increased emphasis on enforcement of the sequential approach.

The IPI also call for a Good Practice Guide, suggesting that implementation of existing guidelines has been poor, mainly due to “lack of understanding of practitioners”.  All of which seems eminently sensible.

http://www.irishplanninginstitute.ie/ipi/news-article/ipi-submission-on-the-draft-retail-planning-guidelines/

 

An Taisce made a submission which related the draft guidelines to the Smarter Travel Policy document.  In particular they urge that fair car parking pricing strategies be applied to out-of-town centres.  The submission, drafted by a DIT Spatial Planning graduate, is excellently referenced and draws on international studies on retail policy impacts.  Some of its conclusions are listed below: –

  •  The Government’s own research shows that large out-of-town retailers are growing and smaller shops in town centre locations are dying. Fact: the independent retail sector shrunk 50% between 2001 and 2006 while retailers that control their own brands, delivery systems and product research have grown by 62% over the same five year period.
  •  Locally based shops return twice as much money to the local economy as out-of-town retailers. Fact: locally-based shops return one-third of their revenues to the local economy but large out-of-town retailers only return 16% of revenue back into the local economy.
  • Research from the UK warns: “the ability to build stores outside towns has been made possible by a combination of confused and poorly applied planning rules, the power of developers, and weakness of local councils. Unless we see urgent action our high streets will be lost to a final wave of out-of-town retail construction that threatens to remove retail from the heart of our communities”.
  •  When residents redirect their spending from out-of-town retailers to locally owned businesses additional jobs are created and economic activity in the area increases. Fact: A Michigan study shows 1,600 additional jobs and $140 million uplift in economic activity occurs.
  •  Locally owned businesses employ more staff and pay better. Employees in ‘superstores’ earn 20% less according to Wal-Mart data. Indeed, “opening a single Wal-Mart store lowers the average retail wage in the surrounding county by between 0.5 and 0.9 percent”.
  •  1.4 jobs are lost for every 1 new job created in a ‘megastore’. Because of their failure to engage with local suppliers and re-circulate money back into local economies, each new out-of-town ‘megastore’ results in a net jobs loss of 270 full-time positions.

http://www.antaisce.ie/News/AnTaisceRelatedNewsReleases/tabid/1024/articleType/ArticleView/articleId/220/Proposed-changes-to-retail-guidelines-will-cost-jobs-and-cause-more-dereliction.aspx (submission document available on request from an Taisce)

 

Commentaries on the Retail Planning Sector in Ireland

 

“Retail’s Ticking Clock”, Sunday Times, 1st January, 2012

Good commentary on changes in the Irish retail sector, focussing on prospects for the oldest of them all – Clery’s Department Store, suggests a curates egg of an industry.  Strong brands such as Avoca, Brown Thomas and the Dundrum Town Centre are performing well with many recently built centres dying on their feet and bringing existing town centres with them.  Some strong words for the state of planning in the sector.

http://www.thesundaytimes.co.uk/sto/public/sitesearch.do?querystring=retail%27s+ticking+clock&sectionId=2&p=sto&bl=on&pf=all

 

“High Noon on High Street”, Irish Times, Friday January 13, 2012

Laura Slattery in Business Agenda asks if the recent la Senza closure and confrontation is a sign of things to come.

http://www.irishtimes.com/newspaper/finance/2012/0113/1224310187579.html

 

 IPI Planning Issues Editorial

The Editorial of this month’s Planning Issues, the e-bulletin of the IPI, singles out the topic of retail for its importance.  Right now, more than ever, there is a coincidence of need and opportunity for reform and it must be through good retail planning.

http://www.irishplanninginstitute.ie/ipi/news-article/planning-matters-winter-2011-issue/

 

Uptown Downtown series

In April 2011, Carl O’Brien released a three-part series called Uptown Downtown.  In it he profiled three towns, Youghal, Drogheda and Longford, which, for different reasons seemed to be in a spiral of decline. The series provoked the question, is there anything that can be done to save the Irish market town – iconic and archetypal to so many of us – from disaster.   Worth it alone for the comments added by readers.

