WHAT’S IN SHOPPING
Closure of national chain stores due to pandemic gives locals room to expand
IT ISN’T just high streets that are affected by the loss of Debenhams and the Arcadia Group, Sir Philip Green’s retail empire, which collapsed into administration in November and recently announced 714 more job losses.
More than 600 UK shopping centres, many of which have been part of towns and cities for half a century, are also taking a hit like never before.
For Newport’s Friars Walk, which opened in November 2015 at a cost of nearly £100m, the loss of Debenhams was a hammer blow to the shopping centre which had already lost the likes of Topshop, Schuh, Flying Tiger, The Body Shop and Krispy Kreme in 2020.
Currently, around 40% of Friars Walk’s units are empty. But they aren’t alone. Along the M4 in Cardiff, St David’s Shopping Centre has lost some major tenants such as Gap, Cath Kidston, Oasis and Warehouse. Its co-owner Intu went into administration last summer.
In St Catherine’s Walk shopping centre in Carmarthen, which opened in 2010, losing Debenhams added to a lengthy list of departures in the past year alone: River Island, Fat Face, Topshop, Topman, Miss Selfridge, Accessorize, Monsoon and Burger King.
John Nash, centre manager at St Catherine’s Walk, said it was “very sad” to see the store close, adding that the landlord was “working on plans for the space” and would keep shoppers updated.
Simon Pullen, manager of Friars Walk in Newport, said he was “fully committed to bringing great names to the shopping centre and will continue to explore potential opportunities for the unit, with announcements to be made in due course.”
We asked some experts what the future holds for shopping centres in the UK. Nelson Blackley is an independent retail analyst and former Retail Research Associate at Nottingham Business School. He said retailers in shopping centres were facing challenges even before the pandemic.
“The problems that UK retail faced, even pre-Covid, included the high costs associated with physical retail outlets, including rents, business rates and ser
SHOPPING CENTRES vice charges, and higher labour costs, because of the increase in the minimum wage,” he said.
All this was made worse by reduced consumer confidence and spending power, which began with the 2008 financial crisis, as well as price competition from major discount grocers and single price stores.
After some 170,000 retail job losses in 2020, more are expected in 2021, with estimates of as many as 200,000 jobs in the retail sector under threat.
Mr Blackley said this presents two immediate challenges for shopping centres: “The first is lack of footfall which has been caused by ‘non-essential’ retailers being forced to close. In most cases less than 20% of shopping centre tenants are ‘essential’ retail.
“This is as well as millions of office workers across the UK currently working from home and so not travelling every day into the larger towns and cities and spending money before or after work, or during lunchtime etc.
“The second short-term challenge is the increasing number of vacant units. If one of the main ‘anchor’ tenants close, this has an immediate detrimental impact on the appearance and vitality of the centre and reduces its attraction to consumers and so to footfall.”
While smaller units in shopping centres tend to be easier to fill, larger units are more difficult.
Mr Blackley said huge anchor tenants are difficult to replace, especially at a time when “most national retail brands are looking to reduce the size of their store estates, rather than open new stores.
“Even reconfiguring these large ‘holes’ is not easy and replacing the rental income at a time of over-supply is almost impossible.”
The problems facing major centres
before the pandemic were evident even before the loss of the Debenhams and Arcadia Group brands.
Last June Intu, the company that coowns Cardiff’s St David’s shopping centre, collapsed into administration. Land Securities, which co-owns St David’s – the 12th largest shopping centre in the UK – later issued a statement confirming the centre would remain open.
Meanwhile, Newport council has paid more than £1 million to the Talisker Corporation, the Canadian equity company that owns Friars Walk, in the past three years to cover the cost of rent at the shopping centre. This is due to an agreement made during the sale of the centre which said that the council would subsidise rent up to a maximum of £500,000 a year, if the rent from the centre did not reach a minimum level.
According to recent statistics from the British Retail Consortium and Local Data Company’s Vacancy Monitor, shopping centres have the highest vacancy rate of all location types (high streets, retail parks and shopping centres) at 17.1%. It has left owners of shopping centres facing the dilemma of empty units bringing in no income, combined with a large rates bill to the local authorities and an asset which is continuously falling in value.
Alex Butler is a partner with property consultancy Allsop, which has facilitated the sale of a number of shopping centre developments in the UK.
Mr Butler said the values of shopping centres “have been absolutely murdered” over the past 10 years, with many now worth a fraction of their original price.
“The problem is that because of the huge rates bill on the empty units for landlords, the money going out to pay the rates to the council for empty units is more than you’re getting in, so they’re actually liabilities to a lot of landlords.”
Mr Butler said many of the UK’s shopping centres are often owned by pension funds and other similar institutions, or foreign private equity firms.
