SCOTLAND has what some describe as a mature retail sector, another way of saying that we probably have as many shops and shopping centres as we need.
But it is the rest of the UK which is in danger of providing an oversupply and, according to Colliers CRE, Scotland remains an attractive location for continuing retailer expansion.
Not that there is much of it in the pipeline but Colliers, in its
Midsummer Retail Report, highlights the changing emphasis and challenges for developers.
"It is difficult to see developers bold enough and brave enough to come forward with new schemes," says John Duffy, Colliers' head of retail in town, Scotland. "Getting consent for out-of-town is now extremely rare and developers have to be much more innovative.
"But when considering the shopping centre and other large-scale retail development pipeline the Scottish picture is more favourable than the national one, which is in danger of producing an oversupply.
"In the wider market for Scotland, while there has been a number of retail failures, most have resulted in the companies being bought out of administration and remaining relatively intact."
This point is expanded upon in the report, which says that, while there is undoubtedly much caution in the market, deals are still being agreed and some locations are also still seeing retail growth.
The report continues: "It is true that there have been a number of retailer failures, but many of the companies were rescued within a short space of time and the best stores retained by the new owners. Even more encouragingly, some are now seeking to expand again. It is also fair to say there have been fewer actual failures than were predicted at the start of the year.
"Cynics would say – and many landlords would agree – that administrations are increasingly being used as a ruse to offload poor performing stores in a cheap and easy fashion.
"So perhaps these 'failures' are less a reflection of a struggling market than some assume, and perhaps more a convenient way of restructuring a portfolio. Retailers are struggling with the economic downturn and falling consumer confidence arising from the credit crunch and falling house prices. The number of business failures and the media focus on negative news serves as a constant reminder to the boardroom decision makers that entering into expensive commitments in uncertain times can be fatal.
"Where overheads are considered to be at a manageable level or where risks are low, competition is still driving rents up and will continue to do so."
The report says that some banks are pretending to be still in the market while others are openly saying that the "tills are closed". Where finance is available, the banks are also dictating on which covenants they are prepared to lend and there is an obvious nervousness about the retail occupational market.
Chris Humphrey, Colliers' associate director, out-of-town retail Scotland, has spotted a novel way of getting planning consent. "It's the re-generation angle," he says. "There are no major schemes out-of-town completing in Scotland this year and this is a combination of general market conditions and the difficulty developers have in securing planning consent for out of town.
"The majority of retailers who want to be out of town are already there and where retailers have such requirements they have to be cautious about not cannibalising their existing business.
"Local authorities now concentrate on developing town centres but there is a big regeneration argument which is why Silverburn and Glasgow Fort have been allowed to develop as town centres while being out of town."
The full article contains 607 words and appears in The Scotsman newspaper.
