Essential Trends BID Market Intelligence Issue 87 Winter 2018

Transcription

1 January 2018 p1 Essential Trends BID Market Intelligence Issue 87 Winter 2018

2 January 2018 p3 Introduction Firstly, on behalf of everyone at Essential Edinburgh can I wish all our partners and Essential Trends readers a very happy new year. Our first edition of 2018 reflects on the final statistics gathered in 2017 and it is pleasing to report an excellent set of results for the city in the vital Christmas trading period. Footfall was significantly up in the city centre with December showing a footfall count of just under 14 million. key new transactions and opportunities in the Edinburgh market. The city centre continues to exhibit a low vacancy rate and enhanced rent. With a positive visitor survey and airport figures also included, it is a very upbeat first edition, I hope you enjoy the read. Edinburgh Footfall Index As reported in the previous issues of Trends, we have all 39 footfall counters in place across Edinburgh, with 19 in the BID Area. The new counters enable us to have a much wider spread across the BID, which allows us to build a clearer picture of footfall in the city centre and will help us to monitor and report on the trends by street and area. There are nineteen counters in the BID area, just under half of the 39 counters that have been installed. The nineteen BID footfall counters results represent over 90% of the total footfall counted - over 11 million people - in the BID area in November and 92% - over 14 million people in December. This months figures are reporting for November and December. Edinburgh followed the national trend of a slight upturn in sales figures against the previous year recording a 0.5% increase which was slightly less than the rest of the country. Leisure and hospitality sales continued its healthy upward curve with a year on year increase of 4.6%. This edition also includes a rental market review from our partners at Ryden, outlining some of the Roddy Smith Chief Executive Contents 03 Footfall 08 Sales Monitors 12 Ryden 16 Edinburgh Visitors Survey 23 Parking 26 Edinburgh Airport

3 January 2018 p5 The busiest week of December was 11th - 17th with week-on-week increases of 2.7% for the BID and 0.5% for Edinburgh as a whole. Although both Rose Street and George Street were up in the week of 18th to 24th December by 2.5% and 5% respectively, all other streets declined. For the last week of December only two areas showed a drop in footfall compared to the same week in 2016; the Cross Streets and St Andrew Square/Multrees Walk were down 3.8% and 6.7% respectively. The BID area as a whole saw an increase year on year of 4.3% with Edinburgh as a whole increasing 4.6% compared to an average decline of 11.8% for the UK. In past years, monthly pedestrian numbers in the city centre have followed an annual trend, with August increasing to the highest levels, then dropping quite dramatically in September and October, but as shown in the chart below, this annual trend changed in There were just over 11.5 million people counted in the BID area in August, dropping in September and October to just over 10.5 million and rising to over 11.5 million in November. Then in December there were just under 14 million people counted in the BID area alone. The following pages look more closely at the breakdown of these figures by month, time of the day and by day of the week.

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5 January 2018 Sales Monitors for November and December 2017 November and December again brought a slight upturn in sales in the city centre of Edinburgh. Comparing sales in both November and December 2017 with the same months last year a growth of 0.5% was noted by Edinburgh based retailers. Overall in Scotland, sales decreased by 0.6% in November but a minor boost of 0.8% could be seen in December. While in the UK overall, the increase was slightly more pronounced at 1.7% and 1.4% when compared with November and December Retailers participating in the Retail Monitoring Programme reported these figures for November and December The figures for Edinburgh are based on a sample of city centre retailers. The figures for Scotland and the UK were reported by the BRC-KPMG Retail Sales Monitor and the BRC Scottish Retail Sales Monitor. In the Hospitality Monitoring Programme in Edinburgh City Centre, a brighter picture can be seen. Hospitality businesses reported a turnover increase of 4.6% in December 2017 compared with December David Lonsdale, Director, Scottish Retail Consortium, commenting on the Scottish figures said: These positive results for December provided a final flourish to what was otherwise a pretty tepid 2017 for Scottish retailers. Adjusted for falling shop prices, total retail sales increased by a commendable 1.4%. Last minute festive purchases and more discounting than in previous years meant the final month of the year ended on an optimistic note for retailers, even with Black Friday in November pulling sales forward from the early part of last month. The polarisation between the performances of grocery and non-food retail sales continued, although it was less pronounced than of late. Clothing and footwear were the stand out performers, driven by online promotions. Grocery sales maintained their strong run of late, helped by customers stocking up for Christmas and with evidence of trading up to more premium items. p9 You are sent this information before publication in Essential Trends if you agree to participate in the City Centre Monitoring Project. For more information about how to participate in the Tunover Monitoring Project please contact STR, who manages this project on our behalf: tdoksanska@str.com or

