Corporate divestments of under-performing stores, rationalisation in the petrol forecourt sector and ongoing merger and acquisition activity will lead to continuing levels of churn on the retail property market, which could lead to new opportunities for independent retailers to acquire good sites, maintains business property advisor Christie & Co.
According to the company’s annual Business Outlook report, average prices remained economically positive throughout 2018 across almost every sector in which the firm specialises, with retail seeing a 1.3% increase.
Steve Rodell, managing director, retail, at Christie & Co told C-Store: “The multiples have a number of headwinds affecting what they are doing and, with a rising cost base, they need a higher turnover to sustain any given store than they would have done a few years ago. With this threshold for success rising, it means there are huge opportunities for independents to operate good stores where the multiples are no longer going in.
“There is still a steady flow of new entrants to the market, a c-store is still reasonably low capital and there is good support available from wholesalers and symbol groups, so there is still demand for people wanting to own a shop.
“Large groups are reviewing their portfolios closely and, with more consolidation in the forecourt sector looking likely, and the CMA verdict on the Asda/Sainsbury’s merger expected soon, there is sure to be a lot of churn of sites in the next year or so.”
Independent retailers confirmed to C-Store that there are good opportunities to buy in the marketplace, but the numbers have to stack up.
Barry Patel, owner of two Nisa stores in Luton, said: “I would say now is good time to buy. It would depend on locality and everything really, but why not? While minimum wage and everything is going up, stores can still make you a decent profit at the end of the day.
“The minimum turnover I would be looking for would be £15,000 a week, but that would be with the potential for an increase. That’s depending on chimney pots around, high street location and everything else.”
Sid Sidhu, owner of St John’s Budgens in Kenilworth, Warwickshire, is actively looking for a second site.
“I am looking for a decent sized store with a decent turnover, not a small space. It is about finding the right area, adding value to the business and getting the commercial and financial aspects weighed up.
“Convenience is where it is all happening at the moment and is key within the food retail channel, but a lot is coming from the multiples and not necessarily the independents. I was out-bid by Co-op at a recent site with good potential, but I needed deeper pockets. But, there are opportunities out there.
“For me, if a new store is to be managed, I would need a £20,000 a week base.”