SUMMARY OF REPORT CONTENTS

     Retail Construction Work Contractor’s Output by Value

                               2009 - 2013 (£bn)               

Although overall sales recovered in 2010, trading conditions for retailers in the UK have been mixed. During the recent downturn, many of the UK’s planned retail developments were either delayed or cancelled by property companies. As a result, the UK shopping centre development pipeline is now substantially smaller.  However, some retailers have taken advantage of the downturn to improve operations and increase market share and rapid expansion by a number of the major grocery retailers has supported retail construction and provided a large share of new work output.

So far in 2011, the retail sector is seeing positive signs, with retailers announcing strong trading results for the Christmas period, with growth of over 5% over the period. The outlook for the major grocery multiples, in particular, appears particularly strong. Some non-food retailers are also pressing ahead with expansion plans to enhance their place in the market. The major companies are also carrying out large-scale store refit programmes, in addition to the expansion of outlet numbers. Smaller-format stores by the large retailers are becoming more frequent, resulting in increased competition with smaller, independent retailers. The collapse of former high street stores such as Woolworths has created new prime retail space and opportunities for expansion.  

The growth of the UK grocery convenience sector continues to outpace mainstream grocery retailing growing by 67% over the past 10 years and now worth £32.1bn per annum, around 21% of the UK grocery sector.  The UK convenience sector will continue to outperform the grocery market and is projected to reach £42.6bn in 2015.

The UK non-food retail market was valued at an estimated £142.2bn in 2010, a slight increase of around 2% on the previous year. UK non-food retailing is dominated by large multiple store chains, who currently account for around three quarters of annual sales.

In 2010, contractors output from new retail construction work reached £5.1 billion and accounted for around 7.1% of new non-domestic work obtained by contractors in the UK.  The retail construction pipeline has been cut back significantly and construction activity dropped sharply, as many developers put a stop on planned schemes.

However, retail looks likely to deliver badly needed growth prospects in construction over the next year, and supermarket projects are expected to lead the recovery in retail construction output and will ensure that as government funding fades away and other sectors remain depressed by lack of investment retail construction will remain well up on 2010 levels.

Retail demand is expected to slowly increase in 2011, which should herald a restart of many of the currently stalled projects. The first wave of major retail development is expected to commence on site in 2011-12, but a more substantial increase in retail construction is not expected before 2013, when output values are forecast to increase by around 7% to reach £5.9bn. Retail construction output values are not expected to reach levels seen in 2008 until at least 2015, when the market is expected to be worth just over £7bn.