“People who might have seen shopping centres as a good investment 10 years ago now realise they are dropping in value regularly,” he continued. “Now they’re just trying to cash in and sell them now before they drop any further.”
What will shopping centres look like in the future? One option which has been explored is more involvement from local authorities.
Mr Blackley said council involvement has brought mixed results, but was more appealing than ownership by a foreign company “with no real connection with, or concern about the place, apart from a return on investment”.
He said having a wide range of shops under one roof with a car park attached is not the novelty it once was.
“Shoppers are no longer excited by visiting shopping centres or high streets that all look the same, providing exactly the same range of retail brands and choice of product.
“Increasingly, people now want to see a connection with their place – whether the history, the culture or the unique aspects of a town or city that make the place different.
“Yes, they want to find a mix of national retail brands, but also local independent retailers who are selling produce originating from the area and businesses that have a real stake in the future success of the town or city.”
And he said he feels that while some centres may close or see more empty units, there are other ways they can look to bring people in.
“Landlords are having to be creative with their property strategy, such as splitting units to accommodate smaller, independent businesses or reworking space for use as a shared office for flexible working,” he said. “Over the past 15 years, many of the most successful shopping centres in the UK had already opened leisure and entertainment facilities and food courts etc as a way of encouraging shoppers to visits and to ‘dwell’ for longer.
“At present with social distancing, these are of course not open, but it’s likely that at some time the ‘social’ aspects of retail, including a visit to a shopping centre with perhaps a meal or a cinema visit, as well as some shopping, will return.
“There is no doubt some shopping centres will close, or their owners fall into administration.
“I think there’ll be a change of use which is part residential and part leisure. Because people will be dying to go out to eat and drink when they are allowed to after the pandemic.”
“It should be positive. If councils are more realistic on the rates payable and planning is done correctly, it could be the resurgence of the high street, I think.”
IN SEPTEMBER 2016 Carmarthenshire council unveiled plans to transform a square in the middle of Carmarthen. The area of land, located at the bottom of Jackson’s Lane, was going to be thrust into the 21st century thanks to a new seating area, shops, cafes and a huge LED screen acting as a backdrop to a “new focal point for the people of the town”.
Nearly five years on from the consultation, however, the area remains the same – largely untouched.
The project has not, the council insists, been abandoned but it seems it may have been kicked into the long grass – an ironic state of affairs for something which faced objections due to a lack of green space.
King Street, in its almost Dickensian glory, is located at the top of the lane leading to the yet-to-be transformed square. It’s a street that will always have its charms even in these darkest of days for retailers but a lot of the modern giants of high street shopping that Jackson’s Square – as it was termed during the consultation – was meant to connect to are no longer there. The chains that would bind together old and new have gone.
River Island, Fat Face, Accessorize, Monsoon, Topshop, Topman, Miss Selfridge – gone. Just like that in less than 12 months. Debenhams, the biggest store in Carmarthen, anchor tenant of the shiny 11-year-old shopping centre and the mothership around which hopes hung so tightly as Carmarthen wanted to become the go-to destination west of Swansea, will follow shortly.
The “gateway between old and new” has since become something else entirely – the road to nowhere, perhaps. Or, more pertinently, the road to something completely different.
Where a sign once read River Island there is now one that reads Jackie James and Me & Luce – independent shops formed and honed by local people who have taken the brave decision to expand rather shrink in these uncertain times. The same goes for another local shop called House by Betty, which made sure that the space vacated by Fat Face was not empty for long.
“I don’t think too much about the future any more – I just take one day at a time,” said Lauren Treharne, sat on a sofa at the back of House by Betty, her wonderfully adorned lifestyle store at St Catherine’s Walk that sells everything from cushions to candles to kitchenware.
“The rent is more than I was paying before and so are the rates,” said Lauren, who is keeping the business ticking over during lockdown by offering a click and collect service.
“There’s a service charge too which is more than the rent I was paying for the old store so this is a risk. I never saw myself as a gambler but in for a penny, in for a pound.”
Lauren admits that the Welsh Government’s rate relief scheme for retail, leisure and hospitality, which currently runs until the end of March, made the move “more appealing” and has allowed her a bit of breathing space to get her feet under the table at her new home.
“It’s the best move I’ve ever made,” she said. “A lot of people helped me out and made it possible. I crowdfunded and managed to raise about £4,000 which helped to get me started over that first month or so because I had this place and my old store to begin with.”
Lauren started off in business in her early 20s with a vintage shop in St Clears, 10 miles west of Carmarthen, and then, due to its popularity, was persuaded to open in the Pembrokeshire town of Narberth. She was happy there but her life took a horrible turn when an abusive relationship saw her, at one point, sleeping in her car.
