Home / News / New figures show growth in the Retail Construction and Refurbishment Market

New figures show growth in the Retail Construction and Refurbishment Market

Concentration on the convenience sector and growth of discounters lead to changes in the UK retail construction pipeline.

New figures show growth in the Retail Construction and Refurbishment Market

Total UK retail sales have been boosted by an increase in online sales in recent years, and the industry has performed strongly to date in 2015, with consumer confidence returning.

Retail construction output saw a return to growth in 2013 driven by an uplift in consumer confidence, followed by a 2% increase in 2014/15 low inflation and interest rates, rising real incomes, and positive house price growth continued to support the market.

Retail construction, whilst challenging for the contractor and offering slim margins, offers repeated high volumes of work, especially in the grocery sector.

The retail market continues to be driven by structural changes due to the growth of online shopping. Profit margins for traditional retailers continue to be squeezed by a combination of online sales, rapidly changing consumer habits and intense competition from discounters such as Aldi and Lidl.

Driven by the rise of online shopping and with a strategy based on major expansion into the convenience market – the construction requirements of the retail sector are changing significantly, with short-term contracts now a marked feature of the market.

Despite curtailed expansion plans there is still over 100m sq. ft. of total retail space in the development pipeline at all stages of development – grocery retail, shopping centres and retail parks – in 2015.

Jane Tarver, AMA Research, said: “Whilst retail contractors are likely to see more work coming through in 2016, the value and size of projects have changed with an emphasis on smaller refurbishment, particularly for the convenience and discount sectors in urban locations.”

The extent and speed of the recovery in the retail sector will remain heavily dependent on consumer confidence and spending levels and current forecasts indicate total annual output increases of around 3% per annum to 2017, when new work output is forecast to reach £6.1bn.

Into the medium-term, the retail sector is facing significant structural changes with the continuing growth of internet shopping likely to increase demand for warehousing space but also declining demand for traditional retail outlets, particularly in high street locations.

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

Check Also

Travis Perkins and Northampton Saints’ charity toy collection runs for eighth year

Travis Perkins has teamed up with Northampton Saints and Northampton Saints Foundation to share donations …