Planning matters

It has been well documented that the retail and leisure sector in the UK has been through a turbulent period, compounded by Covid-19 and its aftermath. However, what has the impact been upon spending within the sector and what does the future hold? Spending forecasts sign-post short-term turbulence and a slow recovery  The UK retail and leisure sectors have experienced significant turbulence since the Covid-19 pandemic began in early 2020. The convenience (food grocery) sector benefitted during the lockdowns in 2020 with over 10% growth in expenditure, whilst the comparison goods retail and leisure/hospitality sectors suffered. The average shop vacancy rate in town centres across the country increased from around 12% to almost 15% between 2020 and 2022, with many businesses failing to re-open after the lockdowns. During 2021/2022, there was a period of readjustment with expenditure growth in the convenience goods sector reversed. The leisure sector recovered strongly with 66% growth in expenditure per head during 2021/22, as people returned to pubs and restaurants to eat and drink and spent less in supermarkets. Growth in the comparison goods retail sector was more modest – although very welcome - at around 6%. The latest Retail Planner Briefing Note from Experian sets out their forecasts on future changes in retail spending per person. To help illustrate both the impact of the pandemic upon retail spending and Experian’s views on how personal expenditure is likely to change going forward, their recommended growth rates are shown in the figure below. Source: Experian – February 2023 The latest forecasts suggest a small reduction in expenditure during 2023 across all three sectors with sluggish growth thereafter in 2024 and 2025. With the continued growth in home shopping, the short-term market outlook for the high street will be challenging. Not least given that the above growth rates are before any allowance is made for continued growth in internet shopping, which will take a significant chunk out of the spending actually available to physical shops. What does this mean for town centres? These short-term trends are not entirely new but have been exacerbated by recent circumstances. Although the proportion of convenience goods (i.e. food/grocery) retail uses has increased slightly – buoyed by the number of smaller format stores opened by the large national operators - comparison goods retailing in town centres has declined steadily over the past decade. The proportion of town centre shop premises occupied by comparison goods retail outlets has reduced significantly - from over 41% in 2011 to only 28% in 2022. The banking/financial sector also reduced significantly. Conversely, the proportions of food/beverage and other non-retail services grew during this period. The decline in comparison goods retail outlets has been experienced across all retail sub-sectors, but particularly significant for certain sectors, including clothing/footwear and books/stationery. Experian’s latest expenditure projections suggest that these trends are likely to continue. As indicated above, expenditure growth in the leisure sector is expected to be much lower in the next few years and local authorities will need to continually refine their strategies to seek to avoid, and where necessary, respond to further increases in vacancy rates.        Retail is still very much alive There will be locational differences with areas with high population growth or existing gaps in provision likely to be most resilient. Some sectors, including discount retail (both food and non-food) are continuing to expand, and it is important that local authorities are able to respond positively to these proposals – directing them to the locations which will best support their town centres. Aside from traditional retail, research from LDC confirms that fast food takeaways, beauty salons, nail salons and barbers were all in the top ten fastest growing categories in 2022, based on net change in units. This is not necessarily something to base a strategy around but certainly helpful to smaller centres around the country, in bringing increased diversity of use and new drivers of footfall. But town centre strategies cannot stand still Winners and losers will emerge as centres compete for market share. However, those areas which plan pro-actively to deal with the above challenges have the best chances of success.  Town centre strategies should continually be revisited, taking into account changes in consumer demand – the need to reduce reliance upon retail is accepted wisdom but it is not enough to rely on traditional leisure activities (and particularly food and beverage uses) either. A more imaginative approach is therefore essential.   Lichfields has helped a number of authorities develop strategies to deal with the challenges facing their centres. In Stockton-on-Tees, we have secured outline planning permission for the redevelopment of a former shopping centre – acquired by the Council to address a longstanding vacancy problem – to provide a new urban park and mixed use development, connecting the wider town centre with the River Tees. Also on Teesside, and after helping secure £25m Town Deal funding for a package of measures in Redcar, Lichfields obtained permission for a new cultural and leisure hub, along with public events space - providing a year-round attraction with spin-off benefits for the wider town centre. Any new strategies should be bespoke to each town’s needs, also taking into account market demand. Retail may still be part of the solution, not least where there is latent demand in the discount sector, and local authorities must ensure they have the resources to deal with such proposals. However, the latest forecasts from Experian confirm that it can no longer be the central feature. Leisure will play a part, but a simple glance at the definition of ‘Main town centre uses’ in the NPPF Glossary tells us there is a much wider range of uses which should come into the equation. This includes offices, hotels and conference facilities, theatres, museums and/or concert calls. Whilst not strictly a main town centre use in planning terms, housing will inevitably play a role in most centres, and outdoor space offers the flexibility to perform a range of functions. Up to date evidence on retail and leisure spending will always be important but local authorities must take a much broader outlook to genuinely support their centres. Image credit: Jonny Gios via Unsplash