6 January 2018 p11 Retail is an industry in transition, with retailers navigating profound changes in shopping habits while cash-conscious customers - challenged by rises in the cost of living hunt more and more for deals. If consumers continue to hold out for discounts this will put real pressure on retailers profit margins. The spotlight now turns to the year ahead and whether this welcome uptick in December heralds the start of a more sustained recovery in the growth of total retail sales or a further nail-biting period ahead for Scotland s shopkeepers. Helen Dickinson OBE, Chief Executive, British Retail Consortium, commenting on the UK figures said: There was both light and dark in this year s Christmas trading period. Growth in spending was in line with the, albeit modest, average for the year. However, the divergence between growth in sales of food and non-food has never been so stark. With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts. That made this year s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales. These promotions came as a welcome relief for stretched households, although the late lift in sales came at the expense of margins for many retailers. Retailers who did well in such a challenging environment got both their discounting strategy and omni-channel offerings right. Those who could offer and deliver on last minute delivery options did better, boosting online non-food sales more than 15 percent in the seven days before Christmas, a week when, until now, shoppers would have had to turn to stores to ensure gifts made it under the tree in time. With spending likely to remain under severe pressure in the next few years, it s imperative that in the forthcoming trade negotiations, the Government does all it can to avoid adding new tariffs to existing price pressures.

7 Market Review By Dr Mark Robertson, Partner at Ryden Slow economic growth and a positive jobs market have underpinned a stable period for the retail sector overall. A tighter 2018 now seems likely in the face of price inflation and cost pressures. Edinburgh city centre continues to out-perform and attract new investment, including the major Edinburgh St James at the nowdemolished former St James Centre site. The Scottish Government s Retail Sales Index for Scotland reports that sales in Scotland were up by 0.6% on an annual basis during the third quarter of This is lower than the 1.5% recorded in Great Britain and is consistent with continuing lower economic growth in Scotland. Trading figures for the Christmas 2017 period are still emerging at the time of writing. These suggest that the mainstream and discount food retailers had the best Christmases, more so than specialist food, and some high street multiples or departments (although performance did vary by retailer). Online expenditure has continued its expansion to reach 16% of all retail spend, with internet-only and click-and-collect/ store sales formats each accounting for around half of the online market. Recent confidence surveys by the CBI and Mintel provide a forward indicator of market potential. These suggest challenges as operator costs rise and consumer incomes come under pressure. This would be consistent with the current out-performance by food retailers, as staple goods (groceries) hold up better than comparison and discretionary spending. Any economic dislocation caused by the Brexit process during 2018 and into 2019 could negatively affect the retail sector, if economic activity and current low growth is further dampened. National retail operators continue to rationalise their property portfolios to focus on the best-performing locations. Edinburgh city centre is among those super-prime locations, even for increasingly online services such as banks and travel agents. There are early, selective signs of rationalisation in among leisure outlets as well as shops. Retail and October 2017 p13 leisure expenditure have managed to grow in harmony in recent years, but tighter consumer expenditure and higher food costs could potentially affect discretionary leisure spend to a greater extent. In Edinburgh city centre, the demolitions at St James Centre are now complete. TH Real Estate s Edinburgh St James development has agreed a pre-let with luxury brand Roomzzz for a 73-room aparthotel at its 850 million new mixed-used development. Roomzzz will join a 214-bedroom W Hotel, a flagship Next store and a 5-screen boutique Everyman Cinema. The project aims to raise Edinburgh from a 13th place ranking in the UK retail market, to 8th. This once-in-a-generation project is symbolic of a number of notable market trends: diversification of retail centres to include leisure and other uses; the dominance of a handful of super-prime locations in Scotland; and the continuing shift of the city centre s commercial heart to the east ends of Princes Street and George Street around St Andrew Square, St James and Waverley Station.

