sample market intelligence report | fsp retail consultancy

August 6, 2013

FSP RETAIL BUSINESS CONSULTANTS

High Wycombe Demonstration Report

Introduction The purpose of this report is to provide a representative example of FSP consultancy techniques.

The following sections in this sample report are standard FSP outputs. In practice, research is tailored to satisfy clients’ specific needs, which may require differing/additional research options and outputs that are readily available. Similarly, a client may require only some sections of the report – these considerations define the scope of the work undertaken by FSP.

This demonstration report uses Eden Shopping Centre located in High Wycombe as the analysed centre. A ‘field audit’ of all operators in High Wycombe Town Centre was conducted, recording the type of trader, approximate trading floor space, estimated retail sales along with additional observations.

FSP has selected Eden in High Wycombe to develop a sample report purely on the basis that it’s head office is located in the town. Data, such as rental information for Eden, is fictitious for the purpose of this report so should not be read as a definitive view of the Centre’s sustainability.

FSP RETAIL BUSINESS CONSULTANTS 2

Brief Eden Shopping Centre in High Wycombe is located approximately 30 miles North West of London, surrounded by pockets of considerable affluence. Market intelligence is required to optimise the Centre’s performance by fully understanding the catchment in order to inform future strategy.

To help achieve this aim, FSP has conducted research and provide a report to:

Ascertain catchment boundaries together with demographics, spending and lifestyles Define the profile of shoppers Identify the main competing shopping locations Identify comparable towns to aid leasing approach Carry out a SWOT analysis of Eden Identify the scale of Trading Gap Evaluate Sustainable Rent and Retailer Risk of existing tenants Assess the retail mix of Eden and future potential including target retailers

This report sets out FSP’s findings, conclusions and recommendations.


Executive Summary High Wycombe is a large market town, located in the Chiltern Hills, approximately 30 miles to the North West of London. The town has a diverse manufacturing, distribution, administrative and commuter-based economy and attracts a Shopper Population of 142k, (nationally ranking 114th) which is drawn from a Resident Population of 307k The catchment population is very affluent. The average household income is 25% above the national average, and 48% of residents are classified within the most affluent ACORN Category, Wealthy Achievers This said, High Wycombe currently struggles to successfully convert affluent residents into shoppers, with the shopper population dominated by Comfortably Off ACORN Category High Wycombe loses shoppers to a range of competing shopping destinations, but the three largest, Aylesbury, Watford and Uxbridge, together take only 22% of the shopper leakage from the High Wycombe catchment In addition, small towns within High Wycombe’s catchment, such as Marlow, Beaconsfield and Amersham provide a different type of retail offer to High Wycombe – often aspirational, independent retailer based and ‘niche’, appealing to more affluent residents Shoppers in High Wycombe, in number and profile, are similar to those using Solihull, Tunbridge Wells, and Leamington Spa. The existing scale and nature of the town’s retail offer trails these centres suggesting a significant opportunity to improve the quality of retail provision in High Wycombe


Executive Summary Current retail sales in High Wycombe are estimated at £211m FSP calculates that there is a Trading Gap (sales growth opportunity) of £73m. This is made up of;

Market Share Gap of £45m – an opportunity to improve existing visitor spending conversion with a more appropriate retail offer Shopper Gap of £20m – better conversion of residents to shoppers (generating greater footfall) by targeting currently under-performing postcode sectors Catchment Gap of £8m – increasing overall penetration of the catchment

The C&F offer in High Wycombe is dominated by retailers targeting the Family sector, creating an under-provision in the Assured market which accounts for the majority of shopper spend. Eden is reasonably positioned for its shoppers, so should continue to capitalise on its mid-market attraction of Young/ Family, but also exploit, where possible, the significant catchment opportunity to develop the Assured offer


Executive Summary FSP recommends that Eden establishes a slightly more upmarket appeal in order to target a greater proportion of affluent residents and thereby strengthen the Assured offer. Assured absent retailers that could realistically fit into Eden’s trading profile include Fat Face, Aldo and Dune, whereas more upmarket retailers, such as Jigsaw, are less likely to view the Centre as a realistic location at present

Whilst strengthening the Assured offer to a modest degree, the Centre should continue to capitalise on its current Young/Family appeal in conjunction with F&B and Leisure provision to improve Eden as a destination. A selection of retailers for consideration are located at page 54

Eden is hampered by the current provision of retail accommodation in the older, original part of the Centre which is unattractive and unlikely to appeal to new retailers so should consider the cost/benefit of developing the old part of the Centre up to the standard of the new


Contents Introduction 2

Brief 3

Executive Summary 4

Section 1: Catchment Demographics 8

Section 2: Eden SWOT Analysis 17

Section 3: Competition 20

Section 4: Benchmarking 26

Section 5: Trading Gap 33

Section 6: Sustainable Rents 39

Section 7: Tenant Mix 48

Recommendations & Conclusion 55

Appendices 59



Catchment & Demographics

Catchment and Demographics The map overleaf shows High Wycombe’s Principal Non-Food catchment area, derived from the National Survey of Local Shopping Patterns (NSLSP) 2011. The Primary segment represents the home location of 50% of High Wycombe shoppers. The Secondary segment represents where the next 25% of High Wycombe shoppers live and the Tertiary segment a further 15%. For a full list of postal sectors by Catchment segment please see Appendix 1.


The Primary segment has a Resident Population of 113k The Secondary segment has a Resident Population of 73k The Tertiary segment has a Resident Population of 121k. Competition from Aylesbury in the North prevents the catchment extending further

The total resident population for the Principal catchment area is 307k. The Resident Population is expected to increase at a slower rate than UK average, up by 5% to 2020 (UK+7%).

Catchment and Demographics


Source: FSP/CES

Resident and Shopping Population The Shopping Population represents the proportion of the Resident Population that uses High Wycombe as their main Non-Food shopping destination. The total Shopper Population also includes a 10% ‘pull in’ figure that relates to those who shop in High Wycombe town centre, but live outside the Principal Catchment area. The Shopping Populations are:


Primary segment 73k – 65% penetration Secondary segment 35k – 48% penetration Tertiary segment 20k – 17% penetration

The Principal catchment produces 128k (142k incl. ‘pull-in’). Penetration is 42%, while typical penetration for similar sized ‘Major District’ towns as High Wycombe is classified is 22%, suggesting High Wycombe acts more similar to a ‘Major Sub Regional’ centre. High Wycombe ranks 114th nationally by Shopper Population. The shopper opportunity at High Wycombe is greater than Bury St Edmunds, Salisbury and Harrogate.

Source: FSP/CES

Population Density and Shopper Penetration The maps show population density and shopper penetration within High Wycombe's catchment.

Population density is lowest in the West of the catchment and greatest in the South East Shopper penetration is, logically, highest close to High Wycombe, with the lowest penetration in the far East and West of the catchment


Source: FSP/NSLSP

Shopper Penetration Population Density

The graph shows the demographic characteristics of the Principal catchment compared to UK averages represented by Index 100.

Proportions of Pre-Family households are 23% below UK average, but are in line with it in the Primary segment Family households make up 33% of the catchment – 7% above UK average, 11% above in the Primary Empty Nesters overall are 11% above UK average, but just 2% above in the Primary Retired Seniors are 7% below UK average, 21% below in the Primary The Primary segment (with the majority of shoppers) is skewed towards younger households

Catchment Demographics – Resident Lifestage

13

Catchment households have been classified into four Lifestage Groups: Pre-Family: Main wage earner, under 45, no children; Family: Any age, dependent children living at home; Empty-Nesters: 45-69, no dependent children at home; Retired Seniors: 70+, no dependent children at home.

Source: FSP/CES

Pre-Family Family Empty Nesters RetiredSeniors

Primary 100 111 102 79Secondary 63 104 117 101Tertiary 66 106 115 99Total 77 107 111 93High Wycombe % 14 33 35 17UK % 18 31 32 19

70

80

90

100

110

120

130Above UK Average

Neutral

Below UK Average

Index = UK


Household Income and Expenditure The graph highlights the relationship between average resident household income and retail expenditure on Food and Non-Grocery. While income provides a good indication of catchment affluence, it tells only a partial story about the propensity for retail spending.