As highlighted in an earlier blog (Jonathan Wallace, Town Centres: A Time for Change), the high street is finally climbing up the political agenda. Although other issues – the housing crisis, climate change and of course Brexit - remain at the top of the list, the Government is, at last, waking up to the fundamental change being experienced in our town centres. We now have a High Streets Minister (Jake Berry) who, to his credit, set up an expert panel led by Sir John Timpson – of the shoe repairs chain, a staple of many high streets across the country. This panel published their recommendations in the High Street Report in December 2018. These included the creation of a High Streets Task Force to share information and expertise across the country, the Future High Streets fund (which has since been launched) and other short term solutions, related to town centre housekeeping, empty shops and parking. In parallel to this work, the Government undertook a consultation on supporting the high street, with a number of changes to Permitted Development Rights (PDRs) being announced. These new rights, which came into force on 25 May 2019, allow: shops (A1), financial and professional services (A2), hot food takeaways (A5), betting shops, pay day loan shops and launderettes to change use to an office (B1(a)); and hot food takeaways (A5) to change to residential use (C3). In addition to the above, the temporary change of use between commercial and community uses has also been extended from two to three years and the scope of the PDR extended to allow temporary change of use to certain class D1 uses. This is intended to give business and community organisations longer to test the market, before applying for a more permanent permission. My colleagues Steven Butterworth and Jennie Baker previously asked the question - would the new PDRs really improve vibrancy in town centres? The additional flexibility this brings to help centres adapt to change is a good thing. In many areas, particularly those with higher vacancy rates and limited investment, a ‘laissez-faire’ approach which prioritises re-occupation of empty units will be appropriate. The temporary changes of use also allow authorities time to weigh up any potential harmful impacts before granting permanent permissions. Some may have concerns that these recent changes could result in ‘dead’ frontages and/or that the new uses might not be ‘the right type’. Don’t forget, however, for permanent changes of use local authorities can use the prior approval process to consider the potential impact upon the provision of services or the sustainability of key shopping areas. Depending on the end use, they can also consider issues such as highways impact, noise, flooding, contaminated land and design/external appearance. Although perhaps more draconian, they also have the ability to impose Article 4 Directions which restrict PDRs. Lichfields has provided a quick reference guide to the various PDRs for changing between main town centre uses. Inspection of the different permutations raises a number of questions, not least whether a simplified version of both the Use Classes Order and these PDRs would benefit everyone. Why allow a bank to change to an office, dwelling or leisure use, but not a café/restaurant? And why could a hot food takeaway or laundrette go to an office or dwelling, but not leisure use, which would contribute more to town centre vibrancy? Rather vaguely, MHCLG confirmed in May that they will ‘amend the shops use class to ensure it captures current and future retail models’. This will apparently include clarification on the ability of the A use classes to diversify and incorporate ancillary uses. It remains unclear, though, whether the Government will merge A1, A2 and A3 to create a single use class. Whilst keeping A3 uses separate makes more sense, it would be strange if Classes A1 and A2 were not merged, when you can already switch between the two without seeking prior approval. Source: Retail and Leisure Market Analysis Full Year 2018 (Local Data Company – May 2019) Whatever the outcome, local authorities cannot rely upon PDRs to promote the future health of town centres. A more flexible policy framework and approach to determining planning applications is critical. Too many Councils are still developing overly prescriptive policies relating to frontages and protecting Class A1 uses. Primary Shopping Areas will continue to have role in the larger centres but their role and composition must be re-imagined. How many more high profile retail chains need to fail before we recognise the need for new anchors for our town centres? There is no doubt more to come from the Government on this topic. Reliance by Councils on further PDR changes will only go a limited way to addressing the challenges town centre are facing. However, a more flexible and pragmatic approach, allied to a longer-term vision of what their town centres can be in future, and use of the many tools local authorities now have their disposal, could help to provide a catalyst for their revitalisation and re-imagination.