Harper Dennis Hobbs releases updated European retail research

Retail specialist Harper Dennis Hobbs (HDH) has updated its ranking of European towns and cities by retail spend. The cities that have notably moved up the table include Dublin, Barcelona, Valencia and Istanbul, whilst Stockholm and Moscow have moved down the rankings, largely as a result of out of town developments drawing shoppers away from the city centre.

The research takes into account new retail developments and changes in consumer spending since the rankings were originally produced in 2014. Whilst the top 5 centres – London West End, Paris, Madrid, Rome and Munich – remain unchanged in terms of their relative position, several centres have significantly risen or fallen in the rankings. Dublin has climbed 7 places, Barcelona and Valencia have benefited from a recent resurgence in the Spanish economy and Istanbul has also increased its position, despite geopolitical instability.

New retail developments have had a significant impact on the findings, some positive and some negative. Berlin and Marseille’s positions have been bolstered significantly by new shopping centres for example, whilst Stockholm and Moscow have dropped down the rankings as a result of out of town competition.

In publishing these rankings HDH provides a clear picture, based on rigorous analytical research, of the importance of different markets for both retailers and investors. The research analyses 15,000 towns and cities across Europe and calculates the flow of spend to each via a ‘gravity model’.

Jonathan De Mello, Head of Retail Consultancy at HDH comments, “Parts of Europe have witnessed significant economic and political upheaval and our 2016 European retail rankings reflect this, with Spanish cities bouncing back due to an improved economy, whilst places like Moscow have fallen due to a combination of political instability and large new out of town malls. The HDH European Retail Rankings are the first and only pan European rankings of gravitated retail spend, and are a seminal guide for retailers seeking to enter the European marketplace for the first time, or for European brands seeking to expand cross-border.”

The UK continues to have the largest representation of centres within the rankings, and whilst only London’s West End makes the top 10, Glasgow, Leeds, Liverpool and Nottingham have all increased their relative positions. UK economic growth is continuing to outpace the Eurozone and, as such, UK towns and cities are faring favourably in Europe’s retail hierarchy. Birmingham has also benefited from the opening of Grand Central, a new shopping centre built above the redeveloped New Street station with over 60 retailers, anchored by a large John Lewis.

Dublin’s climb 7 places in the rankings, is due to the bounce-back of the Irish economy. The financial crisis hit the country hard in 2008, but there has been a strong turnaround with 2014 and 2015 figures showing that it is the fastest growing economy in the EU.

Spain has also experienced an economic revival, with retail sales showing growth following prolonged recession. Barcelona and Valencia have both benefited from this resurgence, climbing in the rankings by 3 and 1 places respectively. Istanbul has also increased its position, ranking 7th with a retail spend of over £4.4 billion – a consequence of the continued growth of Turkey’s economy despite geopolitical instability in the country, including ongoing border issues with Syria.

Warsaw also increased its position in the rankings, rising to 45th; Poland’s economy has shown persistent resilience, dating back to its avoidance of recession during the 2008 financial crisis, and retail spend has shown growth over the last two years.

New retail developments change both the volume of retail stock in a location and the dynamism of the retail environment. Berlin and Marseille have been beneficiaries of new schemes since the original rankings were published. In Berlin, the LP12 Mall of Berlin opened at the end of 2014, with 270 units and circa 76,000 square metres of floorspace, bolstering the city’s retail stock. The development reflects the ascendancy of the city as a whole, supported by a growing population and strong tourism. Marseille saw the opening of Terrasses Du Port in May 2014, a shopping centre with 190 units which has increased the attractiveness of the city as a retail destination, moving it up 6 places in the rankings.

Out-of-town developments have in some cities impacted on retail spend. The Mall of Scandinavia, a recent opening in Solna to the north west of Stockholm, trades across a floorspace of over 1 million square feet and has provided strong competition for Sweden’s capital city, which has dropped 6 places in the rankings as a consequence. This negative effect on city centre retail is not an isolated event – Moscow has also been impacted by the openings of several out-of-town malls in the last two years, including the substantial ‘Aviapark’ scheme, which boasts over 500 stores.

The fall in the rankings for both Russian cities – Moscow and Saint Petersburg – also reflects the downturn of Russia’s economy, a result of Western sanctions, falling oil prices and the devaluation of the rouble. Economic problems are also still prevalent in Greece; the debt crisis continues and the more recent refugee crisis has compounded the country’s problems. Athens has therefore fallen furthest down the rankings, dropping 12 places, and now sits below the likes of Saint Petersburg and Turin.

In terms of recent trends in the retail market, the Paris terror attacks have had a pan-European impact on footfall levels. The Parisian tourist industry has been affected, with MKG, a hospitality research firm, reporting a fall in hotel occupancy rates in France’s capital. The events have also hit other major European cities; fewer leisure trips to London via rail and bus were observed by transport operator Stagecoach and there was a material impact on footfall levels in London and Paris.

The result of the forthcoming “Brexit” referendum could also have implications for retail in Europe, with Britain leaving the EU potentially leading to the devaluation of sterling, and a concurrent impact on London West End’s position within the rankings.

The update builds on the original methodology, which was calibrated through a combination of detailed research and HDH’s in-depth understanding of the European retail market. The research is underpinned by a pan-European ‘gravity model’ which defines catchment areas for retail destinations and, in turn, the amount of shopper spend attracted to each retail centre. Expenditure calculations take into account residential, worker and tourist demand – all significant factors in determining market size.