Out-of-town stores' growth challenge

THE flight of customers from traditional High Street stores to out-of-town shopping centres shows little sign of abating although out-of-town outlets will have to work harder for their growth.

According to a report today from retail research group Verdict, the out-of-town sector of the retail market now generates sales of more than £74bn a year and is still growing at 5.5% per annum. During the early 1990s growth was above 10% a year.

In the past decade sales at the big shopping complexes away from town centres have grown by a whopping 118%, which compares with retail growth overall of 62.1%.

Verdict says the main factor driving out-of-town growth will not be consumers' preferences but the acute shortage of land needed by retailers. However, it warns that they will find it increasingly hard to win approval for new developments.

'Retailers will need to be more flexible about format to win planning consents,' the Verdict report says. 'The concern for retailers is that these initiatives add to costs, seriously compromising the profitability of new stores.'

That is likely to force a rethink of how stores are run, it adds.

'Looking ahead, Verdict predicts like-for-like growth will pick up to 2.4% as retailers put greater efforts into improving the performance of their stores to cope with rising costs,î the report says.