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Appendix E Retail continued
Total retail sales in the UK increased by a very modest 0.5% pa in 2020, compared with 3.4% growth in 2019 (nominal). This forecast is based on the Spring 2021 Main Scenario and comprises a modest re-bound in total retail sales of 2.8% pa (real) in 2021, and further diversion of retail sales to online.11
Better performing retailers, including those that were able to keep their stores open throughout the UK lockdown periods are expected to show greater resilience in 2021 and the years after. This includes supermarkets, homeware, and DIY retailers.
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Retail warehouses have shown to be more resilient throughout the lockdown periods in part because many are anchored by supermarkets or DIY retailers and their extensive car parking helped footfall recover quicker compared to other retail provision.
Super-regional and major centres are well placed to weather the disruption occurring in retail. Retail stores in these major centres, which can attract people from a wide geography, are able to benefit from a consumer desire for a more holistic shopping experience whereby a greater emphasis is placed on the supplementing of retail provision with an entertainment and food and beverage offer- in short, a more experiential offer.
Although some retail formats have proved resilient, the future of retail is uncertain, but within this uncertainty there are opportunities. Excess retail space coupled with falling values will create opportunities in the medium and long term for assets to be repositioned to include alternative uses. Shopping centre and high street owners are expected to implement innovative ways of using vacant space, like pop-up retail, or co-working space which could provide a temporary solution to filling vacant units whilst also diversifying the retail offer.
The Covid-19 pandemic has also been seen to accelerate the changing behaviours that were already manifesting such as a tendency to shop online. There has been a rise in the number of retailers placing a greater emphasis on ecommerce, with retailers investing in their online platforms and generating a larger proportion of their sales online. CBRE forecasts that online penetration will reach 26% in 2021 and 30% in 2025.
Figure 1 below sets out all retail nominal rental growth, retail sale growth, and online penetration growth through to 2025. It suggests that whilst retail sales growth is forecast to be flat over the coming years, ecommerce is expected to continue its upward growth trajectory.