Household income is 25% above UK average Non-Grocery and Food spend are above UK average, by 14% and 11% respectively Both household income and spend are highest in the Tertiary segment and lowest in the Secondary segment


Household Income Non-Grocery Spend Food SpendPrimary 123 113 111Seconday 119 104 104Tertiary 131 121 115Total 125 114 111High Wycombe £43,780 £10,410 £5,497UK £35,004 £9,137 £4,988

80

90

100

110

120

130

TotalAbove UK Average

Neutral

Below UK Average

Source: FSP/CES

Expected Shoppers – ACORN profile The adjacent graph shows the ACORN profile of High Wycombe’s expected shoppers compared to catchment residents.

High Wycombe fails to attract the expected proportions of Wealthy Executives, with less than 50% of these residents using the town as their main Non-Food shopping destination Accounting for the majority of shoppers (26%), Secure Families are over-represented in the shopper population This suggests High Wycombe has work to do to successfully attract more affluent shoppers. Its offer remains appealing to the middle markets


Source: FSP/CACI

0% 5% 10% 15% 20% 25% 30% 35%

Wealthy Executives

Affluent Greys

Flourishing Families

Prosperous Professionals

Educated Urbanites

Aspiring Singles

Starting Out

Secure Families

Settled Suburbia

Prudent Pensioners

Asian Communities

Post-Industrial Families

Blue-Collar Roots

Struggling Families

Burdened Singles

High-Rise Hardship

Inner City Adversity

Wea

lthy

Ach

ieve

rsU

rban

Pro

sper

ityC

omfo

rtabl

y O

ffM

oder

ate

Mea

nsH

ard-

Pre

ssed

Expected Shoppers Catchment Residents

Full ACORN definitions can be found in Appendix 3.

Shopper Spend Non-Grocery shopper spending amounts to £579m (including 10% pull-in) Household Goods and C&F are the largest markets, annually worth £150m and £139m (including 10% pull-in) F&B is also a large market, with an annual spend of £106m (including 10% pull-in) Spend levels are highest in the Primary segment at £293m, accounting for 56% of the Principal catchment spend


Source: FSP/NSLSP

0 10 20 30 40 50 60 70 80

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

F&B

Shopper Spend (£m)

Primary Spend Secondary Spend Tertiary Spend

Primary Spend, £293mSecondary

Spend, £137m

Tertiary Spend, £91m


Section 2: Eden SWOT Analysis

SWOT Analysis


Strengths Eden – a modern, covered centre in the town centre

Strong anchors – M&S, Tesco and House of Fraser

Decent Leisure offer, with AMF bowling and a 12 screen Cineworld Cinema

Good versions of popular national retailers, including Superdry, Monsoon, L’Occitane, H&M, Zara, River Island, Topshop and New Look

Toys R Us have chosen Eden to trial a new town centre format store

Good F&B offer, including Wagamama, Zizzi, Nando’s, Frankie and Benny’s and YO! Sushi

Eden offers good parking and well-maintained toilet facilities

Large student population

Weaknesses Vacancies plague the town centre and Eden

John Lewis is located out-of-town, just off the M40 and has received planning permission to expand into the clothing market

Eden lacks integration between the new development (Newland Street/Meadow) and the older part (Union Parade and Eden Walk)

Existing town centre offer fails to attract more affluent shoppers from surrounding towns

Tesco, situated in the middle of Eden, has previously been resistant to re-location to improve Centre layout and circulation

F&B offer not fully integrated – main restaurants remote from shopping

Opportunities

Cinema and bowling act as a strong attraction to F&B operators. Vacant La Tasca unit should be opportunity to extend F&B

Fully cover Eden/ reduce ‘wind tunnel’ effect. Although the Centre is largely covered, improvement is required to provide a more pleasant shopping environment

Improve attractiveness/environment of the older half of Eden (Union Parade and Eden Walk).

Combine smaller units to create larger units to attract tenants

Increase sales through attracting affluent shoppers within the catchment

Work with House of Fraser to increase awareness of the store within under-performing zones

SWOT Analysis


Threats

Out-of-town John Lewis will add fashion, childrenswear and toys as part of a £16m extension and refurbishment to be completed by October 2013. This is a major threat providing further encouragement for more affluent shoppers to avoid HW town centre

Newly vacant Jessops unit and poor quality independents along Union Parade weaken appearance of Eden in this area

HMV falling into administration – although this offers the opportunity to fill the unit with a strong national C&F retailer to complement Newland Street’s already strong offer


Section 3: Competition

Competing Centres – Leakage


High Wycombe’s catchment penetration is 42%. Leakage is made up of the remaining 58% of catchment residents who do not use High Wycombe as their main Non-Food shopping destination.

Aylesbury and Watford are High Wycombe’s biggest competitors. Both falling outside the Principal catchment area, they each account for 8% of leakage Uxbridge makes up 6% of leakage Hemel Hempstead, Reading and Maidenhead each account for 5% of leakage Slough accounts for a further 4% of leakage

Locations that individually account for less than 4% of the leakage, are included in ‘Other’, in total taking a market share of 58%. Source: FSP/CES

Aylesbury8%

Watford8%

Uxbridge6%

Hemel Hempstead

5%

Reading5%

Maidenhead5%

Slough4%

Other58%

Competing Centres


The graph below uses NSLSP data to compare High Wycombe with its competing centres in terms of the ACORN profile of and number of shoppers.

High Wycombe’s shopper population (left-hand scale) is most similar to Slough in terms of size and Watford in terms of ACORN profile (right-hand scale) Reading and Watford attract a significantly larger shopper population than High Wycombe, whilst Maidenhead, Hemel Hempstead and Aylesbury attract fewer

Source: FSP/CACI/NSLSP

30%

40%

50%

60%

70%

80%

90%

100%

0

50

100

150

200

250

300

350

HemelHempstead

Maidenhead Reading Aylesbury Uxbridge Slough Watford High Wycombe

Cor

rela

tion

Coe

ffici

ent

NS

LSP

Prin

cipa

l Sho

pper

Pop

ulat

ion

(k)

Shopping Population Correlation

Competing Centres – Merchandise Mix


The proportion of retailers by merchandise category in High Wycombe has been compared to its competing centres.

C&F accounts for 25% of High Wycombe retailers – only Maidenhead and Slough have a lower proportion, whilst Reading has the greatest focus on C&F retailers F&B accounts for 15% of retailers in High Wycombe – higher than four of the centres

16% 18% 18% 14% 17% 15%23% 23%

15% 13% 13%15% 12% 17%

19% 14%4% 4% 4% 4% 6% 4%

7%6%

17% 16% 15% 17% 17% 12%

20%18%

12% 10% 11% 11% 12%9%

10%

9%12% 11% 9% 10% 9%

10%

8%

11%

25% 27% 29% 28% 27% 33%

13%20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% M

ultip

le R

etai

ler O

utle

ts

Clothing & Footwear Household Goods Leisure Goods Personal Goods Grocery F&B Service / Other

Source: FSP/LDC

Competing Centres – C&F FISH Segmentation


The proportion of C&F retailers by FISH segmentation in High Wycombe has been compared to the competing centres.

Like most of the centres, High Wycombe’s C&F offer has a strong Family focus. The lack of differentiation establishes an opportunity for High Wycombe to develop a more unique offer to become more competitive Reading is weighted towards Assured, typical of Regional centres and providing a strong draw for affluent, mobile shoppers

7%19%

11%3% 5%

15%0% 5%

49%

48%

38% 55% 52% 31% 62% 55%

21%

21%

28%22% 18% 36%

12%9%

23%12%

23% 20% 25%18%

27% 32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% M

ultip

le R

etai

ler O

utle

ts

Young Assured Family Classic

Source: FSP/LDC

Competing Centres – Minor Centres Competition from Minor Centres within the High Wycombe catchment include Marlow, Beaconsfield and Amersham. Each account for less than 3% of leakage, however, they act as significant competitors providing a differentiated retail offer to High Wycombe – often considered by shoppers to be quaint and upmarket and thus appealing to more affluent residents.

Marlow Located 5 miles South of High Wycombe, Marlow is a Georgian town situated on the River Thames. The High Street offers a range of independent and upmarket national retailers such as The White Company, Jack Wills, Space NK, and Waitrose. The F&B offer ranges from Subway, Starbucks and Pizza Express to independent cafés and restaurants including the Michelin two starred pub, The Hands & Flowers.

