Consumer spending and choice over the years ahead will rise inexorably because of demographic, economic and technical change. As a result, competition between the retail and leisure in-dustries for consumers’ time and money will inevitably increase.
One of the key means of combating the trend towards home-oriented leisure will be successfully combining retail offers and formats with leisure facilities.
As competition between town centres and other shopping locations increases, accompanied by a parallel rise in demand for pleasur able shopping, so the pressures to combine retail and leisure will increase.
Overall commercial benefit must be derived from encouraging people to stay longer stay and spend more. Food service is the key link between retail and leisure – a successful food court is already an essential ingredient, but not always achieved.
Retail parks and factory outlet centres, which sell manufacturers’ brands cheap, in areas on the outskirts of towns will increasingly attract leisure components, not least because the latter share the common needs of extensive low-cost land, good access and parking – all adding up to enhanced family appeal.
Smaller, individual leisure attractions – museums, cinemas, sports facilities and the like – can all provide profitable retail opportunities, including themed merchandise.
In the right combination, retail and leisure add increasing value to each other, so the larger the location, the greater the opportunity. But because of the higher investment and risk levels, scaled-down leisure is often investors’ preferred option.
Owners of shopping locations with a successful mix of retail and leisure will be able to achieve higher rental levels, based on stronger consumer spending.
Corporate Intelligence research-ers expect that out-of-town shopping will increase despite the Government’s guidelines favouring town centre retailing, but mainly at the expense of neighbourhood shops.
Although the number of traditional high street retailers with new out-of-town outlets will increase (the recent crop includes Next, The Burton Group and British Shoe Corporation’s Shoe City), this will not significantly affect high street shopping, even though by the year 2005 up to 37 per cent of retail spending is forecast to be in out-of-town superstores, retail parks and malls compared with under a third now.
The key for retailers, as well as leisure companies operating outside the home, is to compete more strongly with home-centred leisure, which has been the greater beneficiary of many socio-economic and demographic trends. Out-of-home leisure activity will, anyway, account for only 27 per cent of the total leisure market in 2005, against 31 per cent in 1995, according to Corporate Intelligence estimates.
Researchers predict that spending in shops, as a share of total consumer spending, will decline from 37 per cent in 1996 to 33 per cent by 2005.
However, 37 per cent of retail spending will be in out-of-town locations, compared with under 33 per cent now. This is despite a rise in road congestion that will mean consumers preferring closer locations to distant ones.
Food service is the prime link between retail and leisure and themed restaurants and themed or branded pubs, especially those offering food, will increasingly occupy prime retail space.
In this context, retail parks and out-of-town centres are particularly favoured for catering and, indeed, leisure generally because of lower cost land, good access and convenient parking.
As competition between shopping locations increases, combining retail and leisure not only differentiates those locations, but also makes shopping more pleasurable – and can attract those whose primary purpose may not be shopping.
Retail opportunities are greater at larger-scale leisure attractions, but operators are now increasingly recognising the retail potential at smaller attractions, such as museums and cinemas, whether in standalone locations or alongside con- ventional retailing locations.
Branded leisure retail is another development with the Sega centre at London’s Trocadero and Dr Martens and Levi’s concept stores in the capital. Conversely, free-standing themed merchandise outlets within predominantly retail locations – such as Disney and Warner Bros stores – will also continue to grow strongly and prove significant draws.
As retail and leisure are moving at such a rapid pace, driven by life-style, social and technical changes, the choices open to shoppers will be much wider over the next five to ten years.
This will intensify competition between the two, but operators able to harness the convergence of retail and leisure, in whatever ways, will benefit more. Centres with an appropriate mix of leisure will attract higher footfall, more spending – and, in-deed, stronger retailer demand.