Parking & the High Street

June 2016

Impact of Parking on Town Centre Retail

At the end of February this year the British Retail Consortium issued its report “Retail 2020: Fewer but better jobs” (BRC, 2016). The study forecasts that there could be up to 900,000 fewer jobs in retail by 2025. Discussing the report with the BBC, Sir Charlie Mayfield chairman of the British Retail Consortium (BRC) and head of the John Lewis Partnership, explained that it was in part due to the increased national living wage that would accelerate changes that retailers will be required to make to mitigate rising cost pressures. He foresaw “significant shop closures”, which would be very uneven across the country; areas that are economically fragile with weak demand would suffer the most.

But the national living wage is probably just the latest pressure on retailers. There is an on-going structural change in shopping behaviour that has been identified and commented on for some time. The Distressed Town Centre Property Taskforce, reporting back in 2013, considered the combined forces of economic downturn leaving people with less money to spend at a time when the availability of the on-line shopping became largely ubiquitous, changing not only the market share but also the way people shop as well. This has led to there not only being too much retail floorspace overall, but the smaller fragmented units found in town centres not of the scale that were offered in out of town locations and that the major multiples were looking to occupy.

Research at that time from the Javelin Group suggested that by 2020 the impact of declining in-store sales would result in a loss of 31% of High Street stores.

The BRC report does little to change that position. Their research shows that the retail industry is facing a significant uplift in costs. On top of the increased wage bill from the National Living Wage, retailers can expect increased business rates and additional costs from the apprenticeship levy. With rising labour costs and falling technology costs, there will be scope to reduce headcount with automation and other productivity improvements, in particular through the supply chain. At least for the larger retailers. For the smaller retailers such options may be more limited.

The High Street is characterised by a greater number of independent shops, so the future for the High Street looks ever more problematic as a direct competitor with other retail options.  With a large number of retail leases reaching their term in the next five years, BRC predict a significant reduction in those being renewed. We may well see the History of Mr Polly repeating itself.

So we perhaps should brace ourselves for shop closures of a notable scale. And given that this will not be a uniform affair, some High Streets in the weaker economic areas will be hit very hard. Some High Streets able to model themselves as higher-end destinations may find themselves largely untroubled by the rising costs of business or structural change. For some traditional shopping areas it will have a devastating impact. But as this goes on, we really must not let ourselves believe that this downturn and the fallout of these major changes is because the local council put up parking charges. Nor that by offering parking free after three it will save a sinking ship. If only it was that easy.

Shoppers choose where to shop because of the destination and the offer. This conclusion was established as far back as 1978 by Koppelman for a study of non-grocery destination choice in the US and has been supported by numerous commentators since.

Our own primary research in recent years has included asking car-borne respondents that had used the internet for a previous purpose  whether free parking in would have caused them to make their last internet purchase from a shop instead. When we asked this in 2013 in St Helier, Jersey, between 88-99% said it would not. When we asked 127 shoppers why they had used the internet for their last on-line purchase rather than coming to the shops, 83% gave as their primary reason that the item was either not available or the range on the internet was better or it was less expensive on-line. Despite both being available options, no-one in St Helier told us that their primary reason was because of the cost or parking or lack of parking.

Last year we repeated these questions in Grimsby. The lower cost of the internet was far less striking, but range and availability again were notable, accounting for 72% of the primary reason. Indicative of the change in way people are shopping, a strong response came from those using the internet because it was open when the town centre wasn’t (6 responses; 14%). One respondent indicated that it was the cost of parking that had been the primary factor.

In some contrast however, asked then whether free parking would have changed this position a much higher 27% said that it would. Had the town offered free parking they would not have used the internet.

Undertaking the same questioning about out of town shopping, the people of Grimsby provided a similar theme. 77% chose out of town because of availability or range. The cost of parking remained a much smaller factor. As seen with on-line sales, the extended opening hours proved to be the next most important factor. Amongst other options the cost of parking did not feature highly.

When asked directly whether free parking in the town centre would have changed the purchase from out-of town to town centre, twelve out of the forty responding said it would.

These are two surveys of a limited sample size in two quite different places. We hope to ask these questions again in more locations and will re-order the factors to verify that respondents are not being influenced by this. There are two interesting things that we can place some confidence in. It is the availability that shoppers want. It makes sense that they won’t go shopping somewhere if they cannot get what they want (and that should include the experience as well as actual product), no matter how cheap the parking may be. But when asked directly about parking charges, far more respondents in Grimsby (as opposed to very few in Jersey) suggested it was an influential factor, despite not including it in their reasons for shopping elsewhere in previous questions.

Now I remain somewhat sceptical of this and would suggest it is more a response to being offered something for nothing, for Grimsby has for some time relaxed on-street parking controls such that anyone who is sufficiently cost conscious can park all day for nothing very close to the centre of town anyway. Even off-street parking charges in the shopping centre itself are provided at competitive rates.

So is parking policy irrelevant to the survival of the town centre? Parking availability will remain a key part of making a town or city centre attractive to those that want to drive. But parking, and access by car must be put in context. Good parking, perhaps lower prices may influence a few. If people want to go somewhere however the cost of parking is generally little more than an after-thought and a grudge, but it doesn’t immediately change destination choice. If town centre shops are closing, we have to do better than blaming the parking.

The Car Park after Three. Free. But not full. Kington 2014

An SOS from a High Street Shop, Hereford, 2014

References

Beyond Retail. Redefining the shape and purpose of town centres. Distressed Town Centre Property Taskforce, 2013

British Retail Consortium, February 2016. “Retail 2020 Fewer but better jobs”

Javelin Group “Transforming the Retail Enterprise” presentation 3 May 2013 cited by Taskforce 2013

Koppelman 1978 “Destination Choice Behavior for Non-Grocery Shopping Trips” Tansport Research Record, No 673, Washington DC