Beaconsfield Located 5 miles South East of High Wycombe, Beaconsfield is formed of the historic Old Town and New Town. A number of national retailers include, Fat Face, Crew Clothing and M&S Simply Food in addition to a wide selection of small, specialist shops. A monthly farmer’s market is an addition to the retail offer, plus Beaconsfield is home to Bekonscot, the oldest model village in the world.

Amersham Amersham is located 8 miles North East of High Wycombe. Split into two areas, Old Amersham offers upmarket independent boutiques, whilst Amersham-on-the-Hill offers high street retailers such as Holland & Barrett, Clarks and Waterstone’s. The F&B offer includes Costa and Pizza Express in Amersham-on-the-Hill and independent restaurants and pubs in Old Amersham.



Section 4: Benchmarking

NSLSP Similar Towns by ACORN Classification


The graph below uses NSLSP data to assess similarities between different towns, in terms of the ACORN profile of and number of shoppers. The chart uses a correlation coefficient to indicate the degree of similarity. Generally speaking, ACORN correlations need to be in excess of 0.7 to indicate significant similarities between centres. Shopper population, shown by the bars, relates to the left-hand scale.

Source: FSP/CACI

60%

70%

80%

90%

100%

0

50

100

150

200

Tunbridge Wells Basingstoke Woking Leamington Spa Banbury Solihull High Wycombe

Cor

rela

tion

Coe

ffici

ent

NS

LSP

Prin

cipa

l Sho

pper

Pop

ulat

ion

(k)

Shopping Population Correlation

Similar Towns by ACORN Classification


In terms of shopper ACORN profile, High Wycombe is most similar to Solihull. Both towns are dominated by Comfortably Off shoppers whilst also have a high proportion of affluent, Wealthy Executives shoppers. Unlike High Wycombe, the retail offer in Solihull caters well for its affluent catchment Banbury, Woking and Basingstoke offer a similar retail offer to High Wycombe and are not aspirational as shopping destinations Tunbridge Wells and Leamington Spa are comparable in terms of shopper number and profile, however, the retail offer is superior to High Wycombe, suggesting an opportunity to improve the quality of retail provision in High Wycombe Zone A rent in High Wycombe in 2012 was £90/ft2 (Colliers). This is 54% cheaper than Solihull (£195/ft2), 33% cheaper than Basingstoke (£135/ft2) and 25% cheaper than both Tunbridge Wells and Leamington Spa (£120/ft2) Zone A rent is the same as in both Banbury and Woking (£90/ft2)

Source: FSP/Colliers

Similar Towns – Merchandise Mix


The proportion of retailers by merchandise category in High Wycombe has been compared to the similar towns.

Accounting for 25%, the proportion of C&F retailers in High Wycombe is higher than only Woking – indicating an opportunity to increase the C&F offer in High Wycombe F&B representation in High Wycombe is good compared to the similar towns, only less than Woking

Source: FSP/LDC

16% 19% 19% 19% 17% 23%14%

15% 13% 12% 17%12%

13%

11%

4% 5% 5%7%

5%6%

5%

17% 11% 15%14%

14%14%

14%

12%12% 11%

11%

10%10%

8%

12% 14% 11%9%

11%10%

11%

25% 26% 27%21%

30% 25%37%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% M

ultip

le R

etai

ler O

utle

ts

Clothing & Footwear Household Goods Leisure Goods Personal Goods Grocery F&B Service / Other

Similar Towns – C&F FISH Segmentation


The proportion of C&F retailers by FISH segmentation in High Wycombe has been compared to the similar towns.

High Wycombe’s C&F offer has a strong Family focus, as do the majority of similar towns

Weighted towards Assured retailers, Tunbridge Wells and Solihull are able to draw affluent shoppers who typically seek Assured fashion

Source: FSP/LDC

7%19% 13% 7%

18%9%

22%

49% 29% 45% 51%37% 57% 29%

21% 36% 19% 20% 29%20%

34%

23%15%

23% 22%16% 14% 15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% M

ultip

le R

etai

ler O

utle

ts

Young Assured Family Classic

Eden Store Selling Area vs. Benchmark


The chart shows average store selling area in Eden, split by the older and newer part, compared against two benchmarks (excludes department, grocery, services and vacant stores). The ‘Regular’ benchmark is made up of centres offering a typical high street tenant mix, with a Family dominated offer. The ‘Premium’ benchmark combines centres with a more aspirational offer, attracting retailers such as Hollister, Reiss and Phase Eight.

As a whole, Eden’s average store selling area is on par with the ‘Regular’ benchmark, whilst smaller than the ‘Premium’ The older part of Eden has a noticeably small average store selling area – inadequate for many multiple retailers The newer part of Eden has a larger average store selling area, similar to the ‘Premium’ benchmark

Source: FSP

0

500

1,000

1,500

2,000

2,500

Ave

rage

Sto

re S

ellin

g A

rea

(ft2 )

Vacancy Rates


In the current economic climate, high vacancy rates are inevitable. 19 units within Eden are vacant.

14 vacant units are situated in the old part of the Centre, whilst only 5 in the new part

The average vacant store selling area (70% conversion) within the old part of Eden is 1,100 ft2 – substantially lower than 2,400 ft2 in the new part

The small units in the old part of the Centre are of an inadequate size to attract strong multiple retailers. In addition the older part lacks an attractive environment

Current occupiers achieve 15% greater average estimated sales density in the newer part compared to the older part of Eden

Source: FSP

0

500

1,000

1,500

2,000

2,500

0

5

10

15

Older Eden Newer Eden

Aver

age

Est

imat

ed S

tore

Sel

ling

Are

a (ft

2 )

Cou

nt o

f Vac

ant U

nits

Vacant Count Average Store Selling Area


Section 5: Trading Gap

Retail Supply and Demand


Comparing retail sales estimates with catchment spending highlights market shares and gaps. FSP has analysed a range of data in order to derive a realistic estimate of the potential level of turnover that High Wycombe can achieve – the Trading Gap.

Non-Grocery sales in High Wycombe town centre as a whole amount to an estimated £212m – 37% market share 66% of High Wycombe’s total Non-Grocery sales take place at the Eden Centre The Trading Gap is £73m – details are described overleaf

Source: FSP

0 40 80 120 160

F&B

Leisure Goods

Household Goods

Personal Goods

Clothing & Footwear

£m

Town Retail Sales Eden Centre Retail Sales Trading Gap

Town Retail Sales£72m

Eden Centre Retail Sales

£139m

Trading Gap£73m

Market Share Gap – the level of additional turnover that could be achieved by increasing the proportion of spend of current shoppers to match that of shoppers in similar centres – would provide additional turnover of £45m Shopper Gap – the value created by increasing shopper numbers from specific underperforming areas within the High Wycombe catchment. It is worth £20m Catchment Gap – the value created if current shopper penetration across the catchment can be increased overall. High Wycombe’s current penetration is 42%, whilst FSP’s Market Share Model predicts a penetration of 48%, based on the scale of offer compared to competing centres. By increasing penetration to that predicted by the model would provide additional turnover of £8m (see Appendix 4 for graph)

Trading Gap


Whilst attracting all resident catchment spend to High Wycombe is not achievable, the Trading Gap provides a realistic level of additional turnover that High Wycombe can attain. The Trading Gap consists of three elements: the Market Share Gap, the Shopper Gap and the Catchment Gap. FSP estimates the Trading Gap in High Wycombe to be worth an additional £73m.

Source: FSP

£45m

£20m

£8m

0

10

20

30

40

50

60

70

80

Trading Gap

Turn

over

Upl

ift (£

m)

Market Share Gap Shopper Gap Catchment Gap

C&F provides the largest opportunity to increase turnover in High Wycombe, with a Trading Gap of £39m. The majority at £26m, exists within the Market Share Gap (which can be realised through convincing existing High Wycombe shoppers to spend more – typically by providing a retail/F&B offer more closely meeting their needs and aspirations) Personal and Leisure Goods have a gap of £9m and £10m, mainly available through attracting new shoppers Household Goods has a potential turnover uplift of £7m, the majority realised through existing shoppers F&B has a potential turnover uplift of £8m – the majority available from existing shoppers

Trading Gap By Merchandise Category


The chart below shows the Trading Gap across the main merchandise categories, identifying opportunities for turnover growth.

