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The key to success

Published:  19 May, 2008

With 50 million sq ft of development space due to be delivered by 2012 and with consumer confidence at a 15-year low, the key to success for both developers and retailers could lie in targeting those consumers who are immune to the credit crunch, according to CACI's latest Retail Footprint survey.

The analysts identified a segment of the population largely immune to the economic downturn, dubbed the 'Silver Foxes'. They are typically over 55, their children have left home, they have no mortgage or other debt and enjoy above-average incomes. According to CACI they make up 14 per cent of the UK population.

The problem for some developers will be that they are not distributed evenly across the UK: they tend to live in the commuter belt around the large conurbations and they are massively concentrated in the south of the country. CACI could only identify three locations north of Birmingham that have an above-average representation of Silver Foxes in their catchment: Altrincham, Harrogate and Chester.

So where are they to be found? They make up 26.3 per cent of the catchment in Epsom, 26.0 per cent in Guildford and 25.1 per cent in High Wycombe, and the rest of the top 10 recession-proof locations are Camberley, Tunbridge Wells, Woking, Bishop's Stortford, Horsham, Winchester and Chelmsford.

But conversely locations where they are under-represented is topped by Bradford with just 8.6 per cent. Other locations deemed vulnerable on this measure include Barnsley, Walsall, Sunderland, Stoke-on-Trent, Mansfield, Doncaster, Middlesbrough, the Birmingham Fort and Grimsby.

"We are seeing a polarisation of affluence," said CACI's Ian Thurman. "There will still be consumers with money to spend but the challenge will be in persuading them to part with it."

Tenant mix could be crucial to achieving this, according to Thurman. CACI's research shows the Silver Foxes like to shop in Marks & Spencer, Sainsbury's and, most of all, John Lewis. That's good news for the new centres that have John Lewis as an anchor, like Grand Arcade in Cambridge and Liverpool One and, further ahead, Portsmouth, Crawley and Stratford City.

But even here Thurman warned that the Silver Foxes are a difficult target. "John Lewis is an important anchor and it brings in the right kind of shopper, but it's a huge challenge to integrate it into a mall when its customers don't actually like shopping in a mall," he said.

CACI has also released its annual Retail Footprint ranking of Britain's retail destinations. London's West End retains the top slot, with Birmingham still second. But the Arndale extension has enabled Manchester to leapfrog Glasgow into third place. Leeds, Nottingham, Liverpool, Bluewater, Norwich and Reading make up the rest of the 2008 top 10.

The big winners this year have been High Wycombe, where the completion of Eden has pushed it up 43 places to 50th in the rankings and Derby, where Westfield's scheme has pushed the city up 15 places to 38th. However, new development has had less of an impact on Cambridge, where Grand Arcade has only moved the city up one place to 21st. "There's no doubt about the attractiveness of John Lewis but Cambridge is over-shopped," said CACI's senior analyst Nielsen Harrap.

Cardiff, Southampton and Guildford have all moved up the rankings while Bristol and Leicester have fallen as their developments await opening.

CACI has also forecasted the impact of the 50 million sq ft of new development it expects to see over the coming five years. Westfield's Stratford City - due to open in 2012 as part of the Olympic project in east London - will have a massive impact, boosting Stratford up 307 places to 8th place. And the Australian developer's Westfield London on the other side of town will occupy 9th slot, pushing Bluewater out of the top 10 for the first time since it opened.

But despite massive new investment, and a corresponding increase in turnover, Nottingham and Liverpool will remain static in the 2012 rankings in 5th and 6th places respectively, according to the forecast.

But inevitably not every centre is going to be a winner in the current development cycle. Harrap warned: "Retailers and developers with stores or investment in nearby centres will be affected by new large-scale schemes. They need to consider the implications and potential impact on turnover and know which schemes pose a threat, to help meet commercial challenges in what looks set to be a tougher yet still competitive market over the next few years."

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=== Resistant centres ===

Above-average representation of credit-crunch resistant shoppers

1 Epsom (26.3 per cent)

2 Guildford (26.0 per cent)

3 High Wycombe (25.1 per cent)

4 Camberley (24.8 per cent)

5 Tunbridge Wells (24.6 per cent)

6 Woking (24.2 per cent)

7 Bishop's Stortford (24.1 per cent)

8 Horsham (23.4 per cent)

9 Winchester (23.4 per cent)

10 Chelmsford (22.9 per cent)

11 Kingston-upon-Thames (22.4 per cent)

12 Reading (22.4 per cent)

13 Bicester Village (22.3 per cent)

14 Newbury - 22.2 per cent)

15 Aylesbury (22.1 per cent)

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=== Vunerable centres ===

Below-average representation of credit crunch-resistant shoppers

1 Bradford (8.6 per cent)

2 Barnsley (8.9 per cent)

3 Walsall (9.5 per cent)

4 Sunderland (9.6 per cent)

5 Stoke-on-Trent (9.9 per cent)

6 Mansfield (9.9 per cent)

7 Doncaster (10.1 per cent)

8 Middlesbrough (10.6 per cent)

9 Birmingham Fort (10.6 per cent)

10 Grimsby (10.9 per cent)

11 Meadowhall (11.0 per cent)

12 Scarborough (11.0 per cent)

13 Wolverhampton (11.0 per cent)

14 White Rose, Leeds (11.0 per cent)

15 Blackpool (11.0 per cent)