ACS

The slowdown in the economy — and its impact on the level of transactions across the retail sector — saw average prices decline by approximately 16% from their peak in the fourth quarter of 2007, according to Christie + Co’s latest Business Outlook publication.

The annual publication, which uses average price information derived from retail transactions brokered by the company, also showed that average retail property prices for 2009 dropped by 9.8%, compared to a decline of 6.5% in the previous year.

Tony Evans, Head of Retail at Christie + Co, said: “The retail sector, like all sectors, has not been immune to the economic downturn. However, it has remained more robust, with property values falling less than in other markets. The recession has undoubtedly changed the way that we shop, with the acceleration of long-running trends, such as discounting and the introduction of value ranges.

“Unlike other commercial property sectors, our core retail sectors have not experienced a wave of administrations, with the increase in promotions and value ranges allowing many operators to stabilise turnover levels. Consumers have taken the opportunity to shop more frequently and locally, which has strengthened the resilience of the market, especially the convenience sector.”

Whilst transactional activity was hampered by the lack of available debt, regional and local operators continued to build their estates. However, those looking to expand struggled to find competitively-priced, quality businesses, as retailers weighed up their return on capital against the lack of investment returns they would attract in alternative markets.

Christie + Co believes the next 12 months will bring further downward pressure on gross profit margins, continued growth of on-line shopping, the introduction of further value ranges and more consolidation across the sector.

Evans said: “The last 12 months has proved that well-run businesses, which afford a valuable offer to their local communities, including product availability and speed of service with a personal touch, can still generate sales. We will witness a similar picture in 2010, especially as consumers continue to cut down on luxury items and concentrate on necessities.”