Sectors seek different size schemes

There have been some differences in how each of the Value sectors have grown in terms of their OOT offer. The number of schemes including a Value grocer for example has increased across all sizes of OOT scheme since 2011, but the variation on the proportion of schemes of different sizes over this time period gives some interesting findings.

Value grocery’s representation is developing faster in smaller schemes over larger ones. In 2011 there were 43 schemes up to 20,000 sq ft in size, containing a Value grocer, rising to 67 in 2014 (a 56% increase) and to 95 by 2017 (a further 42% increase). The proportion of schemes in this size band has therefore risen from 18% of all schemes in 2011 to 22% in both 2014 and 2017 respectively.

Schemes of 100,000 sq ft+ that include a Value grocer have also grown, from 49 to 58 in 2014 and to 80 in 2017. Conversely, however, the proportion of all such schemes this represents has fallen from 21% in 2011 to 19% in 2014 and 2017 respectively. The smaller scheme therefore seems to be the key growth format for Value grocery retailers at the present time. There are 223 schemes anchored by a Value grocer currently under 40,000 sq ft, accounting for over half.

The pattern of growth over the last five years and subsequent proportion of representation of Value grocers across OOT schemes of all sizes, can be attributed to the brands desire to expand wherever possible. The size profile of schemes containing a Value grocer for 2017 (highlighted in Figure 4) is reflective of the distribution of all OOT schemes in the UK across the same size groupings. Aldi, Lidl, Iceland and Farmfoods have taken space in the OOT market wherever it has become available highlighting a desire to reach a wider demographic group to expand their customer base.

^{Source: Savills Research, Geolytix}

When it comes to Value fashion the story is in fact the opposite (Figure 5). These brands have been more selective, continuing to favour much larger OOT schemes. In 2011, 204 schemes with a Value fashion operator were 100,000 sq ft or more, equating to 59% of schemes of all sizes. This increases to as much as 284 schemes by 2017, with the proportion of the total schemes rising marginally to 60%. Schemes of 100,000 sq ft or more continue to account for the majority of those with a Value fashion retailer. For smaller schemes between 20,000 and 80,000 sq ft the growth has been more modest and the overall proportion of schemes they represent has begun to decline (from 49% in 2011 to 46% in 2017).

^{Source: Savills Research, Geolytix}

Fashion retailers favour large shopping and retail parks, often choosing to cluster together largely due to the way consumers shop in this market. A shopper, whether looking for a particular fashion item or browsing for inspiration, often favour schemes with brand critical mass, schemes that benefit from a range of brands and varied price point, over visiting many different stores across many different shopper journeys. Larger schemes facilitate the clustering of brands and the Value fashion retailers are no different in their pursuit of a position in that market.

Large schemes attract a large and demographically varied customer base which is particularly important to Value fashion brands. Having evolved from the perception their products were the exclusive pursuit of the lower affluence households, these brands are now considered to have a Value orientated price point but with a Mass market appeal. Prudent consumers with a stronger spending power are able to indulge in more Aspirational and Premium based retailing the more money they save in the everyday essential retail purchases value fashion brands offer.

Value Comparison Goods retailing has seen a more polarised nature of growth in terms of the size of retail schemes in which brands have chosen to locate. The number of small schemes, between 20,000 and 40,000 sq ft, has grown considerably from 41 in 2011 to 188 by 2017. This is the largest overall growth at 359% across the size bands analysed in Figure 6, resulting in the proportion of schemes this represents increasing from 20% to 27%. However it is the 100,000 to 200,000 sq ft category that has the greatest slice of the market, accounting for almost a third of all schemes, growing from 67 in 2011 to 213 by 2017 (an increase of 218%).

^{Source: Savills Research, Geolytix}

The considerable growth in Value Comparison Goods, which includes retailers such as B&M, Home Bargains, Poundland and Poundworld, is unsurprising if we actually think of these retailers as operating within the Convenience Goods sphere, as opposed to traditional Comparison Goods. Products in this market are typically characterised as affordable, useable and disposable. This means these retailers need to be where the customers are located the most, in locations most convenient to the shopper. They tend not to be destination retailers in their own right, so locating on a small park next to a grocery anchor, or on a large scheme amongst a wealth of other retailers ensures they are capturing a significant share of consumer expenditure. Many of these retailers successfully stepped into the void left by Woolworths, taking a number of the units that came available when the retailer closed its doors in 2008.