8 Within this burgeoning commercial quarter, Multrees Walk has seen two new occupiers during 2017, with luxury lifestyle brands Coach opening in the former Sandro unit and Holland Cooper in the former Sassoon Salon. Meanwhile, Standard Life Aberdeen and Peveril Securities completed its restaurant line up within the nearby St Andrews Square development, with recent openings by Argentine steak house Gaucho and The Ivy on the Square along with Dishoom, The Refinery and Vapiano. On the other side of Princes Street, fashion retailer Damaged Society and AdoraBubble Tea have taken units in Waverley Mall. There has been a trend for relocation within the city centre. All Saints relocated from Princes Street to the French Connection unit on George Street, while Cath Kidston has backfilled the All Saints and will relocate from George Street. Xile Clothing relocated from Frederick Street to George Street, and Five Guys opened a restaurant in its vacated space. Flight Centre is relocating from their North Bridge outlet into the former McColls on Hanover Street. The city centre hotel market continues to be active as visitor numbers increase (also boosting destination retailers in the city centre). The Hampton by Hilton Hotel opened in Fountainbridge in November The Erskine House office building on Queen Street has sold to Yotel for its first operation in Scotland, a 280 cabin room -style hotel to open in The new Carlton Hotel on Market Street is to open in Meanwhile, two traditional New Town hotels - Howard Hotel on Great King Street and Channings on South Learmonth Gardens - are to close and will be converted into residential apartments, mirroring the recent trend in the New Town office market. Some hotel operators are entering the Edinburgh market via existing assets. The former Premier Inn at Haymarket has rebranded to a Leonardo Hotel and the former Roxburghe Hotel is now the Principal Edinburgh Charlotte Square. The prime retail property investment market has been active. Notable city centre transactions include the sale of Jenners, the iconic department store at Princes Street to Anders Povlsen for 53 million on a long lease to Waverley Mall on Princes Street was sold to Moorgarth for c. 23 million. Among Princes Street s shop units, Associated British Foods plc acquired number 111, let to River Island, for 9.21 million. Fidelity Investments International purchased 119 Princes Street, let to Card Factory and H Samuel, for 7.35 million. A private investor purchased the Levi Strauss units 109 Princes Street for 4.13 million. The House of Fraser department store at the west end of Princes Street has recently been put up for sale at 13.7 million. October 2017 p15 Looking beyond the core city centre, the wider Edinburgh retail market has been active. Craigleith Retail Park has attracted homewear retailer Homestore & More, Card Factory, Starbucks and Toys R Us. The former BHS unit at Cameron Toll Shopping Centre is now occupied by Aldi, followed by investment from Subway, Greggs, Vaporize and the Gym group. Plans to refurbish The Gyle shopping centre include new outlets for Krispy Kreme, Noa Noa, The Gallery, Hawkins Bazaar, The Works and Menkind. Ocean Terminal has introduced an indoor roller skating rink and a skate park in its former BHS store. Fort Kinnaird movers and new entrants include Office, O2, Tui, Oak Furniture Land, Wilko, Card Factory, Waterstones, Schuh and Tapi Carpets. The table on page 10 highlights trends in leading retail market indicators in Edinburgh since Dr Mark Robertson is a partner at Ryden and head of the firm s consulting group. He is editor of Scottish Property Review and is an External Tutor, Property Investment Appraisal (MSc) at Napier University. For more information about Ryden please visit

9 Edinburgh Visitors Survey - Quarter 4 results According to the Edinburgh Visitor Survey, an ongoing survey conducted by STR on behalf of Essential Edinburgh, visitors to the BID area in Q4 (October to December) 2017 expressed their opinion that the part of the town managed by Essential Edinburgh outperformed the rest of the city on a broad range of visitor experience aspects. However, repeating the trend of previous years, car access and parking were rated less favourably compared to the rest of the city. perceived notably less favourably. The table below shows how much visitors to the New Town spent on different aspects of their trip. Taken as a whole, expenditure went up by 7% in Q compared to Q The most January 2018 significant increase was evident for shopping expenditure whilst the opposite was true for accommodation expenditure. A broadly similar trend could be seen among staying visitors although a higher increase in overall expenditure of 8.1% was recorded among these visitors. p17 The Edinburgh Visitor Survey asks visitors encountered in the New Town how they perceive the BID area compared to the rest of the city in order to help Essential Edinburgh gauge their progress and the impact of ongoing activities. The following charts show a comparison of visitor experience in the BID area to the city area overall. It is important to bear in mind that the chart takes into consideration only visitors who expressed either a positive or negative preference. The results suggest that the area managed by Essential Edinburgh is more positively perceived than the rest of the city. Visitors tended to most favourably rate public transport access and quality of shops with 9 out of 10 visitors (who expressed a preference) rating the BID area better than the city overall. Furthermore, visitors to the New Town were more likely to indicate positive impressions in terms of safety, cleanliness, friendliness, quality of bars and restaurants and signage. Encouragingly, perceptions of safety in the BID area were more positive in Q compared to Q In contrast, ease of access by car and parking facilities in the BID area continue to be a challenge and as in the previous years were