“But then in August 2019 I thought: ‘You know what? Let’s do this.’ It felt like I’d been asleep for two years and I decided at that point to just go for it again so I opened up a store down the road from here in Blue Street.”
Like everyone else Lauren had no idea then that coronavirus would come along and make everything a hundred times harder but her attitude towards the turbulence is totally different, and somewhat refreshing.
“I feel quite guilty at times because my business has had an opportunity of a lifetime because of this pandemic,” she said candidly. “If the shopping centre had not had problems, brought about by stores closing, then I would not have had the chance to move up here to a bigger premises. I know that.
“But I believe that independent shops and big national chains need to be next to each other. How exactly that works in the long-term I don’t know because the nationals will always have more money and be able to pay more for retail space but just being here amongst Coffee #1 or H&M you see the huge increase in footfall.
“The divide between nationals and independents needs to disappear. They need to exist together and this situation is an opportunity for local people.”
Lauren is originally from Carmarthen so it is easy to understand her passion for opening a shop in her hometown and making a fist of it but the town also has the ability to attract people from afar.
Paul Raven is from Swansea and for 23 years he worked in further education in North Wales, including working with young people with learning disabilities. In 2017 he and his partner Nick decided a change of pace was needed and set about looking all over South Wales for a retail space to open as a tea shop with a difference.
They searched from Monmouth to Haverfordwest and many places in between but settled on a unit slap bang in the middle of Carmarthen’s biggest square, a few yards away from the historic Guildhall building.
“I wanted to do something for myself, something more personal, and it was a chance to move back to South Wales to be nearer to my parents,” said Paul, surrounded by countless bags of tea in Tea Traders, the store he and his partner have built from nothing over the past three and a bit years.
“Why tea? We just thought there were a lot of coffee shops around so how about a specialist tea shop which we had seen in cities but not so much elsewhere? That idea resonated with us and led to us developing the business.”
Tea Traders was soon full with customers, whether they were having a cuppa and a slice of cake inside the shop or buying their own bags of specialist tea leaves to enjoy in their own homes. Thankfully for Paul and Nick they had the foresight to sell tea, coffee and other goods online pretty much from the start of their business venture, which began in November 2017. It’s just as well that they did seeing as the past 12 months have been blighted by having to shut the shop’s doors for months at a time.
“That side of things has increased hugely since lockdown first came in last March,” said Paul, who has immersed himself into the community by being a part of the local business improvement district (Carmarthen
BID) and the town’s chamber of trade.
While having that online income has made life easier it certainly hasn’t made it easy. In fact Paul admits that were it not for the help received from the Government and the council by way of grants and business rates relief things would now be looking very grim.
That support will run out at some point, however, and customers will be allowed to return, although in what numbers remains to be seen. It’s clear to hear in Paul’s voice that the chief concern for all local businesses is what happens when that tap of support is turned off.
The streets will once again be home to shoppers – but how many? With the sheer amount of shops that have closed in Carmarthen in the past year or so will there still be enough customers on our streets to go around? Will people still head into town for a cup of tea if their favourite shop no longer draws them in?
“It’s inevitable that town will be quieter if more and more shops close,” admitted Paul. “We want to be in a position to re-open with customers here inside the shop but before all this we only had a capacity of 18, and then it was down to 12, and it might for a time need to be at six so the whole concept of having a tea room changes.
“We will just have to adapt by finding a way to make our business work because if town is busy again with people wandering around we have to operate differently.
“Carmarthen has a really nice balance and is supported by a very large catchment area. It’s got a population of about 15,000 people itself but it feels much bigger than that, especially in the summer months when people flock from all over to West Wales.
“That community aspect is really important, that’s what the shop is, so it will be a real shame if we cannot find a way of keeping that connection with the customers – we certainly don’t want to be an online-only business.
“There is a lot of culture and heritage here, a lot of character,” he said. “Carmarthen has, and will continue to have, a lot to offer people as a shopping destination.”
Despite the optimism on show from Paul, Lauren and countless others there is no getting away from a salient fact – coronavirus has changed the game. Before it, relatively speaking, retailers knew little of such sustained and extensive pain.
On Saturday, November 23, 2019, figures obtained from Carmarthen Town Council reveal there were more than 45,000 people in town. On the same weekend a year later that had reduced by around 60%. In King Street alone footfall in 2020 was down 45.3% on the previous year.
Carmarthenshire council is working hard behind the scenes to bring Carmarthen back into the light – they will
are working on a “Covid-19 economic recovery strategic masterplan” and have confirmed that additional grant funding support will be made available from April 2021 to help businesses in the town to grow and recover with the details currently being finalised.
A brisk walk around just a portion of the town centre reveals 16 empty units. Not shut. Empty.
Something that has been able to stick it out is a Carmarthen institution. It’s not a statue or a piece of castle but a clothes shop.
