By Simon Underwood, partner and turnaround specialist, at accountancy firm, Menzies LLP and Martin Hamilton is a senior manager and retail sector specialist at the firm
The Government’s decision to provide funding to support the regeneration of High Streets in towns across the UK is an opportunity for agile retailers and local authorities seeking to attract inward investment and increase footfall.
Growing pressure to reform business rates and the increased availability of flexible leasing arrangements, mean some retailers may consider that now is the right time to open a new store.
Following publication of its Town’s Fund prospectus in November last year, the Government is providing funding of up to £25m to 14 towns across the UK to kickstart their High Street renewal initiatives. More towns are expected to benefit similarly in the future.
The Town’s Fund has already earmarked a total of £3.6bn for investment for over 100 locations across the UK. Places wishing to secure a share of the fund have been invited to submit their own Town Investment Plans, complete with a Board of local representatives to agree its objectives and take responsibility for its delivery.
For local authorities that have witnessed the demise of local High Streets, with reduced footfall and a rise in vacant properties, the Town’s Fund presents a real opportunity. A cash injection alone is unlikely to be enough however, and a holistic, strategic plan is required, which takes into account planning and land use, alongside retailer concerns about business rates and restrictive tenancy agreements.
The Town’s Fund prospectus acknowledges that High Streets fail for a variety of reasons. Many residential towns have shrinking populations, leading to reduced social mobility and a reduction in the quality of local jobs. This is compounded by shop and business closures, which create a sense of desertion.
Towns often have a distinct set of assets, as well as problems to address, which means their regeneration is likely to require a bespoke approach. For example, sometimes the location itself is important to existing businesses and there might be an opportunity to enhance this ‘pull’ as part of a sustainable development plan. It may be possible to do more to encourage businesses to stay and grow in the local area by supporting their supply chains, investing in skills development or improving transport infrastructure and connectivity. By taking action to improve planning and land use, unlocking land for future development, local authorities can facilitate urban regeneration and deliver changes that will be attractive to investors and strengthen the local economy. Retailers could of course benefit from all the above changes.
One town highlighted in the prospectus as an emerging regeneration success story is Bolton, which has put in place a strategic town centre masterplan focused on four key areas of investment – retail, tourism, office space and housing. The 15-year plan has achieved private sector investment, in addition to the £100m provided by Bolton Council to get project delivery underway. There are already signs that the plans are attracting retailers and businesses back to the town centre. Other areas could consider a similar approach, using public sector funding to leverage private sector investment.
In order to be considered for Government funding of up to £25m, each local Board must put in place a Town Deal Investment Plan, with a clear business case supported by financial data. To enhance its chance of securing funding, it is important that the plan’s vision and strategic objectives are aligned with those set out in the Government’s Town’s Fund prospectus.
Whilst some Boards are likely to be better equipped than others to prepare and submit such plans, demonstrating good governance and a robust approach to the development of a bespoke investment plan that will deliver sustainable benefits to the local economy will be critical to its success. The guidance provided in the prospectus states that the plan should provide a well-evidenced case for any suggested interventions; a vision for the town that complements existing or emerging economic strategies and a description of any priority areas to be addressed over time.
From a retail perspective, such funding could provide the impetus needed to reinvent local High Streets and introduce fresh ideas that appeal to today’s consumer. Instead of department stores, which no longer attract the footfall required to justify the use of floor space, High Streets can seek to establish more flexible civic spaces, which can be shared by pop-ups and other retailers. Instead of offering leases with terms of 10 or 20 years, these spaces could offer a range of temporary and short-term lease options, which are designed to reduce the drag effect on the tenant’s business model. Other solutions might include creating environments that combine experiential retail and entertainment, with facilities for live music events or other attractions.
The first 14 towns to receive up to £25m of funding from the Government under the Town’s Fund programme include:
1. Salford – Swinton Town centre
2. Croydon – Thornton Heath
3. Staffordshire Moorlands – Cheadle
4. Rushmoor – Aldershot Town Centre
5. Birmingham – Stirchley
6. Hyndburn – Accrington Town Centre
7. South Lakeland – Kendal
8. Preston – Friargate
9. Coventry – Coventry City Centre
10. Hartlepool – Hartlepool Town Centre
11. Cheshire West and Chester – Ellesmere Port Town Centre
12. Sandwell – West Bromwich Town Centre
13. Knowsley – Huyton Town Centre
14. Manchester – Withington District Centre
For retailers considering opening stores or embarking on new ventures in 2020, these towns could present an opportunity to capitalise on the flow of inward investment. Before taking the plunge however, they should develop a business plan, based on a clear understanding of their cost base, a well-tested pricing strategy and accurate cashflow forecasts. Getting in touch with local authorities at an early stage to explore potential locations and find out more about business rates and leasing options, could also help to ensure their proposal is well received.