2024-10-21-莱坊-Retail_Monitor_Q2_2024_2页_1mb

UK Retail Monitor Q2 2024 Summary

Core Content

The Knight Frank Retail Monitor Q2 2024 provides an overview of the UK retail market, highlighting both the challenges and opportunities faced by retailers and investors. The report discusses macroeconomic trends, consumer sentiment, and investment activity across different retail subsectors.

Main Points

Consumer Markets

• Economic Improvements: The macroeconomic environment showed signs of improvement, with inflation easing to 2.1% (CPI) in Q2 from 3.5% in Q1.
• Consumer Confidence: Confidence metrics improved each month, driven by positive economic expectations.
• Retail Sales Performance: Despite rising confidence, retail sales disappointed, with a +0.5% growth in sales values compared to +3.5% in Q1, and a -0.5% decline in volumes.
• Weather Impact: Unsettled weather, including Storm Kathleen, significantly suppressed demand for spring/summer products, leading to a -3.5% monthly contraction in clothing sales, with June showing no recovery (-4.5%).
• Online Sales: The Online Retail Sales Index continued to reflect weak consumer demand, with no recovery observed.

Occupier Markets

• Discounting Trends: Retailers resorted to heavy discounting to boost sales, particularly in the fashion sector.
• Brand Performance: Brands like H&M and Next anticipate sales declines, while others like M&S, Decathlon, and Pandora made progress in turnaround and growth strategies.
• Expansion Intentions: Some brands, such as Greggs, Mango, and Superdrug, announced new expansion plans.
• Distress Signals: Muji placed its European arm into administration, and Carpetright followed shortly after.
• Vacancy Rate: The national retail vacancy rate remained stable at 15.3%.

Investment Markets

• Slow Start to H1 2024: Investment volumes were £2.23bn, a decrease from £2.89bn in H1 2023.
• Sector Performance:
  • Retail Warehousing: Strong demand, with prime assets in high demand.
  • Shopping Centre Market: Revived, with the best buyer pool in five years and competitive bidding.
  • Foodstore Market: Volumes normalized after a strong 2023, aligning with 10-year averages.
  • High Streets: Underperformed, at 60% below the 10-year average, due to limited availability of large properties.
• Sentiment Improvement: Overall sentiment improved, with total return forecasts for 2024 revised upwards to 8.0% from 6.5%.
• Sub-sector Upgrades: All retail sub-sectors saw upward revisions in return forecasts.

Key Information

• Consumer Confidence: Improved throughout Q2, but retail sales did not reflect this optimism.
• Weather Impact: Severe weather conditions played a critical role in suppressing demand, especially for seasonal products.
• Occupier Strategies: Brands are focusing on operational improvements and strategic growth, with mixed results.
• Investment Trends: A slow start to the year, but positive signs for the second half of 2024.
• Vacancy Rate: Stabilized at 15.3%, indicating ongoing challenges in retail space utilization.

Visual Highlights

• Consumer Confidence Metrics: Showed a gradual build-up, though not enough to offset weak sales performance.
• Retail Vacancy Rate: Stable at 15.3% over the last 12 years.
• Rental and Capital Value Growth: Slight improvements observed, with upward revisions in forecasts.
• Investment Volumes by Sub-sector: Highlighted the relative strength of retail warehousing and shopping centres.

Conclusion

Q2 2024 was marked by weak consumer demand, challenging weather conditions, and modest retail sales growth. However, investment sentiment improved, with positive forecasts and increased activity in certain sub-sectors. Retailers are adapting to these conditions through strategic changes, operational improvements, and new expansion plans, while the market continues to show signs of recovery in the second half of the year.