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Travel hubs set to benefit from retailer investment priorities in the coming year

Travel hubs will be the most favoured location for new stores in the coming year according to a report by UK law firm TLT and global retail research agency Conlumino, which surveyed the views of the UK's top 100 retailers. 

In contrast, the 'Retail Growth Strategies' report found that out-of-town retail parks, in-town shopping malls and shopping parades away from high streets are thought to offer the least prospects for growth.   

Dan Sweeney, real estate partner at UK law firm TLT, said: "Store location has always been important, with the most favoured locations inevitably changing over time in response to shopping habits. The rise of the travel hub is an example of that, pointing not only to their guaranteed footfall and convenience but, importantly, their ability to support the growth in click & collect.

"The less popular locations are arguably more mature with retailers who want to be in those locations already there. But, it is clear that in these areas we will continue to see a trend for major retailers seeking lease re-gears in advance of breaks and expiry, often securing enhanced terms and incentives in return for their continued presence."  

The report also found a growing trend to share space in stores with 22 of the UK's top retailers embracing the idea, the majority of whom will share with a leisure operator (68%). We are also likely to see more coffee shops in stores, with around a quarter of retailers planning to cash in on the nations love of all things caffeinated.

Dan Sweeney commented: "Physical stores are still viewed as vital to the success of most retailers, but their role continues to change and they are being asked to deliver more for less with the need to optimise the size and location of their store estate in the continued fight for footfall. 

"The trend to share space reflects this and supermarkets have been quick to grasp the opportunities with Sainsbury's plans to roll out more Argos digital concessions and mini-Habitat shops a great example."

When looking at opportunities for growth by UK region, Scotland, the South West, London and the West Midlands were the only four regions deemed as being 'under potential' in terms of growth opportunities. All other regions were seen as saturated markets for new stores. 

But, business rates are an increasing barrier to investment in new stores UK-wide - over half (53%) believe that they will have a more negative impact this year than last with 44% planning to reduce the number of new store openings as a direct result.  

Landlords may also face rent review requests from retailers to minimise the impact of the recent rates revaluation, with some retailers facing rises of 45% in the space of year, despite transitional relief.  

Other barriers to investment in new stores include planning restrictions on new developments and the fragmented ownership and disjointed asset management prevalent in many town centres, Dan Sweeney commented: "It is clear that more needs to be done to strengthen land acquisition powers to facilitate redevelopment of town centres. Doing so will help retailers compete with improved out-of-town retail developments and online shopping"

Looking internationally, 19 of the UK's top retailers plan to expand internationally in the year ahead by opening more physical stores. The most popular location is China, with the US, Germany, India, Turkey and Ireland also popular.

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