10 Edinburgh Visitors Survey - Annual 2017 Results January 2018 p19 In 2017, STR interviewed 1,398 Edinburgh visitors encountered in the New Town to assess their profile, reasons to visit, activities undertaken, satisfaction scores and expenditure patterns. The most significant factors encouraging visits were history of the city and the Castle cited by 73% and 56%, respectively. However, the importance of these two drivers dropped in 2017 compared to At the same time, the role of personal recommendations in attracting visitors to the city decreased slightly. Furthermore, 2017 recorded a slight increase in the importance of shopping as a driver to visit the city. Visitors to the New Town / BID Area were also asked which activities they undertook on their trip to Edinburgh. Walking around the city continues to be the most popular activity. It is positive to see that visitors to the BID area were more likely to go shopping as well as go to pubs, bars and restaurants compared to the previous year. However, visitors engagement with museums in the city dropped by 6% in Visitor ratings in terms of customer service were generally on par or above the levels recorded in Visitors attributed scores of above 8 out of 10 for customer service at each of the seven visitor touchpoints. This result indicates that there were generally very positive interactions among tourism sector staff and visitors in the city. The service provided by attractions continued to be perceived most positively and the rating increased to its highest level ever (9.0). The most notable increase in customer service satisfaction was evident in the case of service provided at shops. However, as in the previous years, visitors attributed the lowest scores to this element of customer service.

11 January 2018 p21 The average spend of BID area visitors totalled and rose by 0.3% compared to The growing proportion of visitors going to pubs, bars and restaurants and visitors going to shops translated into increased expenditure on these aspects of visit. The most significant annual increase was evident for shopping expenditure (7.1%). That said, money spent on accommodation again accounted for the largest share of the overall spending, despite decreasing by 3.8%. Looking at visitors who stayed overnight in the city, it is worth noting that their expenditure followed a similar trend as the overall expenditure trend. In total, staying visitors spent 1.9% more compared to the last year.

12 The following two charts summarise the profile of visitors to the New Town / BID Area. Overseas visitors were again the most common visitors by origin and made up 48% of the overall sample. The second most common segment were visitors from England accounting for 38% and visitors from Scotland made up 10% of the sample. There was evidence of growth in the proportions of visitors from England and Scotland, increasing by 4% and 2%, respectively. There was a good spread of visitors by age group. The key audience were those aged who made up 24% of the overall sample. The smallest segment were those aged 65+ accounting for 6%. Parking Index: data 2017 January 2018 Parking is important for businesses in the city centre and the information below shows the number of times and length of time each parking bay is used during the chargeable period. The higher the turnover of paid parking spaces the more opportunities for shoppers to find a space. In the New Town there are 959 bays in zones 1A and 2, which covers the Essential Edinburgh BID area. It should be noted, that the average daily number of transactions per bay during trading hours and the average length of time parked are derived from transactions at parking ticket machines, varies throughout the year. The relatively low number of daily transactions per bay is likely to be due to the usage of the bays by holders of resident s parking permits. In the New Town over December 2017, the average turnover of parking spaces per day was 1.1. This compares to 1.3 in the Old Town, 0.9 in the West End and 0.6 in the East End. p23

13 Parking Index: data 2017 cont... January 2018 p25 This table reflects the levels of usage of parking bays during the times when parking charges are levied - (Monday Saturday 8:30 am 5:30pm in areas with lower parking ticket sales and 8:30am 6:30pm in areas with higher ticket sales. Parking utilisation Shoppers looking to park their car are more likely to find a space in the streets that are less utilised. It is clear that Queen Street had the highest levels of utilisation, followed by Little king Street. The streets that are used less than average for parking include Young Street, Heriot Row and George Street. For real time information on utilisation rates in off-street car parks follow this link:

14 January 2018 p27 A record year for a Scottish airport More than 13 million passengers used Edinburgh Airport in 2017, making it the busiest ever year for a Scottish airport. A total of 13,432,485 people passed through Scotland s busiest airport in 2017, an additional one million passengers when compared to 2016, with international passengers driving growth up almost 14% as 32 of the 34 new routes launched at the airport in 2017 were to international destinations. Growth was helped by another record month at the airport as December saw 925,017 passengers using the terminal. It was the busiest ever December at the airport. Chief Executive of Edinburgh Airport Gordon Dewar said: This is a fantastic achievement for Edinburgh Airport to welcome more than 13 million passengers is a real triumph and one that we are delighted by. That success is of course down to the vast choice of destinations we offer, our partner airlines and businesses, but it s also down to the dedicated and expert staff who work across our campus to ensure the airport operates smoothly and successfully. We thank all of them for the sometimes unseen work that they do that is so crucial to our operations. We ve already announced new and extended routes this year and construction continues on our 80 million extension project so we are preparing for further growth. We know we play a crucial role in the economy and we want to use Edinburgh and Scotland s global appeal and standing to bring further benefits but that sense of Annual Figures adventure that an airport offers is also important to us. We are excited about what 2018 will bring and we hope to deliver more choices and destinations for our passengers throughout the year. Gordon Robertson, Director of Communications or gordon_robertson@edinburghairport.com

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