Over the last 10 years retail construction output has been on an underlying downward trend, firstly because of the recession and subsequently because of pressure on the housing sector and uncertainties surrounding ‘Brexit’. Between 2007 and 2017, contractors output declined from £8.3bn to £6.1bn, and annual growth since 2015 has been static.
At a sub-sector level, fortunes have been mixed with expansion within the discount sector but a reduction in newbuild and output in the supermarket and High Street segments. The race to build large superstores in the grocery sector has now all but ended and larger retailers are being forced to re-evaluate their property portfolios in the face of increased competition from the value and convenience retailers and from online and ‘click and collect’ services. Sub-letting and re-purposing space is being deployed at both existing and new stores, particularly at out-of-town locations
Retail construction, whilst challenging for the contractor and offering slim margins, does offer repeated high volumes of work, especially in the grocery sector. In the discount grocery sector, where expansion programmes have remained relatively strong so far has been an area offering opportunities for contractors, which helped to maintain order books and work pipelines.
The continued trend for many retail projects is now for inclusion within mixed use developments and there has been a significant shift from purely retail-driven outlets to ‘destination’ mixed retail, leisure and family entertainment venues. The extent and speed of the recovery for retail remains heavily dependent upon levels of consumer confidence and spending, which are currently being impacted by the ongoing uncertainty surrounding the Brexit process.