Source: FSP

26

5 1

7 6

9

3

4

2 2

3

1

2

1 1

0

5

10

15

20

25

30

35

40

Clothing andFootwear

PersonalGoods

HouseholdGoods

LeisureGoods

F&B

Turn

over

Upl

ift (£

m)

Market Share Gap Shopper Gap Catchment Gap

Zone 1 – 11k additional shoppers are obtainable and potential increase in Non-Grocery turnover of £16m Zone 2 – 1k additional shoppers are obtainable and potential increase in Non-Grocery turnover of £2m Zone 3 – 1k additional shoppers are obtainable and potential increase in Non-Grocery turnover of £2m

Shopper Gap – Under-performing Zones


FSP has identified postal sectors within High Wycombe’s Principal catchment where the actual shopper penetration is significantly less than the expected penetration. The map below shows the underperforming postal sectors grouped into a zone deemed to be most achievable target for high Wycombe.

Source: FSP/CES

Shopper Gap – By ACORN Zone 1, situated in the centre of High Wycombe, is the least affluent, but most valuable zone Zone 2 is the most similar to the High Wycombe catchment Zone 3 is the most affluent The affluent profiles of Zones 2 and 3 reinforce the suggestion that High Wycombe fails to successfully attract the most affluent shoppers Effective targeting of these zones would require a significant change in retail offer. The challenge will be increased when the Out of Town John Lewis store adds fashion later this year


Source: FSP/CES

48%

27%

51%

70%

8%

14%

9%

8%27%

35%

27%

12%7%

16%3%

10% 8% 10% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

High WycombeCatchment

Zone 1 Zone 2 Zone 3

% o

f Res

iden

ts

Wealthy Achievers Urban Prosperity Comfortably Off Moderate Means Hard-Pressed


Section 6: Sustainable Rents

Passing Rent – Sustainability


In standard FSP reports, rent sustainability is assessed on two dimensions: Corporate Risk and Unit Risk.

Corporate Risk

Refers to the level of risk associated with the business overall. For example, HMV may have been performing well in High Wycombe, but financial vulnerability across the Company has put the individual store in jeopardy. Corporate Risk is assessed using information from Company Accounts that is in the public domain and is shown in this example report. Corporate risk can be assessed only for retailers that file annual accounts at Companies House.

Unit Risk

This refers to the health of a particular retail unit. For example, Next is financially healthy as an overall business. However, for various reasons, Next might not trade well in every location. Assessing unit risk requires the use of sensitive, and usually confidential, information (e.g. annual rent per unit). In this Demonstration report, the unit risk section is fictitious; it is not indicative of trading in High Wycombe town centre, and is provided only as a visual aid. It will be made clear which charts are examples, and which are based on actual data in the following pages.

This section is for example purposes only and does not reflect the true sustainability of Eden’s retailers.

Passing Rent – Sustainability


The Demonstration chart shows the proportion of rent in Eden deemed Thriving, Viable and Vulnerable As a whole, Eden is Viable, with Sustainable Rent 8% below Passing Rent 39% of rent is Thriving, largely driven by Marks and Spencer 42% of rent is deemed as Viable 19% of rent is deemed Vulnerable, predominantly driven by Gap and Lush

Source: FSP

For an explanation of how FSP calculates Sustainable Rents, please refer to Appendix 5.

Vulnerable19%

Viable42%

Thriving39%

Retailer Sustainability The majority of merchandise categories are deemed Viable. C&F is particularly strong with Sustainable Rent 15% above Passing Leisure Goods and F&B categories are both Vulnerable


Source: FSP

Total Gross Lettable

Selling Space

Space Conversion

Est Sales Density

Est Gross Turnover

Passing Rent

Sustainable Rent

Merchandise Category ft2 ft2 % £/ft2 £k £k £k £k %

Clothing and footwear 311,155 191,178 63 397 76 752 862 110 15

Personal 57,433 42,336 36 593 25 830 686 - 144 - 17

Household 59,711 42,602 40 469 20 140 138 - 2 - 2

Leisure 31,558 20,266 56 518 11 489 340 - 150 - 31

F&B 42,359 25,250 68 313 7,906 256 183 - 73 - 29

Total Unit Shops 502,216 321,632 64 25 8,038 2,467 2,208 - 259 - 10

Grocery 4,446 3,432 77 510 1,749 262 292 30 12

Total Non-Grocery/Grocery 506,662 325,064 64 30 9,787 2,729 2,500 - 229 - 8

Example Summary Schedule

Sustainable over Passing

Financial Risk Matrix The Financial Risk Matrix (overleaf) classifies retailers according to the Department for Business, Innovation and Skills (BIS) Wealth Creation Index (see Appendix 6 for definitions) – Very Worrying, Head Above Water or Healthy. FSP compares this to individual unit risk – Vulnerable, Viable or Thriving within Eden. By definition, the analysis deals with historical accounts data and in a period of high retail instability, like the present time, retailers’ viability can change substantially from one accounting period to the next.

It should be stressed that FSP’s Sustainability model assumes retailers will be seeking to achieve at least their average portfolio Return on Trading Assets (ROTA). Thus, retailers showing as Vulnerable are not necessarily losing money, but may be achieving a below average return.


Financial Risk – Passing Rent Matrix Example


Source: FSP

The chart below is an example, showing what a standard FSP Risk Matrix would look like if the relevant rental information were provided. Note – the Unit Risk shown below is also example only.

Vulnerable Viable Thriving

Cor

pora

te R

isk

Unit Risk

Very Worrying

Head Above Water

Healthy

M&S

21%

15%

3%

19%

17%

6%

8%

6%

5%

Starbucks

PandoraGames Workshop

Monsoon

Office

Boots

ClarksErnest Jones

River IslandWaterstones

New Look

Holland & Barrett

Herbert Brown

Nando's

Subway

CineworldApricot

Superdry

Charles FishH. Samuel

Ann Summers

Cargo

The Fragrance Shop Zara

Claire's

House of Fraser

F.HindsJones Bootmaker

Blue Inc.Linens Direct Clintons Beaverbrooks

H&M L'OccitaneYO! Sushi Thorntons

Mothercare

Gap

Lush

BhsHMV

Muse

Build A Bear Workshop

Two SeasonsBijou Brigitte

Next

Zizzi

Corporate Risk Commentary BIS Very Worrying – 5% of Passing Rent subject to analysis by BIS methodology.

Lush – Medium Risk – £12.6m is owed to group undertakings Gap – Medium Risk – there has been substantial re-organisation of the European operations and there has been an undertaking by Gap Inc. to support the Company for at least another 12 months. £20.1m is owed to subsidiary undertakings Muse – Medium Risk – £1.8bn is owed to group undertakings under long term creditors


Unit Risk Commentary A further 14% from rent is from retailers deemed as Vulnerable by unit risk, but Head Above Water or Healthy by Corporate risk – indicating Vulnerability is specific to Eden. An example of these retailers include:

Cargo – significantly undersized unit compared to the retailer’s FSP audited average, plus a high rent per ft². A larger unit with lower rent per ft² could be more suitable for Cargo Waterstone’s – poor sales, which is an on-going company wide problem, and above average rent per ft² for this retailer Games Workshop – low estimated sales density for the retailer. With an above average store size for Games Workshop, a smaller unit could provide better sales densities


Sustainable Rents Centre Plan


Source: FSP/GOAD

An example of a Sustainable Rent plan of Eden is shown, classified by unit risk – Vulnerable, Viable or Thriving.


Section 7: Tenant Mix

Eden Sales & Selling Area by Category


The proportion of selling area and sales by merchandise category in Eden have been compared to a benchmark proportions of centres of a similar size.

Eden is dominated by C&F in terms of sales and selling area There is a greater focus on Personal Goods in Eden compared to benchmark centres, driven by the good provision of Jewellers and Toiletries retailers Leisure and Household Goods have less significance in Eden compared to benchmark in terms of sales and selling area F&B is marginally below benchmark in terms of sales and selling area and developing the F&B offer would provide positives for the Centre

Source: FSP

5446

5951

18

14

13

10

14

19

13

18

814

612

6 7 8 9

0

10

20

30

40

50

60

70

80

90

100

Eden Sales Benchmark Sales Eden Selling Area Benchmark SellingArea

%

F&B Leisure Household Personal Clothing and footwear

Clothing & Footwear Supply and Demand by FISH The pie charts below show the distribution of C&F turnover based on the FISH segmentation of retailers (see Appendix 7 for full FISH definitions). FISH segments shoppers by their attitude towards themselves, their self-image, and by their attitude towards their purchase, what they hope it will say about them.

