Following recent years of high profile M&A activity in the supermarket and convenience retailing sectors, there has been unprecedented opportunity for both corporate and independent operators to grow. This looks set to continue into 2019, according to the latest annual report by specialist business property adviser, Christie & Co.
The report, ‘Business Outlook 2019: Navigate, Innovate, Accelerate,’ reflects on the themes, activity and challenges of the previous year and forecasts what 2019 might bring across the industries in which Christie & Co operates, including Retail.
The likely divestment of stores following major M&A deals such as the proposed Sainsburys-Asda merger, along with retailers ‘churning’ their assets, leads Christie & Co to expect a strong supply of sites in the convenience market – a fragmented sub-sector of the retail industry where the report states that 72% of stores are independently owned. Christie & Co also expect lots of activity at both ends of the spectrum.
Reinvestment is also noted as a key theme in convenience, as those without the capital to expand are instead using it to improve their existing stores and maximise revenue potential, with around £814 million spent in 2018.
Highly active in petrol filling stations, bringing the Cornwall Garage Group to the market in autumn last year, Christie & Co describes an expected rash of acquisition activity from oil companies and improved margins due to crude oil price movements in the market.
Following its instruction to market Wyevale Garden Centres last year, Christie & Co outlines the strong demand evident for these opportunities, both from new entrants and existing operators. The company aims to develop its reach into this market and also branch into farm shops – a natural segue for the grocery market, Christie & Co suggests.
Supply chain issues in sourcing products and labour are noted as one of the key considerations for retailers related to Brexit, as costs could increase should undesirable tariffs and movement laws be introduced.
Looking to the year ahead, the report also outlines Christie & Co’s market predictions which are; increased levels of corporate divestment, oil companies to acquire more going concern petrol station businesses, and further financial distress for some high street retailers and shopping centres.
Average prices remained economically positive throughout 2018 across almost every sector in which Christie & Co specialises, with Retail seeing a 1.3% increase.
Steve Rodell, Managing Director – Retail at Christie & Co comments, “2018 kept us very busy on projects not only in our core convenience and petrol markets but also in wider retail. Our marketing of Wyevale Garden Centres and Cornwall Garages ignited interest in alternative investments and illustrated how our established deal handling adds enormous value to clients’ expectations.”