Lancaster City Council

Lancaster City Council

Lancaster City Council

Lancaster City Council Lancaster District Retail Review December 2015 Address: Quay West at MediaCityUK, Trafford Wharf Road, Trafford Park, Manchester, M17 1HH Tel: 0161 872 3223 E-Mail: planners.manchester@wyg.com Web: www.wyg.com

WYG Planning and Environment creative minds safe hands Contents Page 1.0 Introduction . 1 2.0 Population and Expenditure . 3 3.0 Capacity in Existing Centres . 13 4.0 Retail Capacity (Job Baseline OBR) Employment-Led Growth . 40 5.0 Recommendations and Future Retail Strategy . 47 Appendix 1: Statistical Retail Tables – Population Growth (Baseline) Appendix 2: Statistical Retail Tables – Population Growth (Jobs Baseline OBR) Employment Led

1 WYG Planning creative minds safe hands 1.0 Introduction Instruction 1.01 WYG Planning (‘WYG’) was commissioned by Lancaster City Council (LCC) in October 2015 to undertake an update to the Lancaster Retail Development Strategy (LRDS) released in January 2014. The key purpose of this update is to assist in considering both locally and nationally changes that have occurred in the retail sector since publication of the Strategy in 2014 but also to reflect the changes to the wider UK economy. 1.02 The requirements of this update including the following:  An update of the population forecasts of the baseline and employment led scenario;  An update of the retail expenditure forecasts of the baseline and employment led condition;  An assessment of the quantitative need and capacity for additional convenience and comparison retail floorspace in Lancaster that reflect the significant retail development that has since been approved in both Lancaster city centre and Morecambe.

 Consideration of the above capacity in relation to the changing position of Lancaster Canal Corridor North and delivery of the regeneration scheme and the changing dynamic of any future development; 1.03 The update is required to help influence the Canal Corridor North regeneration opportunity adjacent the city centre as a long term aspiration for both the City Council and its developer partners to deliver a retail led regeneration project to maintain Lancaster’s retail position in the sub region. The ever changing retail climate has placed a challenging environment to deliver the Canal Corridor North site and with a number of viability and deliverability matters it is consider that the Council need to review and understand future capacity to inform the emerging local development plan and the site allocation for the Canal Corridor North site.

1.04 The update will again utilise the original empirical research (shopping survey of 1,700 households), undertaken by NEMS Market Research Limited in April 2013. The Study Area is comparable to that adopted by the 2006 and 2013 Retail Studies, which covers Lancaster, parts of South Lakeland, Barrow and Eden to the north; and parts of Wyre, Ribble Valley, Preston and Craven to the south and east of Lancaster. This update also draws upon current Experian population and expenditure data

2 WYG Planning creative minds safe hands (published October and November 2015) in order to establish the up to date position with regard to both convenience and comparison goods capacity.

Structure of Report 1.05 Our report is structured as follows:  Section 2 provides a context for the Retail Study by providing an overview of key retail trends;  Section 3 sets out current and future estimated population and expenditure levels within the Study Area and builds on the same design years from the 2013 Study (i.e. 2013, 2018, 2023 2028 and 2031);  Section 4 provides our assessment of the quantitative and qualitative need for further convenience and comparison goods floorspace over the assessment period;  Section 5 considers future retail capacity based on the employment led population forecasts driven from the results of the Housing Requirements Study; and  Section 6 provides our recommendations in respect of the Council’s future retail and leisure strategy.

3 WYG Planning creative minds safe hands 2.0 Population and Expenditure 2.01 This section of the report re-assesses the current population and available expenditure (for both convenience and comparison goods) within the Study Area. The extent of the Study Area and its thirteen zones was previously identified by Figure 4.1 of the LRDS. Study Area Population 2.02 The population within each postal code sector has been calculated using Experian Micromarketer G3 data (2014 estimate, which was issued in November 2015). The baseline population data takes into consideration the findings of the recent 2011 Census release which has then been projected forward by Experian (using growth rates derived from ONS population projections) using the latest mid-year population projections from 2012 and are based on Experian’s ‘demographic component model’ which builds ONS population projects, age/gender bans and migration and death rates etc.