The largest market is the Assured segment, accounting for 36% of High Wycombe’s shopper spend. This is followed by the Young, then Family segments The Family segment accounts for 46% of High Wycombe sales – an over-provision, creating a significant relative under-provision in the Assured segment Eden sales are better proportioned with shopper spend, indicating a more appropriate offer in the Centre for its catchment, whilst having a slight under-provision in Assured


Source: FSP/CES

23%

36%

22%

15%4%

Catchment Shopper Spend

Young Assured Family Classic Old

20%

22%46%

11% 1%

High Wycombe Sales


26%

30%

28%

15%1%

Eden Sales


Clothing & Footwear Market Segmentation


Source: FSP

Fashionable Individual Safe

Assured

Classic

Family

Young

House of Fraser

M&S Bhs

Ann Summers

Next

Topshop/ Topman

H&MRiver Island

Zara

Primark

Burton

WallisMonsoon

Gap

Clarks Mothercare

Office

Sports Direct

JD Sports

Millets

Dorothy Perkins/ Burton

ShoeZone

New Look

Evans

Eden Centre shops

Town Centre shops

Sports Crest

Jones Bootmaker

Glance

Bango MangoApricot

Sainsbury's

Superdry

Tesco

Chevi

Roman

Two Seasons

Blue Inc.

Stride In

PMG Schoolwear

Stunning Brides

Top Class Fashions

Trinity

Blacks

Clothing & Footwear Market Segmentation Whilst providing retailers across the range of FISH categories, a clear focus on Family retailers in High Wycombe is apparent Eden, in particular, covers a good variety of retailers, reasonably positioned for its shoppers A decent selection of Young retailers are provided within the Centre, particularly falling into Young Fashionable Eden also provides a reasonable Assured offer, with strong nationals such as Next, Monsoon, Zara and Office Classic retailing in High Wycombe is limited. However, Bhs, House of Fraser and Marks & Spencer do cater for this market A high proportion of Safe retailers, defined as ‘value for money’, suggests a different type of shopper is using High Wycombe compared to the wealthy ACORN profile of the catchment. Greater focus on Classic Individual and Assured retailers would appeal to the more affluent residents


Absent Retailers by FISH


The C&F Trading Gap amounts to £39m. The breakdown is shown on the following grid using indicative retailers.

At £15m, the Assured segment provides the greatest opportunity to increase C&F turnover The Young segment also provides a significant opportunity at £14m

Source: FSP/CES

Fashionable Individual Safe Homely

Old

Family

Classic

Young

Assured

Edinburgh Woollen MillDamart

£14m

£15m

£1m

£9m

£1m

Absent Retailer – Similar Towns The list below includes a range of retailers which do not currently trade in High Wycombe. Those with an asterisk are located in the similar towns identified earlier in the report. A convincing case could be put to these retailers to locate in High Wycombe.

54

Source: FSP

Clothing and Footwear Personal Household Leisure Catering

Animal* Schuh* Crabtree & Evelyn* Bang & Olufsen The Disney Store Cafe Rouge*

Bank* Select* David Clulow* Cath Kidston* Cotswold Outdoor* Coal Grill & Bar

Bravissimo* Suit Direct Fossil UK Lakeland* Modelzone* Cornish Pasty Co, The

Cotton Traders Timberland Links of London Laura Ashley* Mountain Warehouse* Giraffe

Fat Face* White Stuff* Molton Brown* Maplin* Snappy Snaps* Gourmet Burger Kitchen

Foot Asylum* EAST* Neal's Yard Remedies MenKind Sweatshop Handmade Burger Co.

Foot Locker JoJo Maman Bebe Ollie & Nic Muji Trespass* Jamie's Italian

Hotter* Pull and Bear Space NK* Steamer Trading Las Iguanas

Internacionale* Sunglass Hut* The White Company Lavazza Espression

Joules* Millies Cookies

Mango Grocery Patisserie Valerie

Phase Eight* Hotel Chocolat* Strada*

Quiz*


Recommendations & Conclusion

Recommendations & Conclusion High Wycombe represents a category of shopping centre that, lying outside the Top 100, requires energetic, active asset management to fully optimise potential. To have national representation, retailers do not “need” to trade from High Wycombe.

However, with an affluent catchment and strong shopper penetration, High Wycombe has the potential to be a flourishing retail destination. At present, High Wycombe ineffectively exploits the affluent residents within its catchment.

FSP recommends that Eden establishes a slightly more upmarket appeal in order to target a greater proportion of affluent residents by strengthening the Assured offer through targeting retailers that could realistically fit its trading profile. Whilst strengthening the Assured offer to a modest degree, the Centre should continue to capitalise on the current Young/ Family appeal in conjunction with F&B and leisure provision to improve Eden as a destination.

Eden is hampered by the current provision of retail accommodation in the older, original part of the Centre which is unattractive and unlikely to appeal to new retailers so should consider the cost/benefit of developing the old part of the Centre up to the standard of the new.


Recommendations & Conclusion The attraction of the town overall needs to improve for High Wycombe to fully optimise its potential. There is ample reason to believe that High Wycombe can be a thriving centre of retailing in the foreseeable future if town stakeholders develop a clear vision and pursue it forcefully.

FSP

June 2013


FSP RETAIL BUSINESS CONSULTANTS 19 Manor Courtyard Hughenden Avenue High Wycombe UK, HP13 5RE

T +44(0)1494 474740 F +44(0)1494 474262 [email protected]

www.fspretail.com www.snap-shop.co.uk

Jo Hewson Managing Director T+44(0)1494 474740 M+44(0)7771528792 F+44(0)1494 474262

[email protected]

John Fell Director T+44(0)1494 474740 M+44(0)7970 880375 F+44(0)1494 474262

[email protected]

Ken Gunn Director T+44(0)1494 474740 M+44(0)7773 779919 F+44(0)1494 474262

[email protected]

Appendices


Appendix 1: Postal Sectors by Catchment Segment

Catchment Postal Sectors


Source: FSP/CES

Postcode Sector Territory Resident

Population (K)Shopper Population (K)

Shopper Penetration (%)

HP13 5 Primary 14 10 71HP13 7 Primary 16 11 70HP15 6 Primary 9 6 68HP12 3 Primary 12 7 64HP13 6 Primary 11 7 63HP11 2 Primary 6 4 62HP15 7 Primary 9 6 62HP14 3 Primary 10 6 62HP12 4 Primary 10 6 62HP14 4 Primary 8 5 61HP11 1 Primary 7 4 59HP16 0 Secondary 7 4 59HP10 9 Secondary 9 5 54HP10 0 Secondary 6 3 54HP10 8 Secondary 6 3 50SL7 3 Secondary 9 4 49SL7 1 Secondary 8 4 48SL8 5 Secondary 6 3 45SL7 2 Secondary 5 2 44HP27 0 Secondary 6 3 42HP27 9 Secondary 6 2 39

Appendix 1: Catchment Postal Sectors

Catchment Postal Sectors


Postcode Sector Territory Resident

Population (K)Shopper Population (K)

Shopper Penetration (%)

HP16 9 Secondary 5 2 38OX39 4 Tertiary 7 3 36HP9 1 Tertiary 9 3 33HP9 2 Tertiary 8 3 31HP7 0 Tertiary 4 1 30HP6 5 Tertiary 5 1 25HP7 9 Tertiary 6 1 22HP6 6 Tertiary 9 2 18RG9 6 Tertiary 3 1 18OX49 5 Tertiary 4 1 17OX9 3 Tertiary 9 1 12OX9 7 Tertiary 1 0 12HP17 9 Tertiary 0 0 11SL9 8 Tertiary 5 0 10HP5 1 Tertiary 7 1 9HP8 4 Tertiary 7 1 9RG9 2 Tertiary 3 0 9SL9 9 Tertiary 6 0 8SL6 3 Tertiary 11 1 7SL6 9 Tertiary 6 0 7HP5 2 Tertiary 11 1 7

Appendix 1: Catchment Postal Sectors

Source: FSP/CES


Appendix 2: Catchment and Demographics

Catchment Demographics – Socio-Economic Grade The SEG profiles show the socio-economic grade of High Wycombe residents.

