Market towns may not be blessed with the same level of footfall as the high street, but, in these cash-strapped times, they can provide some precious stability. Ben Cooper assesses their worth

The high street is not the most pleasant of places to be at the moment. Retailers are having to climb over each other to chase the same pound, while the sound of belts tightening becomes more and more audible. It makes sense, then, to consider a less cut-throat retail stage to trade on, where sales may not be as great, but costs and competition are less intense.

And this is exactly what many retailers are doing. Market town developments have not received the same level of attention as their big city counterparts, but there are plenty springing up across the UK and retailers are finding the offer of lower rents, less competition and the often affluent catchments an inviting option. Waitrose’s signalling last month that it was considering smaller-format stores in market towns is a case in point.

Although the catchments may be smaller, market towns are often very affluent and welcoming to niche, aspirational retailers. While this is a trade-off that may not be worthwhile for all retailers, it is certainly one that those in the same vein as Waitrose are considering. The question is whether market towns will prove to be the safe haven that these retailers are hoping for over the coming years or whether they are better off riding out the storm in the destination shopping centres and high streets.

Last month, Waitrose opened its first new-format store in the market town of St Neots in Cambridgeshire. With a population of 29,000 and surrounded by wealthy Cambridgeshire countryside, this Saxon town was an appealing location for Waitrose. The retailer is toying with the idea of opening more smaller-format stores to tap into a market that is less intensely competitive.

The John Lewis Partnership-owned retailer’s decision to enter the town was in response to the growing challenges of finding sites, according to Waitrose managing director Mark Price. He said at the time: “Our brand has operated most successfully at around 20,000 sq ft, but, in an increasingly competitive market, the challenge was to develop the potential of smaller shops in our estate.”

One very different retailer thinking along these lines is Fat Face. The retailer’s signing for a store in Farnham, near Guildford, last month followed a string of store openings in smaller towns, including Epping in Essex, Tavistock in Devon and Marlborough in Wiltshire.

What the majority of retailers that have succeeded in market towns have in common is their high-value, low-volume nature. This suits the smaller store formats, as well as a smaller catchment that has a relatively high spending power.

Another plus for retailers is the geographical spread of market towns. While the Southeast houses many of the most affluent smaller towns, it by no means has a monopoly on them. A retailer can build up a strong portfolio of stores in towns that have similar catchments and retail requirements, which are scattered evenly across the UK.

For the right retailer, the opportunities are immense, according to Nigel Gillingham, director of letting agent Markham Vaughan Gillingham. He says: “It can be a safer option. If you’re a more aspirational retailer, you’ve got a much higher profile than if you’re in a bigger shopping centre. Your costs are lower, it’s less competitive and sales may not even be lower.

“While there is general sensitivity in the market, I’m finding that many of the better-quality retailers in market towns are very hopeful.”

For health food retailer Julian Graves, market towns are a portfolio staple. With catchments that invariably include the retailer’s core target market – older, more affluent shoppers – market towns tick all the right boxes. Originally trading as a market stall business, in Gloucestershire’s Moreton-in-Marsh – a town with a population of just over 3,000 – the retailer has expanded its portfolio to more than 350 stores. While these are spread across a range of locations, about 75 per cent of the retailer’s shops are in smaller towns.

Julian Graves property director Neil Dixon says: “Being in a market town allows you to get a larger store in a prominent position – often the best store in the town – at a realistic rent level. You’ll be known by the locals very well, rather than being lost in a bigger town or shopping centre.”

And this is what could make market towns something of a safe haven in tough times, says Dixon. “You have an established local trade,” he explains. “People are in the habit of shopping there, so your trade is less under threat. The whole thing is a bit less sensitive to economic problems.”

However, opening a shop in a market town is not without risk. Establishing and retaining your customer base is easier said than done when the catchment is being drawn by a larger town centre. And this is often the case, says King Sturge partner Martin Crossley. “What you get are schemes designed to capture a catchment from a number of towns, like the Eden centre in High Wycombe, which serves a whole range of small market towns.

“Their raison d’être is to say to retailers: ‘Why be in 10 smaller market towns, when you can be in one and take catchment from all 10?’,” he says.

But whether or not this kind of centre succeeds, says Crossley, depends on its strength compared with each market town. If a market town provides the quality and range of retailers that the local population needs to keep its interest and the bigger centre is designed poorly, then the town is likely to feel less of an effect.

“If the overall proposition of a bigger centre is attractive for a shopper, it will work,” says Crossley. “Where a market town does well is when bigger centres are less pleasant than the towns around them as a shopping experience. They need to be well-designed and include good parking facilities.”

In the case of the Eden centre in High Wycombe, while it has a strong retail offering, its impending arrival did not stop Fat Face and Crew Clothing signing in nearby Henley-on-Thames in the past two years. This demonstrates that, for some retailers, the pull of being in a well-established town with a loyal catchment is worth more than being in a centre, competing with a greater number of retailers for the same shoppers.

“Market towns are holding up well on their own two feet,” says Mortlock Simmonds Brown Leverett director Steve Brown. “They have their own shoppers and I can’t see them being too affected by bigger centres like Eden in High Wycombe.”

Despite the attraction of a market town that offers a small but wealthy platform, success is a numbers game. Retailers’ main objective is to drive sales and keep costs low and, while rents are relatively low in smaller towns, some costs are the same, such as staff and overheads. To match the sales figures that a store might achieve at a city centre scheme or a high street pitch, a retailer might have to open half a dozen stores and the costs quickly add up.

Even for the most loyal market town retailers like Julian Graves, it makes sense to cover as many bases as possible. The health food retailer has demonstrated this by developing a high street presence alongside its expansion into market towns.

For many retailers, despite the advantages, market towns may be out of the question, but, for many others, their bottom line will benefit from having a presence in a good scattering of market towns.

There’s no single solution to an impending downturn. But property is one of retailers’ heaviest outgoings and is always an area that comes under scrutiny when the chips are down. For the right retailer, a market town offers lower rents, lower overheads, less competition and the opportunity to be a big fish in a small pond, rather than a needle in a haystack.

Topics