Evans and Wilkins first opened in Hall Street more than 85 years ago. It’s a family business which sells fashionwear, school uniforms, sports kit, evening wear and wedding attire, and it’s a shop that has kitted out generations of people in Carmarthen. It’s run by Rhodri Wilkins, whose grandfather first started selling clothes in the town in the 1920s.
“I’ve worked in the business since 1993 and you can’t compare this last year with anything that we’ve seen before,” he said. “We’ve had our tough times of course, there’s been various recessions, but not like this. This is just something that you could not have planned for.
“Our turnover for 2020 was 50% of what it was in 2019. Even if we re-open in the coming weeks it’s not going to go back to normal. It might be harder than last year because the Government only has so much money to spend – we might have a situation where the money stops but the customers aren’t back either.
“There’s a knock-on effect that hits everything. It’s one big loop and you need every cog in that wheel to get going properly before turnover, and the economy as a whole, gets anywhere near normal.”
Evans and Wilkins sells some items of clothing that they also sell in Debenhams. So, a straight question: was it a big blow to the local store, built from nothing between two world wars, to have this behemoth coming into town in 2010 to steal its trade?
“No,” said Rhodri, honestly. “I remember people asking me back then: ‘What’s going to happen to you?’ I kept telling them that Debenhams coming here was a good thing. And it was – in the first couple of weeks after they opened it was like the build-up to Christmas every day in town.
“Competition is vital. The more you can offer shoppers the better it is. We are totally dependent on Carmarthen being seen as a brand in its own right, on being able to pull people into the town, and stopping people from travelling elsewhere to shop. Maybe it needs to reinvent itself a bit.”
Maybe that is already happening thanks to knock-down rent rates drawing in independent businesses to areas where they would not have dreamed of opening up shop two years ago. Maybe reinvention will happen organically with the disappearance of Debenhams? Maybe that will automatically result in a hike in the Evans and Wilkins turnover figure as it will mean one less shop to compete with? Rhodri disagrees.
“What happens first when a big shop closes down is that the market gets flooded because they sell all their stuff at 50% off so we see a dip in sales because we can’t compete with that sale,” he said.
“Then your turnover might go up a bit when that shop closes but after the initial honeymoon period you see it drop off again because people might stay away from town without that huge pull of a big-name shop. I’ve spoken to friends in the trade where this has happened before and it’s the kind of rollercoaster ride you tend to get when this happens.
“We are fortunate in this store that we have diversified the business so we have a number of different strands and that’s something that has really helped. But I do worry for the future of Carmarthen.”
When looking to the future one needs to consider the past and Carmarthen had its problems before March 2020 when coronavirus shut everything in sight. Some units were already empty, the bitter aftertaste of a convenient tonic of online shopping and out-of town retail parks.
Cambrian Way is a shopping arcade located in the centre of town between St Catherine’s Walk and the as-yetuntouched Jackson’s Square. To be frank it looks more like an alleyway than a shopping arcade in 2021 with nothing to keep one company but the pigeons that take advantage of the shelter provided. They must like the quiet.
A third of the units in Cambrian Way are empty. Without counting the small, start-up style units along one side, it’s even more bleak – more than half (four of out seven) of the main larger units are currently empty. Things are set to get better, however, with a new dessert and coffee shop taking over one of those units on a five-year lease while one of the existing businesses still trading in the arcade is planning to stay at the site long-term and take on additional space.
What will take up the space used by
Debenhams for more than a decade? It’s by far the biggest retail unit in Carmarthen and it will need to be filled if St Catherine’s Walk wants to thrive in the years to come. If you speak to shoppers in the town one name keeps cropping up – one with the pulling power to ride into view and attract the masses once it’s safe and legal to do so.
Primark, Primark, Primark. The clothing giant currently has an out-oftown store in Carmarthenshire – at Llanelli’s Trostre Retail Park – but it does not have a town centre footprint anywhere in West Wales.
Primark bosses have always remained tight-lipped on the matter, only commenting officially to say “we do not comment on speculation around new store openings”.
But if not Primark, or a fellow big name, what about a myriad of businesses working under one roof and across the unit’s two floors? The manager of St Catherine’s Walk shopping centre confirmed last month that various options were being considered and that he was positive “there will be an exciting future for the space”. However, he turned down a request for an interview for this piece.
The answer, as always, lies in compromise and a combination of both high-street brands and local stores and it’s important to stress that a number of retail giants remain in Carmarthen as we hopefully begin to emerge from the latest lockdown.
House by Betty’s motto for 2021 is the way it is and the way it has to be: one day at a time. Only time will tell if the high street can survive in a postpandemic world but, as those at the heart of Carmarthen’s commitment to endure have shown, the town is never going to give up without a fight.