2.03 For the purpose of this update, population and expenditure has been calculated at five year intervals from 2013 (the base date) to 20311 in accordance with the NPPF and the previous LRDS (i.e. 2018, 2023, 2028 and 2031), and then at 2031 to reflect the future development plan timeframe. 2.04 On this basis, the defined Study Area retains a resident population of approximately 383,715 people at 2013 rising to 397,246 people at 2031. This represents an increase in population within the Study Area of 13,531 people (equating to an increase of 3.5%) between 2013 and 2031. The previous LRDS identified that the population with the Study Area would increase by circa 26,400 people between 2013 and 2031, demonstrating that the LRDS over estimated the level of population (by 12,900 persons).

Table 4.1 provides a breakdown of the ‘baseline’ forecast population change within the Study Area in the period through to 2031. The population forecasts are compared to the population forecasts contained within the LRDS (2013). In consideration of the four principal survey zones that cover Lancaster’s administrative area (Zones 1, 2, 3 and 6), the LRDS estimated that these had a population of circa 138,600 persons at 2013 and was forecast to increase to 154,700 by 2031, however, the latest forecasts show that the population will increase to 147,800 persons by 2031, representing a increase of 9,200 persons, (compared to 16,100 persons in the LRDS).

This compare to the circa 7,000 population change estimated in the SNHP 2012 which is set out in Table 4.1 of the SMHA 2015.

1 2031 is three years after 2028 but reflects the plan period

4 WYG Planning creative minds safe hands Table 2.1: Baseline Population in the Study Area (2013 to 2031) Compared to Population Estimates in the LRDS (2013) Year Study Area Population Difference in Population Estimates LRDS (2013) LRDS (2015) 2013 383,715 383,715 0 2018 390,422 389,720 -702 2023 398,166 392,399 -5,767 2028 406,156 395,977 -10,179 2031 410,161 397,246 -12,915 Source: Appendix 2, Table 1 and LRDS (2013) Appendix 1, Table 1 2.05 Table 2.1 provides a detailed breakdown of the revised ‘baseline’ forecast population change within each survey zone in each of the reporting periods to 2031.

Table 2.2: Baseline – Study Area Population by Survey Zone (2013 to 2031) Zone 2013 2018 2023 2028 2031 1 55,594 55,664 55,988 57,025 57,541 2 51,481 52,209 52,889 54,053 54,510 3 8,413 10,871 10,968 11,154 11,221 4 30,035 30,775 31,391 31,860 32,033 5 14,429 14,033 14,245 14,472 14,538 6 23,084 23,637 24,012 24,398 24,507 7 11,447 11,931 11,960 11,981 11,950 8 28,324 30,072 30,318 30,503 30,682 9 12,963 12,331 12,369 12,386 12,324 11 86,872 87,581 87,112 86,532 86,191 13 18,543 17,567 17,669 17,715 17,698 15 20,061 19,972 20,097 20,213 20,206 16 22,469 23,077 23,381 23,685 23,845 Total 383,715 389,720 392,399 395,977 397,246 Source: 2013 data derived from Experian Micromarketer G3 data Retail Expenditure 2.06 In order to calculate per capita convenience and comparison goods expenditure, WYG has utilised Experian Micromarketer G3 data which provides detailed information on local consumer expenditure which takes into consideration the socio-economic characteristics of the local population.

Experian is a

5 WYG Planning creative minds safe hands widely accepted source of expenditure and population data and is regularly used by WYG in calculating retail capacity. 3.01 The base year for the Experian expenditure data is 2013. Per capita growth forecasts have been derived from Experian Retail Planner Briefing Note 13, which was published in October 2015. Appendix 3 of the Retail Planner Briefing Note identifies the following annual growth forecasts for convenience and comparison goods which inform our assessment. The table compares the differences in the annualised growth rates adopted in the LRDS in 2011 and used for this update, it is clear from the results that the annualised growth in convenience goods was over estimated where growth of nearly 1% per annum was predicted but is now not expected to materialise over the plan period.

