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Retail gloom expected to continue two more years

The UK’s leading retailers and retail developers are expecting two difficult years with a third of them scaling back construction activity, according to exclusive research commissioned by Construction News. Subscribers can see the full report in extra online

In-depth interviews with senior managers in 11 organisations show that most do not see any improvement in market conditions before 2010. But they are more positive about prospects for refurbishment.

About a third said they expected to do more refurb work in the next two years than in the previous period. About half said they would do the same.

Tightening market conditions are leading some retailers to review their supply chains, with attempts to forge closer relationships with key suppliers in order to get better management of costs and more innovation.

One said: “The whole industry is having a reality check. People will have to compete for work more than they have in the past four or so years.”

The research also shows some key trends on store design and location. About half of clients predict an increase in town/city stores and greater focus on mixed-used developments.

The biggest sustainability issue by far was reducing the energy consumption of buildings in operation, far more popular than issues such as sustainable building materials and waste management.
Retailers were critical of the ability of M&E contractors to innovate in this area.

One said: “There seems to be the same old solutions, particularly when taking over existing stores.
“There is little innovation. [M&E contractors] seem very set in their ways.”

There was less consensus over zero carbon developments. Six organisations are planning for them while three said it was either impractical or too early to do so.

Analysis: Beware false indicators of health

By David Rogers

A huge number of shopping centres are being opened this year. Paradise Street in Liverpool is one, Westfield’s enormous complex at White City in west London another.

Something like a dozen major schemes are opening in 2008. But rather like looking at the number of tower cranes on the City of London skyline, that is a slightly misleading indicator of the confidence of retailers and retail developers.

What seems to be ever more clear - certainly since the start of the year - is that retailers, like City developers, are reining back on what’s to come.

They are looking at their budgets and seeing where their money is best spent. There will be a lot more refurbishment and extensions work - one way of increasing the value of a complex on smaller resources - while some refurb work might even become minor works.

Refurb requires different skills - live sites, out-of-hours working, not much need for new structures Đ and some contractors will now be looking for work elsewhere.

Subscribers can see the full report in extra online

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