7 September, 2020

Super-regional shopping centres well placed for post-COVID shopping

Recent footfall figures show that consumers are becoming increasingly comfortable returning to shopping centres, with footfall reaching 70% of last year’s level in the week commencing 17 August. Retail parks also continue to perform well as they are open air and are often centred around food superstores which have remained open throughout lockdown. By contrast, high street footfall is still below 60% year-on-year.

Springboard year-on-year footfall figures below show that shopping centres have seen a relatively strong footfall recovery since restrictions were lifted on 15 June, allowing all non-essential retail shops to trade. The focus on creating clear walkways, providing hand sanitisers, and with security guards present to ensure people are respecting guidelines, has helped shopping centre footfalls recover quicker than might have been expected.

Super regional centre Figure 1

Source: Springboard and the Department for Business, Energy and Industrial Strategy, August 2020

Super-regional centres are well placed to meet the customers’ expectations and needs of the post-COVID world. Due to their size, super-regional centres can easily adopt social distancing measure. Large (and often free) car parks which enable people to drive rather than using public transport, and their locations are accessible to a large proportion of the population.

Major centres are also best placed to weather the disruption occurring in retail currently where many businesses are closing down or rationalising store portfolios. Stores in these major centres, which are able to attract people from across the country, are more likely to be chosen to remain open through this difficult period. From an investor point of view, this provides a more secure expectation of income.

It is not possible to control the movement of people on the high street to the same extent, leading to footfall stagnating at c.60% year-on-year. High street footfall also continues to suffer, particularly in London, from the lack of workers returning to offices and low tourist numbers. The return to offices will take some time, and this will continue to support greater growth in shopping centre footfall as consumers get more confident to go out shopping.

However, one of the main threats to the recovery of the whole retail market is the ability and aptitude of consumers to go out and spend. There has been a measured recovery in spending in recent weeks. Retail sales are now up 1.7% for July compared to pre-lockdown levels and are just 0.7% lower than the same time last year. A continued recovery of retail sales will depend on the wider economic recovery and the long-term success of the government furlough scheme. With this scheme concluding at the end of October, the likely increase in unemployment may lead to a slowing of progress for retail sales and footfall.