The results also show that the forecasts in annualised comparison goods expenditure growth is higher than previously estimated in the LRDS in 2011.

Table 2.3: Expenditure Growth Forecasts Year Convenience (%) Comparison (%) LRDS (2013) LRDS (2015) LRDS (2013) LRDS (2015) 2013 -0.6 -1.1 3.1 3.6 2014 -0.3 -2.2 3.2 4.8 2015 0.1 -0.4 2.3 4.7 2016 0.6 -0.2 2.8 2.4 2017 0.9 0.1 2.9 2.1 2018 0.8 -0.1 2.9 1.8 2019 0.9 -0.1 3.1 2.1 2020 0.9 -0.2 3.1 2.5 2021 0.9 -0.3 3.0 3.1 2022 0.9 -0.3 3.0 2.9 2023 0.9 -0.1 2.9 3.4 2024 0.9 0.0 2.9 3.4 2025 0.8 -0.1 2.9 3.2 2026 0.7 -0.1 2.9 3.1 2027 0.7 -0.1 2.8 3.3 2028 0.8 -0.1 2.9 3.1 2029 0.9 -0.1 2.9 3.3 2030 0.9 -0.1 2.9 3.4 2031 0.8 -0.1 2.9 3.3 Source: Appendix 3, Retail Planner Briefing Note 13 (October 2015) 2.07 The latest growth forecasts suggest that the recovery from the downturn in the economy is well underway, albeit growth in convenience goods expenditure will improve over the medium and long

6 WYG Planning creative minds safe hands term when compared to the current position. For convenience goods, Experian forecasts -1.1% annual growth at 2013, -2.2% at 2014 and -0.4% in 2015. Whilst there is some deviation in the rate forecast thereafter, the rate of annual convenience goods decline forecast to 2031 broadly follows - 0.1%. This decline is well below the growth levels predicted just last year demonstrating a weak growth pattern in convenience goods expenditure over the plan period. 2.08 By contrast, Experian identifies an immediate and relatively strong annual comparison growth rate of +3.6% at 2013 (previously 3.1%).

A increase in the rate of growth to +4.8% (previously 3.2%) delivered at 2014 and a anticipated increase of 4.7% in 2015 (previously 2.3%), with annual growth rates thereafter to 2031 forecast to be extremely stable, within the range +1.8% to +3.4%. The latest data shows that there is no growth in convenience goods expenditure in the short to long term and compares to higher annualised comparison goods expenditure growth.

2.09 Growth in expenditure forecast in the longer term (beyond the next ten years) should be treated with caution given the inherent uncertainties in predicting the economy’s performance over time. Assessments of this nature should therefore be reviewed on a regular basis in order to ensure that forecasts over the medium and long term are reflective of any changes to relevant available data. 2.10 Experian Retail Planner Briefing Note 13 also provides a forecast as to the proportion of expenditure which will be committed through Special Forms of Trading (SFT) (comprising ‘non-store retailing’, such as internet sales, TV shopping and so on)2 over the reporting period.

We have ‘excluded’ any expenditure which survey respondents indicated was committed via special forms of trading not spent in tangible in store facilities and instead have made an allowance derived from Experian’s recommendation.

2.11 In considering special forms of trading, it should be noted that many products which are ordered online are actually sourced from a physical store’s shelves or stockroom (particularly in the case of convenience goods). Accordingly, expenditure committed in this manner acts to support stores and should be considered ‘available’ to tangible retail destinations. 2.12 Accordingly, in order not to overstate the influence of expenditure committed via special forms of trading, our approach is based on Experian’s latest ‘adjusted’ figure (provided at Appendix 3 of its Retail Planner Briefing Note 13) which makes an allowance for internet sales which are sourced from stores.

