Weekly Retail & Leisure News - 21 February, 2017
Annual inflation, as measured by CPI, rose to 1.8% in January, up from 1.6% in December, according to the ONS - this rise was slightly lower than expected, and still below the target rate of 2%. Upward pressure is being driven by fuel and food as Sterling remains weak. Retailers are responding in different ways - some have reduced the size of products, while Morrisons has announced that it is aiming to recruit 200 more British suppliers to hedge on the increasing costs of global trade. Inflation is not impacting all sectors, however - in the clothing sector prices fell again, and spending also decreased -3.8% in January, according to the Visa consumer spending index, the largest decline since April 2012.
As highlighted in JLL’s Property Predictions 2017, the retail sector will face further headwinds this year. From April, the effects of the business rate revaluations will be felt, and diverse groups have been challenging the government’s plans this week. Mike Coupe, the chief executive of Sainsbury's, has called for ‘fundamental reforms’ to the ‘archaic system,’ as it ignores the rise of e-commerce. Resistance is also emerging from the other end of the retail spectrum; The Federation of Small Businesses has called for the businesses rates threshold to be increased and for more helpful transitional measures to be introduced.
In the retail investment market, Frogmore has acquired the Stratford Shopping Centre. The property includes the fully let Stratford Shopping Centre, as well as the adjoining vacant office space and planning permission that includes 587 residential units, leisure space and a hotel. This deal reflects the emerging two-tier retail investment market, as highlighted in JLL's Shopping Centre Investment Market Update 2017. With several headwinds in the retail market gathering force, a deep understanding of the fundamentals of a centre is proving increasingly important to investors. In Stratford’s case, the wider regeneration of East London, the existing 26.5 million footfall, the arrival of Crossrail in 2019 and the potential of the site all present Frogmore with significant opportunities. JLL Retail Capital Markets Team advised Frogmore on the transaction.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838