Youghal: How do you fix a broken town?

http://www.irishtimes.com/newspaper/weekend/2011/0402/1224293621909.html

 

Drogheda: On paper, the town has it all

http://www.irishtimes.com/newspaper/features/2011/0406/1224293997158.html

 

Longford: After the factory shuts its doors

http://www.irishtimes.com/newspaper/features/2011/0405/1224293859510.html

 

The View from O’Connell Street

Another three part series, just published, on the O’Connell Streets of Ireland, by Rosita Boland

Dungarvan: “not thriving, but surviving”

http://www.irishtimes.com/newspaper/weekend/2012/0128/1224310855606.html

Ennis: “has nightlife died in Irish towns”?

http://www.irishtimes.com/newspaper/features/2012/0130/1224310938577.html

Sligo: “It used to be wonderful, now it’s a jungle”

http://www.irishtimes.com/newspaper/features/2012/0131/1224310997911.html

 

The UK

A wider debate is going on in the UK, with loud claims that the large retailers are strangling the life out of the British town and, indeed, way of life.

 

The Portas Report

Much of this is prompted by the publication by the UK Government of the Portas Report.  Town centres in the UK have lost 27 million sq ft or 9% in just nine years. In contrast, out of town retail space has risen by 50 million sq ft, or one-third, over the same period.  Shops are closing down at a rate of 5,000 a year and as many as one in six premises lie empty.  Portas argues that much can be done if one accepts a few golden rules. One, that not everywhere can be saved, and, secondly, the future cannot just be about shopping.

http://www.bis.gov.uk/highstreet

 

The New Economic’s Foundation welcomes the Portas Review.  They also call for increased controls on oligopolistic practices, better urban design in town centres and better financial systems, including micro-finance.

http://www.neweconomics.org/press-releases/portas-review-the-chance-to-breathe-life-into-britain’s-high-streets

 

These sentiments are well expressed in a number of recent articles which lament the loss of the social role played by the local shop.

 

Supermarkets kill free markets as well as our communities, Peter Wilby in the Guardian, 3rd May 2011

http://www.guardian.co.uk/commentisfree/2011/may/03/supermarkets-kill-free-markets-communities?INTCMP=ILCNETTXT3487

 

Window pains, By Edwin Heathcote in the Financial Times, 2nd November 2011

http://www.ft.com/intl/cms/s/2/32edd384-1044-11e1-8211-00144feabdc0.html#axzz1iUcqLDt9

 

Saving the British high street from decades of decline, Mark Hennessy’s London Letter to the Irish Times, 14th December 2011

http://www.irishtimes.com/newspaper/world/2011/1214/1224309044997.html

 

Commentaries on the Retail Planning Sector globally

Perhaps most surprisingly, while all this is going on, a revival of town centres is taking place in the US.  Some of this is being driven by market dynamics, some of it by better planning practices (the New Urbanist movement is a strong force in American cities).

 

The Death of the Fringe Suburb, by Christopher B. Leinberger in the New York Times, 25th Novbember 2011

http://www.nytimes.com/2011/11/26/opinion/the-death-of-the-fringe-suburb.html?_r=1

 

Keep it Local Eugene, a forum for discussing the benefits of local businesses and thr impact of chain and big box stores.

http://keepitlocal.blogspot.com/2005/08/studies-find-local-biz-creates-far.html

 

Birth, Death and Shopping – the rise and fall of the shopping mall, in the Economist Christmas Special Edition, 2007.  A favourite of mine, this article suggests that in the capital of consumerism –America – the shopping mall is dead and walkable, open and sustainable “smart growth” town centres are the way to go.

Do we need any more proof?

http://www.economist.com/node/10278717

David O’Connor is a practitioner in Transport and Urban Design and is current Chairperson of the Spatial Planning Graduate Network. davidoconnor@ireland.com

One thought on “Briefing on Retail

  1. David O'Connor

    I received the following comment from Eoghan Ryan, formerly of the NBA now at the Unfinished Housing Developments section at the Department of the Environment, Community and Local Government:

    “In relation to the section ‘Commentaries on the Retail Planning Sector globally’ you might like to consider adding the following –

    ”In Sam we trust: the untold story of Sam Walton and how Wal-Mart is devouring the world” by Bob Ortega

    It provides some excellent case study/empirical information on the impact of Wal-Mart on some towns and cities in the US. Fascinating insight into Sam Walton, who came from a small nickel and dime store on its knees to grow this extremely successful business – but at what cost?”

    Reply

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