65% of High Wycombe’s catchment residents fall into the wealthiest SEG profiles, AB and C1, respectively 52% and 8% above UK average Although less affluent than the Secondary and Tertiary segments, the Primary segment contains much higher proportions of ABC1’s than the UK average This is driven by affluent neighbourhoods such as Daws Hill, Hazlemere and Hughenden Valley


AB C1 C2 DEPrimary 125 104 96 83Secondary 167 112 67 61Tertiary 169 111 67 61Total 152 108 78 69High Wycombe % 33 32 12 23

50

60

70

80

90

100

110

120

130

140

150

160Above UK Average

Neutral

Below UK Average

Index = UK

Source: FSP/CES

Catchment Demographics – ACORN profile Catchment residents have been classified by ACORN (A Classification Of Residential Neighbourhoods).

High Wycombe’s catchment is dominated by Wealthy Achievers – 90% above UK average, with proportions greatest in the Secondary segment Within the Wealthy Achievers Category, 32% fall into the very high spending Wealthy Executives Group Extremely high proportions of Wealthy Achievers result in below UK average representation of less affluent Categories Comfortably Off are 24% above UK average in the Primary segment


Source: FSP/CACI

WealthyAchievers

UrbanProsperity

ComfortablyOff

ModerateMeans

Hard-Pressed

Primary 125 98 124 80 53Secondary 241 37 76 47 33Tertiary 220 52 90 24 47Total 190 65 99 50 46UK % 25 12 27 14 21High Wycombe % 48 8 27 7 10

0

5

10

15

20

25

30

35

40

45

50

0

20

40

60

80

100

120

140

160

180

200

%

Total

High Wycombe %

Neutral

Below UK Average

Above UK Average

Full ACORN definitions can be found in Appendix 2.

Resident Spend Household Goods and Clothing & Footwear (C&F) are the largest markets, annually worth £368m and £342m (including 10% pull-in) Food & Beverage (F&B) is also a large market, annual worth £260m (including 10% pull-in) Spend levels are highest in the Tertiary segment at £539m, accounting for 42% of the Principal catchment spend


Source: FSP/NSLSP

0 50 100 150

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

F&B

Resident Spend (£m)

Primary Spend Secondary Spend Tertiary Spend

Primary Spend, £452m

Secondary Spend, £286m

Tertiary Spend, £539m


Appendix 3: ACORN Category and Group Definitions

What is ACORN?

What is ACORN? FSP RETAIL BUSINESS CONSULTANTS

What is ACORN: ACORN is a geodemographic segmentation of the UK’s population which segments small neighbourhoods, postcodes, or consumer households into 5 categories, 17 groups and 56 types. ACORN provides understanding of the people who interact with your organisation. It helps you learn the who, what, where, when, how, and why of their relationship with you. This can help you to target, acquire, manage and develop profitable relationships and improve business results. The classification also gives a better understanding of places and the people who use them.

Who uses ACORN? Retailers, financial organisations, and over 200 public sector organisations use CACI data to provide an accurate picture of the needs of their customers and local communities. ACORN is used to understand customers’ lifestyle, behaviour and attitudes, or the needs of neighbourhoods and people’s public service needs. It is used to analyse customers, identify profitable prospects, evaluate local markets and focus on the specific needs of each local community. You can learn more about your customers’ behaviour and identify prospects who most resemble your best customers by adding ACORN codes to a customer database. Such an understanding of the ACORN characteristics of a market can also be used to drive effective customer communication strategies

ACORN - Categories and Groups Category Group Wealthy Achievers

1 A Wealthy Executives B Affluent Greys C Flourishing Families

Urban Prosperity

2 D Prosperous Professionals E Educated Urbanites F Aspiring Singles

Comfortably Off

3

G Starting Out H Secure Families I Settled Suburbia J Prudent Pensioners

Moderate Means

4 K Asian Communities L Post-Industrial Families M Blue-Collar Roots

Hard-Pressed

5

N Struggling Families O Burdened Singles P High-Rise Hardship Q Inner City Adversity

68

What is ACORN


What do the ACORN Categories mean? Category 1: Wealthy Achievers Some of the most successful and affluent people in the UK. Living in wealthy, high status rural, semi-rural and suburban areas. Middle aged or older people predominate, with many empty nesters and wealthy retired. Living in large houses, which are usually detached with four or more bedrooms. Almost 90% are owner occupiers, with half owning their home outright. Very well educated and most are employed in managerial and professional occupations, or business owners. Incomes are high, as are levels of savings and investments. Well established at the top of the social ladder. They enjoy all the advantages of being healthy, wealthy and confident consumers and place emphasis on quality products, classic design and excellent service.

Category 2: Urban Prosperity These are well educated and mostly prosperous people living in our major towns and cities. They include both older wealthy people living in the most exclusive urban areas, and highly educated younger professionals moving up the corporate ladder. This category also includes some well educated, but less affluent individuals, such as students and graduates in their first jobs. The wealthier people tend to be in senior managerial or professional careers, and often live in large terraced or detached houses with four or more bedrooms. Some of the younger professionals may be buying or renting flats. These like to eat out in restaurants, go to the theatre and cinema and make the most of the culture and nightlife of the big city.

Category 3: Comfortably Off This category contains much of ‘middle-of-the-road’ Britain. Most people are comfortably off. They may not be wealthy, but they have few major financial worries. All lifestages are represented in this category. Most people own their own home, with owner occupation exceeding 80%. Most houses are semi-detached or detached. Employment is in a mix of professional and managerial, clerical and skilled occupations. Educational qualifications tend to be in line with the national average. This category incorporates the home-owning, stable and fairly comfortable backbone of modern Britain.

Category 4: Moderate Means Many people are employed in traditional, blue collar occupations. Others have become employed in service and retail jobs as the employment landscape has changed. In the better off areas, incomes are in line with the national average and people have reasonable standards of living. However, in other areas, incomes can fall below the national average. There are also some isolated pockets of unemployment and long term illness. This category also includes some neighbourhoods with very high concentrations of Asian families on low incomes. Most housing is terraced, with two or three bedrooms, and largely owner occupied. It includes many former council houses, bought by their tenants in the1980s.

Category 5: Hard-Pressed This category contains the poorest areas of the UK. Unemployment is well above the national average. Those in work are likely to be employed in unskilled occupations. Household incomes are low and there are high levels of long term illness in some areas. Housing is a mix of low rise estates, terraced or semi-detached houses, and purpose built flats. Over 50% of the housing is rented from the local council or a housing association. There are a large number of single adult households, including many single pensioners and lone parents. In some neighbourhoods, there are high numbers of black and Asian residents.

69

Category 1: Wealthy Achievers Group A: Wealthy Executives


Features Wealthy Executives are some of the most affluent people in the UK Living in wealthy, rural and semi-rural areas of the country e.g. Guildford & Beaconsfield Households are a mix of middle-aged families, empty nesters and wealthy retired Well-educated individuals with high levels of academic qualifications Most employed in senior managerial and professional occupations or are running their own businesses High incomes and high disposable incomes Discerning individuals - demand high levels of service and willing to travel to purchase the products they desire John Lewis is their first preference for clothing, furniture and electrical appliances

Wealthy Executives,

8% % UK

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100

Distribution Map Key Retailers Spending Behaviour Clothing & Footwear FISH Expenditure


70

http://www.crewclothing.co.uk/

Category 1: Wealthy Achievers Group B: Affluent Greys


Features The Affluent Greys tend to be older empty nesters and retired couples, they are prosperous, live in detached homes and many have more than one car Many live in rural towns and villages, often in areas where tourism is important Employment is typically in managerial and professional roles. Given the rural locations, farming is also a common occupation These are high income households and even those that have retired have good incomes The majority own their homes outright, and with no mortgage to pay are able to invest their money in a wide range of financial products These older, affluent people have the money and the time to enjoy life

Affluent Greys,

8% % UK


60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100 Young Assured Family Classic Old