The proportion of expenditure committed through special forms of trading cited below at 2 Defined by Experian as expenditure not directed to traditional floorspace such as the internet, mail order, party plan and vending machines and other non-store activity such as market and road side stalls.

7 WYG Planning creative minds safe hands Table 2.4 is ‘stripped out’ of the identified expenditure as it is not available to stores within the Study Area. WYG note that the estimates for Special Forms of Trading (SFT) between 2013 and 2015 have changed and Experian estimates are slightly lower than those set out in Experian Retail Planner Briefing Note 11 (October 2013). Table 2.4: Special Forms of Trading (SFT) Forecasts Year Convenience Comparison LRDS (2013) LRDS (2015) LRDS (2013) LRDS (2015) 2013 2.5% 2.2% 10.8% 10.6% 2018 3.8% 3.5% 14.5% 13.8% 2023 4.8% 4.7% 15.9% 15.1% 2028 5.4% 5.4% 16.0% 14.8% 2031* 5.6% 5.8% 15.9% 14.6% Source: Experian Retail Planner Briefing Note 13 (October 2015) 2.13 Using the revised growth rates and revised SFT allowances, it is possible to reproduce expenditure estimates for each survey zone under each population growth scenario at 2013, 2018, 2023, 2028 and 2031.

In doing so, our assessment takes into account both per capita retail expenditure growth and population change. As highlighted earlier WYG note that the above SFT forecasts are projected growth rates and it still unclear whether these will mature or stabilise over time or/at expected levels as they have already been refined over the last two years, therefore our approach is considered cautious but we would recommend given the fluidity of this growth sector that this is regularly (yearly) monitored as it may have consequences on requirement for tangible floorspace.

Convenience Goods Expenditure 2.14 Taking into consideration the above increases in population and per capita expenditure, it is estimated that, at 2013, the resident population of the Study Area generated some £793.1m of convenience goods expenditure3 this was £58.3m higher than that identified in the LRDS (2014). This is forecast to decrease to £786.3m at 2031, which represents a decrease of £5.7m (or 0.7%) between 2013 and 2031, the previous LRDS had an increase of £131.5m up to 2031. Up to 2018, the convenience goods expenditure is estimated to decrease to £783.8m, which represents a decrease of just £9.3m (-1.2%), it was previously estimated to increase by 2.5% (or £19.0m).

Table 2.5 Total Available Study Area Expenditure – Convenience (£m) 3 Expressed in 2011 prices, as is every subsequent monetary value

8 WYG Planning creative minds safe hands 2013 2018 2023 2028 2031 Growth 2013-2018 Growth 2013-2023 Growth 2013-2028 Growth 2013-2031 LRDS (2013) 734.8 753.7 794.6 837.9 866.3 19.0 59.9 103.2 131.5 LRDS (2015) 793.1 783.8 781.9 786.9 787.3 ‐9.3 ‐11.1 ‐6.2 ‐5.7 Difference +58.3 +30.0 ‐12.7 ‐51.0 ‐79.0 ‐28.3 ‐71.0 ‐109.3 ‐137.3 Source: Table 2a, Appendix 2. 2015 figures are in 2013 prices, the LRDS was in 2011 prices Main Food and ‘Top-Up’ Shopping 2.15 Similar to the LRDS it has been assumed that the proportion of convenience goods expenditure directed to each respondent’s main food shopping destination equates to 80% of their overall convenience shopping expenditure.

The remaining 20% of expenditure (which will typically be spent on regular purchases such as milk, bread and so on) is therefore attributed to the respondents’ ‘top- up’ convenience shopping destination. This ratio broadly reflects the respective expenditure committed during main food and top-up shopping trips as identified by Questions 5 and 15 of the household survey.

