As the industry awaits the outcome of M&S’s portfolio review, Retail Week takes a look at the health of its estate.
Much has been made of the M&S stores review, the results of which are expected to be revealed when the business issues its interim results next Tuesday, and many industry observers believe that boss Steve Rowe needs to cut space significantly.
There has been speculation that the retailer will exit its Paris Champs Élysées store, opened in 2010 by former boss Marc Bolland.
But most of the focus is likely to be on the core UK estate.
In Britain, Marks’s store estate is viewed as problematic as shopping habits continue to change and sales move online at a time when M&S is finding it tough to improve its fashion performance.
Property research and consultancy specialist Local Data Company has provided quantitative data exclusively for Retail Week, which reveals the quality of the retailer’s large UK estate.
M&S’s 299 department stores are primarily split across shopping centres and high streets. There are 53 on retail parks.
Over the last 12 months, the retailer has reacted to the upwards trend in retail park footfall by adding 8% to its retail park estate. However, it has failed to close stores in other types of location where footfall is, generally, on a downward trajectory.
How attractive are M&S’s locations?
Local Data Company found that, according to its Health Index, M&S’s store estate tallies with the national average score of all retailers – six out of nine. A quarter of M&S stores fall into that category.
However, a closer look shows that store quality varies hugely, with 42% of M&S’s store estate falling below that line, and just 30% scoring seven or above.
Local Data Company director Matthew Hopkinson said: “The quality of Marks & Spencer’s store estate varies quite a lot.
“In part this might be as a result of legacy leases, but also how it has moved from the traditional high street in favour of retail parks and large shopping centres, following the likes of Next and others.
“A deep understanding of which locations and formats will perform best is key to M&S’s future success”
“M&S faces a particular challenge in how to format its stores based on having a food and non-food offer.
“A deep understanding of which locations and formats will perform best is key to M&S’s future success and this needs to take account of their competitors, the changing way we shop, the changing fortunes of locations they are in or might want to be in and finally the all-important ‘destination’ factor that is driving customer journeys and spend patterns.
“The places that M&S has retailed in for many years are changing dramatically and an ongoing understanding of how, and to what effect on their business strategy, is critical.”
The data on which this report is based was collected by physically visiting town centres and out-of-town locations across the UK.
The information on 650 major UK towns, 898 shopping centres and 1,234 retail parks is updated on a six- or 12-monthly cycle.
The Health Index was developed by Local Data Company and Morgan Stanley, looking at the attractiveness of a retail location.
Anchor retailers refer to a list of specified retailers which make a location more attractive.
The index has several variables which are used to give a rating of between one and nine, explained below:
|Population density||Population size compared to the number of units|
|Vacancy rate||Vacant units as a proportion to total units compared to UK average for retail type, eg retail parks GB vacancy is 9.8%, a rate of 11.0 at a park would carry a score of -3|
|Persistent vacancy||Number of vacant units vacant for longer than one year|
|Proportion of charity shops||% of units occupied by charity shops compared to the UK average (+2.3% equals to -2 points)|
|Presence of anchor retailers||Point for every anchor retailer from a pre-selected list (eg Curry PC World, Next, M&S etc)|
|Movement of anchor retailers broken down into opening and closing||Plus or minus a point for every anchor retailer which has arrived or closed in the past 24 months|
|Dwell time||% of leisure units in the retail location compared to the UK average (-4.1% difference equals -4 points)|
|Department stores||Three points for every department store in the retail location|
|Cinema score||Three points for every cinema in the retail location|
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