71

Category 1: Wealthy Achievers Group C: Flourishing Families


Flourishing Families

Features These are wealthy families with mortgages. They live in established suburbs, new housing developments around commuter towns, villages and rural areas Younger than other affluent groups, most households are still paying mortgages Incomes are good since many have managerial and professional occupations Car ownership is high and many of these families will have two or more cars These families are usually financially secure with a variety of savings and investments They take regular holidays, including long haul, skiing and summer sun PC ownership is common and they are comfortable with new technology

% UK Flourishing Families, 8%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



72

Category 2: Urban Prosperity Group D: Prosperous Professionals


Features These are the most prosperous people living in our main cities Households are a mix of families, couples, singles and some retired Property is a mix of terraced and detached houses, and converted and purpose built flats in affluent neighbourhoods Very well educated and employed in senior managerial and professional occupations High incomes and high levels of savings and investments Car ownership is high, although travel to work is often by public transport Technologically sophisticated, they regularly use the Internet for financial services, and buying products and services Interests include theatre, the arts, classical music and F&B in good restaurants

% UK Prosperous Professionals,

2%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



73

Category 2: Urban Prosperity Group E: Educated Urbanites


Features These young people are highly qualified. The majority live in flats in our major cities Most are in professional and managerial roles and many are working hard to further their careers They have high incomes, and those who have been working for some time will be buying their flats and making other financial investments. Others are renting and have high disposable incomes The one significant purchase they may make is an expensive car. However, many prefer to use public transport, particularly for travelling to work This Group will spend significant amounts on travel and take frequent holidays. They are very likely to go on long haul trips and will either ski or seek the sun in the winter

% UK Educated Urbanites, 7%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



74

Category 2: Urban Prosperity Group F: Aspiring Singles


Features Aspiring Singles are young and live in urban or suburban locations, frequently around London Large numbers are students and well qualified young people who have recently finished their studies and started working Many live in rented flats. The flats tend to be small, typically one or two bedrooms, and located in basements or above shops These are quite mobile populations with a high turnover of residents People lead urban lifestyles. They enjoy going out with friends to pubs, clubs and coffee shops Cars are relatively rare so transport is by bus, train, tube, or walking

Many of these active young people are likely to develop well-paid careers in the future

% UK Aspiring Singles, 4%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



75

Category 3: Comfortably Off Group G: Starting Out


Features These are young adults, in their twenties and early thirties, many just starting out in their careers Large numbers of students and young singles in their first jobs, as well as young couples and some young families with children under five Housing is a mix of two or three bedroom terraced houses, and converted and purpose built flats Houses are bought on a first mortgage or rented from private landlords. Many of the students and young single professionals in this group will be house or flat sharers Most individuals are well educated to A-level and degree standard Incomes tend to be good and levels of savings and investments above the national average

% UK Starting Out, 4%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



76

Category 3: Comfortably Off Group H: Secure Families


Features A mix of home-owning families and empty nesters living comfortably in stable suburban and semi-rural locations Housing is mainly three bedroom, semi-detached homes Families might include young children, teenagers or even young adults still living at home Employment covers a range of occupations including middle management, clerical roles, shop work and skilled manual work Incomes are at least average. Most have some savings and consider themselves financially prudent The more affluent have good company cars and savings and investments These are the stable suburban families that make up much of middle Britain

% UK

Secure Families, 14%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



77

Category 3: Comfortably Off Group I: Settled Suburbia


Features Empty nesters and retired older couples dominate Homes are two and three bedroom semi-detached houses and bungalows. Many owned outright Workers are in a mix of lower management, supervisory, manufacturing and retail jobs Salaries are modest and many women work part-time to boost the overall household income Many have a reasonable disposable income, and some investments for security after retirement They enjoy holidays in the UK and Europe, in both winter and summer Gardening is a popular activity While most people get their news from TV, the Daily Mail is the most popular newspaper

% UK

Settled Suburbia, 6%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



78

Category 3: Comfortably Off Group J: Prudent Pensioners


Features Comfortably retired and found in many seaside towns and elsewhere around the country Many over 75s as well as younger retired. Households are a mix of pensioner couples and singles. Retirement homes are also common Housing tends to be flats, either converted or low rise purpose built. Many are owner occupied and often of high value; others are privately rented. Holiday homes are also common Well educated, and those who are not retired are employed in managerial and professional occupations Most have a comfortable standard of living having provided for their old age with above average levels of savings and investments These sophisticated senior citizens are both financially smart and socially active

% UK

Prudent Pensioners,

4%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



79

Category 4: Moderate Means Group K: Asian Communities


Features These young families live in the terraced streets of many major cities, including Birmingham, Bradford and London These families feature the highest levels of children under the age of five. Qualification levels tend to be low and unemployment levels are high. People typically work in routine manual roles or in the retail sector With low incomes and large families to support there is little discretionary spend. They rarely go on holiday and rely on home-based entertainment For many, religion is very important and plays a major role in their social and family lives Like all young families, they are striving to create a bright future for their children.

% UK

Asian Communities, 1%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



80

Category 4: Moderate Means Group L: Post-Industrial Families


Features Living in three bedroom terraced houses, which tend to be at the cheaper end of the housing market Most families are owner occupiers, but a number rent their houses from the local council Most households are traditional families with school age children. Employment tends to be office or clerical jobs and in shops Incomes are most likely to be around the national average. Spending on credit cards is low and they are careful with their money Most families can afford to run a car and to take a holiday every year, often a package holiday to the Mediterranean

% UK

Post-Industrial Families, 4%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



81

Category 4: Moderate Means Group M: Blue-Collar Roots


Features Most employment is in traditional blue collar occupations Families and retired people predominate with some young singles and single parents Many own 2-3 bedroom terraced houses, with a mortgage. Others rent privately or from local authorities and housing associations Levels of educational qualifications tend to be low. Most employment is in factory and other manual occupations. There are many shop workers as well Incomes range from moderate to low and unemployment is higher than the national average, as is long term illness. There are pockets of deprivation in this group There are some households with high levels of debt These people have a modest lifestyle, but most are able to get by

% UK

Blue-Collar Roots, 8%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



82

Category 5: Hard-Pressed Group N: Struggling Families


Features Low income families living on traditional low-rise estates. Some have bought their council houses, but most continue to rent Homes are typically terraced or semi-detached two bedroom properties. Larger families may be housed in three bedroom properties Incomes are low and unemployment relatively high Jobs reflect the general lack of educational qualifications and are in factories, shops and other manual occupations Money is tight and shopping tends to focus on cheaper stores and catalogues Educational under-achievement results in lack of opportunity and they struggle to get by in an otherwise affluent Britain

% UK

Struggling Families,

12%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



83

Category 5: Hard-Pressed Group O: Burdened Singles


Features This urban group is characterised by high numbers of single adults. These include single pensioners, young singles and lone parents Homes are purpose built flats or small terraced houses, the majority of which are rented from the council or a housing association The working population is employed in routine, manual and retail occupations The overall level of household incomes is very low. Unemployment levels are above average and long term illness levels are high With such low incomes, these households have little, if any, discretionary spend Life for this group is undoubtedly difficult, with restricted finances and employment opportunities. For most, there is little realistic chance of immediate improvement.

% UK Burdened

Singles, 5%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



84

Category 5: Hard-Pressed Group P: High-Rise Hardship


Features Many older residents, especially over 65s. There are few traditional families and middle aged people Not many households have children, although some areas contain high numbers of single parents with children under 5. The majority live in purpose built flats, mostly rented from the local authority or housing associations Flats are small, usually one or two bedrooms, and often in high rise blocks. Levels of owner occupation are very low Neighbourhoods are relatively deprived and contain some of the UK’s highest levels of unemployment and long term illness Those in work are likely to be employed in manual and factory jobs or work in shops

% UK High-Rise Hardship, 2%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



85

Category 5: Hard-Pressed Group Q: Inner City Adversity


Features This group is young and multi-ethnic, primarily living in densely populated urban areas in and around London. 25% of the population is black and 14% is Asian Households are typically young singles, young families, and single parents Homes are small flats in purpose built blocks, normally rented from the council or housing association Unemployment levels are almost double the national average Household incomes are very low with many earning less than £10,000 per annum There is little money left for discretionary spending, particularly for those with young families Car ownership is very low and everyone is dependent on public transport.

