Diversity and agility will be crucial for survival of small town centres, study shows

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Smaller town centres will need to be diverse and versatile, perhaps developing specialist roles in order to thrive in future and compete with online and out-of-town retailers in austere times, according to research by the Oxford Institute of Retail Management (OXIRM) and the Local Data Company (LDC).

The duo have analysed how the UK’s high streets presently trade and how this has changed, over both the short and long term. 

And they have calculated a retail diversity index for every high street. 

The index, which measures the variety of Comparison Goods outlets and thus the more interesting places to shop, scores Bath, York, Exeter and Cheltenham highly, as well as smaller centres such as Salisbury, Leamington Spa and Chichester. 

Other centres lack variety, despite their size – some larger cities such as Birmingham, Cardiff, Southampton and Sheffield – but also, perhaps surprisingly, places like Cambridge, Oxford and Windsor, which have patchier coverage of some types of retail business than other, similarly sized, centres.

The index also recognises many high streets are more than just places for shopping. A leisure services component scores highly centres with particularly strong entertainment and hospitality roles, including places like Bournemouth, Stratford-upon-Avon, Blackpool and Weston-super-Mare; whilst a consumer services component identifies centres with a particularly diverse range of services to complement their retail offer. This includes places like Darlington, Eastbourne, Banbury and Loughborough.

The study also calculated a OXIRM/LDC Restaurant Diversity Index. Camden Town, Ealing, Clapham, Putney and Richmond provide greater than expected choice. But outside London, consumers should also be spoiled for choice in Manchester, Birmingham or Reading – as well as in either Oxford or Cambridge.

Researchers looked back at 1,300 high streets over the last two years and at 700 of these over the last 20 years to determine how high streets have changed. Over the past two years, the story is as much about a change in the mix as it is of massive across the board declines. The number of independent retailers in high streets actually grew overall by nearly +2% between 2011-13. It was multiple retailers that were in decline – by as much as -5.2% for comparison goods multiples. 

The research has also identified several specific structural changes that underlie this:

  • High streets have already begun to respond to the most obvious effects of online retailing. In the most vulnerable categories, where the product itself is being digitised (including computer games, CDs & DVDs, bookselling and newsagents) there has been a -13% fall in high street outlet numbers – this equates to over 1,000 stores, both multiple and independent. These losses have been fairly evenly distributed across the country, and, whilst these categories only represented around 5% of all shops in 2011, their reduction represents a loss of diversity. 
  • Fashion retailing has taken a particular hit. Women’s clothing retail outlets alone have shown a net decline of nearly -6% for independents and -13% for multiples – a combined net loss of over 500 outlets between 2011-2013.

In tandem, several sectors have grown, researchers found. These include:

  • Value. The last two years has seen a +12.4% increase in value-related retailing – of over 1,100 outlets – by which we mean secondhand, discount and charity shops. There are now over 10,000 such shops in UK high streets, comprising 9% of the total. 
  • Pawnbrokers, pay-day lenders and betting shops have attracted special political attention with Ed Milliband in particular raising his concerns. OXIRM/LDC have been tracking a so-called ‘Milliband Mix’ of these business types. There has been a +17% growth in these outlet numbers since 2011 (most notably in cheque-cashing & pawnbrokers.) But this growth is very selective: it’s not just in more traditional metropolitan high streets (such as East Ham and Ilford) but also in smaller urban high streets, such as Wisbech, Norwich and Penzance. 
  • Food is returning to many high streets. Among independents, c-stores in high streets have grown by +17%, whilst multiple convenience stores, driven by the interest of the major grocery brands, have grown by +8%. Independent food specialists also appear to undergoing something of a modest resurgence. 
  • Health & Beauty. As a nation the UK appears to have become increasingly preoccupied with various aspects of health & beauty. Researchers assembled a special category of health and beauty retailers and leisure service businesses (ranging from nail salons to hairdressers and from barbers to tattoo parlours). This category grew by +10.4%, or by more than 2,300 outlets over the last two years. Indeed, there are now more nail salons on British high streets than Chinese restaurants. 

Researchers now plan to develop a series of possible trajectories for town centres.

Research to date shows many of the country’s high streets continue to evolve to play the changing roles required of them by residents, workers, visitors and their competitive context – although not always into roles that match the expectations of commentators or politicians, perhaps fed by misplaced nostalgia rather than by the realities that some high streets face. The ability to change is of course also hampered by lags in the regulatory and taxation environment. 

Matthew Hopkinson, director at the Local Data Company, said: “This research has developed some fascinating insights into the importance of occupation trends when all too often it is vacancy rates that drive the headlines. Recent political interest in how one can influence the occupational changes that we have shown is a new aspect of high street politics. 

“The level of detail and analysis that this research has shown is, in my view, a key component to understanding the fundamental changes taking place in our town centres. It is data and qualitative research that is available today and which forms a critical part to understanding the changes taking place. This is important knowledge when knowing how to tackle these rapid and dramatic changes at both a national, regional and local level. 

“The decline of a town centre may be seen by some as only the increase of vacancy rates but for others, including Ed Milliband, it may be considered as the decline of occupational quality or a significant number (clustering) of one type of offer which is deemed as undesirable. Knowing what and where this is happening is half the battle. This research shows this is possible and our future plans intend to highlight the ‘at risk’ locations of the future.”

Jonathan Reynolds, academic director, Oxford Institute of Retail Management, Said Business School, Oxford University, said: “We’re replacing the hype generated about the future of our High Streets with analysis based on the hard evidence of what is actually happening in terms of the extent and mix of businesses in town centres, and how this is changing.

“Many high streets are already evolving to accommodate both the effects of online business as well as the needs of shoppers in some areas for more value-driven retailing. The most successful high streets will need to be increasingly diverse and adaptable places, and not just in terms of their retail offer. Services also play an important role in attracting shoppers. And so there are some good news stories in our analysis, as well as some more sobering insights.”