2023-05-12-莱坊-Retail_Monitor_Q1_2023_2页_1mb

UK Retail Monitor Q1 2023 Summary

Core Content

The Knight Frank Retail Monitor Q1 2023 provides a quarterly analysis of the UK retail sector, highlighting trends in consumer and occupier markets, as well as investment activity. The report underscores a generally stable and resilient retail environment, with no major alarms or surprises, despite ongoing challenges like inflation and cost pressures.

Main Points

Consumer Markets

• Consumer Confidence Improved: Confidence increased by +9 percentage points overall, reflecting a positive shift in sentiment.
• Economic Outlook Optimistic: The improved outlook on the general economy, particularly the expectation that high inflation will ease later in the year, has boosted consumer confidence.
• Personal Financial Situation: Consumers remain confident in their personal finances, despite wages lagging behind inflation.
• Retail Sales Growth: Retail sales values (amount spent) rose by +5.6%, continuing a growth trend.
• Volume Impact: Sales volumes (number of items purchased) were affected by inflation, declining by -3.8%, but less severely than in previous quarters.
• Discretionary Spending: Demand for discretionary and large-ticket items (clothing, cosmetics, furniture) remained strong, with notable increases of +13.3%, +26.6%, and +5.2% respectively.
• Online Sales Penetration: Online sales penetration has plateaued at around 25%, indicating that the store experience remains important to consumers.

Occupier Markets

• Minimal Distress: There has been very little occupier fallout, with the market being more stable than anticipated.
• Operational Challenges: The only major household retailers to go into administration were Paperchase and M&Co, both of which have a history of private equity ownership and prior administrations.
• Cost Inflation: Cost inflation continues to be a significant challenge for operators.
• Retailer Preparedness: Most retailers have upgraded their guidance rather than issuing warnings, showing they anticipated the challenges and have communicated accordingly.

Investment Markets

• Muted Activity: Investment activity started quietly, with sentiment improving only slightly from a subdued Q4.
• Deal Volumes: Overall deal volumes were £1.8bn, below the 5-year quarterly average of £2.1bn.
• Retail Warehousing as a Bright Spot: Retail warehousing is expected to outperform other sub-sectors, with total returns forecasted at 6.3%, compared to 4.7% for All Retail and 2.1% for All Property.
• Stock Availability and Debt Costs: The lack of available stock and the cost of debt are key challenges affecting investment volumes in the retail sector.
• Vacancy Rates and Rental Growth: Vacancy rates and rental growth trends show mixed performance across the retail sub-sectors.

Key Information

• Consumer Confidence: Improved significantly, with a +9 percentage point increase.
• Retail Sales Growth: Continued to rise, with values up +5.6%.
• Volume Decline: Sales volumes declined by -3.8% due to inflation.
• Discretionary Spending: Strong demand for clothing, cosmetics, and furniture.
• Online Sales: Penetration has stabilized at around 25%.
• Occupier Stability: Minimal distress in the occupier market, with operational issues rather than economic downturns being the main cause.
• Investment Trends: Retail warehousing is the preferred sub-sector, but deal volumes were constrained by stock availability and debt costs.
• Market Outlook: The sector is expected to continue its slow renaissance, with resilience and preparedness among retailers.

Conclusion

The UK retail sector in Q1 2023 shows signs of resilience and gradual recovery, with improved consumer confidence and stable occupier markets. While investment activity remains subdued, retail warehousing is a standout sub-sector. The sector is navigating inflationary pressures and operational challenges, but with a cautious optimism and proactive strategies, it is expected to continue its slow but steady renaissance.