% UK Inner City Adversity, 2%

60 80 100 120 140

Clothing & Footwear

Personal Goods

Household Goods

Leisure Goods

Food & Beverage

Index GB = 100



86


Appendix 4: The Trading Gap

Market Share Model


Source: FSP

0%

10%

20%

30%

40%

50%

60%

70%

80%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Pred

icte

d M

arke

t Sha

re

Actual Market Share

High Wycombe

Trading Gap By ACORN Group – Market Share Gap The Market Share Gap can be realised by encouraging existing shoppers to spend more. FSP has divided the Market Share Gap by ACORN Group to determine shoppers with the greatest potential.

Worth £12m, Wealthy Executives offer the most value in terms of Market Share Gap, accounting for 29% of the potential turnover, but are likely to be the most difficult to attract Secure Families are also worth a considerable amount – £7m or 18% of the Market Share Gap The majority of potential turnover uplift is available from within the Primary segment (56%)


0

1

2

3

4

5

6

Mar

ket S

hare

Gap

(£m

) Primary Secondary Tertiary

Source: FSP

Trading Gap By ACORN Group – Shopper and Catchment The Shopper Gap can be addressed by attracting new shoppers from underperforming areas. FSP has divided the Shopper Gap by ACORN Group to determine shoppers with the greatest potential.

Worth £16m, Wealthy Achievers offer the most value in terms of Shopper and Catchment Gap, accounting for 26% of the potential turnover Secure Families are also worth a considerable amount at £12m – 19% of the Shopper and Catchment Gap


Source: FSP

0

2

4

6

8

10

Sho

pper

Gap

(£m

)

Primary Secondary Tertiary


Appendix 5: Sustainability Methodology

Methodology FSP routinely analyses the audited accounts of major retailers trading in the UK. From this analysis FSP produces an model account for each retailer which includes:

Gross margin – a key factor in the retailer business model Employment costs Shopfitting costs and depreciation Stockturn Occupancy costs Promotion and Admin costs

From this analysis, it is possible to identify a model ‘Sustainable’ Rent – the proportion of turnover each retailer is able to afford as rent and still deliver their required Return on Trading Assets (ROTA) Actual sales data is combined with information from the audit. Where sales data is not available the auditor will produce an estimate


Methodology VAT is removed from the sales estimate (taking into account the likely proportion of VAT-free goods sold), and the model ‘affordable’ rent proportion is applied to generate a ‘Sustainable’ Rent for each unit Actual sales density is also compared with model density and appropriate factoring applied if actual density exceeds model – this allows over-performing retailers to be fully recognised and Sustainable Rent adjusted accordingly This is then compared to Passing Rent/ERV to indicate unit viability in each year. Units are classified as:

Thriving (Sustainable Rent is more than 25% higher than Passing Rent/ERV) Viable (Sustainable Rent is broadly in line with Passing Rent/ERV) Vulnerable (Sustainable Rent is more than 25% lower than Passing Rent/ERV)



Appendix 6: BIS Definitions

BIS Wealth Creation Index Definitions The Department for Business Innovation and Skills (BIS), a successor to the Department of Trade and Industry (DTI), inherited responsibility for promoting the use of the Wealth Creation Efficiency Index as a measure of financial health that is applicable across all types of industry.

The Wealth Creation Efficiency Index (also known as P2) is calculated from company accounts by expressing Value Added (sales less cost of bought-in goods and services) as a percentage of employment and depreciation costs. Value Added is also equivalent to EBITDA plus employment costs.

P2 (Wealth Creation Efficiency Index) of less than 100 indicates that, in the year in question, the company failed to generate sufficient added value to cover its costs of creating that profit. Such a performance is unsustainable without continuing investment, either from retained profits or further investment by the shareholders. Companies during their start-up phase or companies that are expanding very rapidly may fall into this category.

For ease of presentation, the P2 scores have been divided into categories of:

Very Worrying – indices below 100

Head above Water – indices from 100 to 124

Healthy – indices 125 and above

With the average P2 of the top 800 UK companies being around 160, in some analyses this category can be further sub-divided, but in this case is not relevant.

While the P2 category for a single year is useful, it is only a snapshot. Analysis of the P2 for a longer period may indicate a direction of travel and be more informative.



Appendix 7: FISH Segmentation

Introduction Shopping Centres, Outlet Centres and increasingly Retail Parks rely upon an appropriate mix of fashion retailers to attract, engage and delight shoppers. Age and Image self perceptions underpin fashion purchasing decisions and Fashion retailers tend to be positioned to serve specific market niches.

Age perception – expressed as the consumer’s own ‘thinking age’: i.e. how young or old do I feel? Image perception – what image does the consumer wish to convey about themselves through the merchandise and the brand label: i.e. stylish or safe and sensible?

Consumer segmentations tend to standardise these ‘attitudes’

FISH is FSP’s bespoke method of defining customer segmentation.

Over a decade FSP has devised and refined FISH to uniquely classify occupiers as well as consumers.

FISH based retail mix strategies:

Focus upon shopper needs not benchmarks Take account of local capacity, market share gaps and occupier performance Allow for consumers’ flexible purchasing activity e.g. Assured at work, Fashionable at play Give precise recommendations of target retailers Describe the opportunity in the same way occupiers see their market Directly match demand to occupiers


Age Perception Fashion purchasing behaviour is largely determined by consumers’ self perception of their own ‘thinking age’ e.g. “How young or old do I feel?”, and “ What age-related values do I seek to project?”

Young – Peer pressure to conform is strong and fashion is a powerful identifying statement.

Assured – Young, but no longer immature, or led by peer group pressure. They are able to make up their own minds, are sophisticated in their choices, but do not adopt the attitudes, lifestyles or values typical of older self-perception groups

Family – Dominated by the financial considerations of running the home and caring for the family, therefore precedence comes before self-indulgence. Members can, and often do, ‘migrate’ temporarily to the Assured or Classic segments when spending on discretionary or ‘special occasion’ purchases however, this depends on how much is available after essential family spending

Classic – Typically, though not universally, Post-Family and includes ‘empty-nesters’. In self-perception terms members have many similarities with Assured, differing only in possessing less self-confidence about the ‘rightness’ of purchase decisions, often expressed in terms such as ‘it’s a bit young for me’

Old – No longer want to make any positive statements about themselves through their purchases. Can typically be summarised as, ‘given up’


Image Perception There are four key image perceptions consumers hold about merchandise:

Fashionable – Attitudes are concerned with purchases which demonstrate the individual's fashionability – being 'up to the minute'. Adherence to peer group dress codes and other tokens of group identity are of overriding importance

Individual – Purchased which demonstrate enough 'savoir faire' to distinguish between transitory fashion and taste. The consumer knows what suits his/her lifestyle and is able to make up his/her own mind

It is important that the purchase should not be recognisable as being from a particular shop while branded goods must fulfil a clearly defined need. Style, individuality and exclusivity are important.

Safe – ‘Value for money' for merchandise with “good enough” performance. These include many mass-market branded products, which do not make distinctive claims for performance, and goods recommended in “Which?” magazine

This is a particularly important area for those whose self perception is Assured, Family or Classic and who see themselves as having less discretionary spending and who play safe in their purchase decisions.

Homely – These are purchases where the requirement is for no projection of particular values at all and items are bought purely for replacement. Price is important for goods whose main attribute is ‘utility’


Example Retailers Fashionable – Demonstrates fashionability

Individual – demonstrates taste beyond transitory fashion

Safe – ‘value for money’ merchandise with good enough performance

Homely – Items are bought purely for replacement. Price is important for goods whose main attribute is utility

Young – peer pressure to conform is strong and fashion is a powerful identifying statement

Assured– able to make up own mind and sophisticated in choice

Family – dominated by the financial considerations of running the home and caring for the family

Classic – typically Post-Family. Many similarities with Assured, but less self confidence about the ‘rightness’ of purchase decisions

Old – ‘given up’. Not seeking to make a statement about themselves through their purchases


FSP RETAIL BUSINESS CONSULTANTS 19 Manor Courtyard Hughenden Avenue High Wycombe UK, HP13 5RE

T +44(0)1494 474740 F +44(0)1494 474262 [email protected]

www.fspretail.com www.snap-shop.co.uk