At Harper Dennis Hobbs (HDH) we have expanded our Vitality Index to 1,000 retail centres across Britain. This year’s research, which looks at the quality of retail in a centre, finds Cambridge moving up 6 places to come out on top, with Westfield London in second and Knightsbridge remaining in 3rd place.
The Vitality Index ranks all retail centres in Britain by quantifying the ‘retail health’ of each centre. This year’s Index has been expanded to 1,000 from 500 centres and finds that Vitality is measured through: a combination of the proportion of up-market shops; the proportion of value-led shops; the vacancy rate, and the proportion of ‘undesirable’ shops – such as pawnbrokers, money lenders, and bookmakers. In addition, these variables are also compared to the demographic composition of the centre’s catchment area and a greater score is given to areas whose retail mix is optimally adapted to the local community.
Jonathan De Mello, our Head of Retail Consultancy, said, “This iteration builds considerably on our inaugural Vitality Index, released in 2014, which was the first retail ranking in Great Britain to emphasise the quality of retail in a centre, in addition to its size. In this release, by popular demand from both retailers and investors, HDH have incorporated additional small towns and high streets, which gives a greater range to the ranking, and allows for comparison of local high streets with major retail destinations. We’ve also included a number of temporal variables – tracking the change in retail mix of a centre over the past 5 years, to credit those that have improved, and penalise those that have deteriorated.
“This ranking highlights the ‘healthiest’ retail centres in Britain, which successful brands should target when considering network expansion. Smaller centres are of increasing interest to retailers, given rents are often highest in the largest centres. So a small centre with a high vitality score – and the right shopper profile – could potentially yield strong profits.”
James Ebel, our Executive Director in retail agency division, states, “With an increase in online retailing, many of our clients, especially those from North America, now want to consider why they should enter a market rather than how many stores they should have. For this purpose, it’s important to know not only who trades in a retail centre, but how many are vacant and whether the market captures their customer profile. Each retailer has different requirements in terms of what makes an ideal location to trade in. This ranking, with some bespoke criteria included, can be an important tool for retailers looking to expand their store portfolio. The Vitality Index highlights some of the highest quality retail centres in Britain, demonstrating the fact that market size isn’t the only predictor for commercial success.”
The index includes British centres with greater than 40 multiples, ranging from local high streets to regional shopping malls and major city centres. However, retail parks and outlet centres have been excluded, as their remote locations mean they are not intrinsically linked to the local area, and so their health does not impact the community in the same way.
The addition of smaller centres allows greater insight into the strength of specific districts and neighbourhoods – something that retailers are increasingly asking HDH in terms of new centres to open stores in. A large proportion of shops house premium and luxury brands, matching the affluent population living nearby, whilst also attracting shoppers from across the globe. The least vital centre is Shields Road in Byker, Newcastle-upon-Tyne, where 19.6% of retail floorspace is unused – up 11% in the past 5 years. The retail mix on Shields Road is dominated by ‘undesirable’ retail, such as betting shops and money lenders.
London still dominates the national retail scene and 34% of the top 50 most vital centres are located in the capital. However, quality retailers are increasingly gravitating towards a few very strong shopping centres and high streets, and this concentration of quality retail within the city is at the expense of the typical London high street.
Birmingham and Glasgow are the most improved centres near the top of the ranking, as both have benefited from new retail developments. Brent Cross has fallen out of the top 50 as a result of the preparation for works to modernise and expand the centre. It is likely that this drop will be temporary and the centre will increase its score upon completion within the next 5 years.
The Vitality Index has also highlighted the overall increase in the presence of downmarket stores on Britain’s high streets. In the past 5 years there has been a 2.7% increase in the proportion of value stores in centres, in addition to a 1.6% increase in the proportion of ‘undesirable’ shops.