The weak pound is forcing many Brits to scrap trips abroad while attracting more tourists to the UK, and retailers in the right towns can take full advantage this summer, says Ben Cooper

All the old jokes about grey, windswept British beaches and Hi-de-Hi! holiday resorts might not seem as funny this year. With so many people feeling worse off than they did 12 months ago and the feeble state of sterling, many are opting to spend their much-needed breaks on home turf.

Figures for flights overseas are already down this year and are likely to remain poor. The amount of outbound passenger traffic from all UK airports in February was down 20 per cent on average compared with the same time last year.

For the country’s many tourist spots, this is all good news. Domestic holiday bookings are on the up and Britain’s coastal towns, tourist cities and countryside attractions are expecting to reap the rewards. This, combined with the increasing number of tourists from abroad taking advantage of the weak pound, presents a golden opportunity for retailers.

Crew Clothing founder Alastair Parker-Smith says: “Without doubt more people are going to be taking their holiday in the UK. For us it’s going to have a really positive impact. We can almost do a whole year’s business in that two-month period.”

Developer Bill Harkness, who owns Delamere Estates, says his retail tenants have noticed a marked increase in the number of foreign and domestic visitors at two of his schemes. The first is Southend-on-Sea in Essex, where Delamere has just completed an extensive refurbishment and brought in Next and New Look. The second is Abergavenny, on the edge of the Brecon Beacons in Wales. “Abergavenny is a classic example of a very pretty market town in an accessible part of the UK. My tenants like Millets are saying there are stacks more people coming in – both British and European.”

Animal retail director Jimmy Reynolds adds that international tourists are significantly boosting trade. “People coming into the UK with their strong currencies are hitting the tourist sites and also hitting the shops nearby. We’re performing above expectations and a lot of that is because of people coming into the UK.”

False dawn?

But one summer, however golden it might be, won’t change the state of the retail property market for good. For most towns up and down the country there are still grave problems in the lettings market, even in isolated pockets that benefit from tourism. So what impact will the rise of tourism have on the prospects for the property markets in these towns?

Opinion on whether there is an opportunity to be exploited is divided. Outdoor sports and lifestyle fashion retailer Joules Clothing is expecting a bumper summer and has just completed a push to expand its presence in the UK, with five new stores having been signed in the past two months, in Wimbledon, St Andrews, Harrogate, Tenterden and Tunbridge Wells in Kent. It has also completed a major refurbishment of its store in the seaside resort of Padstow, on the Cornish coast.

Joules’ strategy for the year is based around two main concepts, the “staycation” and “glamping” (glamorous camping), and is selling the idea of the UK holiday to Brits. Founder Tom Joule says: “We’d seen this a long way off. We felt that more and more people would be trying to save money and would be holidaying in the UK this year. There’s going to be a lot more footfall in these towns and people aren’t going to stop shopping.”

King Sturge partner Charles Miller says that the opportunity for retailers to cash in is greater now than ever. “There are recognised seaside towns and resorts and a lot of them have lifted the bar over the last few years,” he says. “Now the retailers are starting to go there. Lifestyle retailers like Billabong who are in these locations have seen significant growth over the last few years.”

However, Harkness warns that extra visitors do not necessarily mean a relative increase in spend or a lift to the property markets in these locations. “There are more people but they’re spending less money,” he says. “I think retailers are so terrified they’re not looking to add anything to their existing portfolios and where they can they will get rid of stores that aren’t making profit or make them work by changing the offer around. Most people aren’t adding new stores.”

Mathew Illsley, company director of Bournemouth-based property agency Meridian, says that demand for new stores from national multiples is generally still sluggish. “We’re seeing pockets of activity but fashion retail is still quite slow,” he says. “In Bournemouth we’re seeing a lot of small retailers going bust. There were a lot of one-man-band companies, but there aren’t enough big-name retailers. If the well-known brands came to the town they would do very well.”

As such, Illsley believes there are opportunities but only for certain well-known brands and advises retailers to exercise caution in terms of store expansion in these areas. “I think it would be a pretty bad move for a small retailer to open 20 stores on the south coast because of the rise in tourism,” he warns.

This sentiment is echoed by Parker-Smith. While he is optimistic about Crew Clothing’s prospects this year in terms of sales, he is maintaining a cautious approach to expansion.

“There aren’t that many more coastal locations we want to go into,” he says. “There are great opportunities out there – it’s just making sure you take the right ones. We’re being very prudent about the ones we take. Anyone who doesn’t exercise caution is completely blindfolded to what’s going on in the world.”

An influx of visitors to the UK’s holiday spots is clearly very good news for those already well placed to take advantage, but the strain that retailers are under because of the recession is handicapping growth in almost all markets and holiday spots are no exception. Whatever this summer brings, caution will still dominate retailers’ property strategies for the foreseeable future.

Gavin Patient, sales manager at Bournemouth-based property agency Lovett International, says: “If you throw caution to the wind and say: ‘It’s going to be good this summer and it’s going to fix all our problems’ you could suffer.”

Forecasts for flights this summer compared with last year

Number of international flights from the UK to anywhere

2008: 186,815

2009: 179,095

(drop of 4.1 per cent)

Number of international flights from the UK to Europe

2008: 152,901

2009: 145,099

(drop of 5.1 per cent)

Source: Official Airline Guide


Tourist retail hotspots

The top 20 most tourist-oriented retail spots (excluding airports)

1. Carnaby Street, London

2. Westfield London

3. Piccadilly, London

4. Bicester Village, Oxfordshire

5. St Helier, Jersey

6. Bond Street, London

7. Regent Street, London

8. Gunwharf Quays, Portsmouth

9. Llandudno, Wales

10. Lisburn, Belfast

11. Coleraine, Northern Ireland

12. Lymington, Hampshire

13. Clarks Village, Street in Somerset

14. Bluewater, Kent

15. Covent Garden, London

16. The Galleria, Hatfield

17. Ashford Designer Fashion Outlet, Kent

18. Canterbury, Kent

19. Douglas, Isle of Man

20. Bristol

Source: Javelin Group: Tourist Orientation Index, 2009

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