Reading between the retail lines...

Written on: 22 February 2011

We're all in need of some retail therapy, especially the shops...

It's tough at times to read between the headlines to actually work out what is going on out there in the world of retail. Percentage growth figures are bandied around, with so many of these comparisons not looking on a like for like basis and no account for the many external factors affecting them. John Lewis's weekly figures continue to look extremely depressed with minus growth virtually across the board. Even the mighty Oxford Street was -2.5% last week, and yet John Lewis put this lack of growth down to Valentines Day being at a different point to where it was last year. Seems incredible that they seem to rely so heavily on such an occasion to boost sales. Their dot com business continues to perform well, people really are getting the hang of this clicking mallarkey. We look forward with trepidation to see what happens with this Friday figures. No doubt half term will be in the wrong place too.

Although the January retail sales are up 1.6% according to the Office for National Statistics, New Look appear to be struggling, JJB are talking CVA's and speaking to independent retailers they are having a tough time convincing customers to part with cash. Yet Hammerson tell us that demand for prime retail space is up. It probably is at Brent Cross and some of its other prime assets, but even at the meccas of shopping, are the rents where they were 2 years ago? Surely any retail destination outside the top 20 must be suffering with double digit vacancy rates. The supply and demand ratio is becoming more evident than ever.

In defiance of the odds stacking against retail property, shares in real estate seem to be generally performing well with Land Securities et al bubbling along nicely. So, where is this growth coming from? It cant be from retail sales and subsequent rental growth, so how are the valuers making their valuations stack up when income is down due to the vacancy rates? Its all in the yield I hear you cry! Also, taking a long term view on these things helps to dull the pain and to believe that post Olympics, we will be in a better place. Optimism seems to be the name of the game..........

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