2.16 By applying these estimates to the identified resident population of the Study Area, convenience goods expenditure at 2013 committed through ‘main food’ shopping trips is estimated to be £634.4m (previously £603.0m in the LRDS) and through ‘top up’ shopping trips is estimated to account for £158.6m (previously £150.7m in the LRDS). Comparison Goods Expenditure 2.17 At 2013, this update estimates that the resident population of the Study Area generates £1,092.8m of comparison goods expenditure, which is forecast to increase to £1,956.8m at 2031. This represents an increase of £864.1m (or 79.0%) between 2013 and 2031.

This increase is clearly significant, it is more modest than that which has previously identified (£690.3m) due to the increased levels of annualised comparison goods growth which is now forecast over the short to medium term in particular up to 2015 which in some years was double that expected. The increase is also due to the level of expenditure assigned to SFT sales was not as high as predicted two years ago. Indeed, the identified comparison goods expenditure growth of £205.7m within the Study Area between 2013 and 2018 represents just an 18.8% increase (previously a 12.0% increase). The difference in the level of expenditure up to 2018 is significant to that previously identified whereby there is no £82.7m of extra comparison goods expenditure available to that which was previously identified in the LRDS which is reflective of the increased economic improvements experienced since 2014.

Table 2.6 Total Available Expenditure Study Area – Comparison (£m)

9 WYG Planning creative minds safe hands 2013 2018 2023 2028 2031 Growth 2013-2018 Growth 2013-2023 Growth 2013-2028 Growth 2013-2031 LRDS (2013) 1,019.8 1,142.7 1,324.4 1,556.4 1,710.0 123.0 304.6 536.7 690.3 LRDS (2015) 1,092.8 1,298.4 1,498.9 1,774.4 1,956.8 205.7 406.2 681.6 864.1 Difference +73.0 +155.7 +174.6 +218.0 +246.8 +82.7 +101.6 +145.0 +173.8 Source: Table 8, Appendix 2 figures are in 2013 prices, the LRDS was in 2011 prices 2.18 For the purposes of this study, comparison goods expenditure has been divided into eight sub- categories: ‘Furniture’, ‘DIY’, ‘Electrical’ (these four categories collectively being referred to as bulky goods), ‘Clothing & Footwear’, ‘CDs, DVDs and Books’, ‘Small Household Goods’, ‘Toys, Games, Bicycles and Recreational Goods’ and ‘Health and Beauty/Chemist Goods’ (collectively referred to as non-bulky goods).

The proportion of expenditure directed to each sub-category is estimated by Experian on a zone by zone basis.

Inflow (Visitor/Tourism) Expenditure to Lancaster 2.19 Further to the LRDS, no new further information has been made available specifically from STEAM (2012) for the district, and with Lancaster (and Morecambe) both recognised as important destinations in Lancashire’s and the North West’s wider tourism economy. We have been provided with a STEAM summary report (2014) which found that on average the number of visitor days to Lancashire has been growing by 1.4% a year since 2009 with the total number of day visitors increased by 2.3% between 2013 and 2014 and this increase was supported due to attractions such as events and festivals.

However, the summary provide no revised quantitative spend data that could be used for the purposes of this update. Therefore as a conservative approach we have sought to retain the last available expenditure figures from 2012 and adjust these accordingly. 2.20 WYG has therefore relied on the level of shopping expenditure that is attracted to the area from visitor and tourist spend from the previous STEAM data (2012). STEAM data confirms that the total ‘shopping’ expenditure by visitors in Lancaster is £159.1m in 20114 , of which £70.9m is spent on food and drink, which we understand includes eating out at destinations such as restaurants, pubs, cafes etc and £88.2m is spent on shopping.

STEAM identify that other (£60.3m) expenditure is spent in Lancaster on accommodation, recreation and transport.

2.21 The STEAM data does not break down the shopping spend into comparison or convenience goods items. In drawing on the ratio identified by Experian between convenience and comparison goods (i.e. £793.1m/£1,093.1m respectively) at 2013 WYG has assumed that around £37.0m is spent at facilities 4 STEAM data is in 2011 price base so WYG has adjusted to reflect the price base of this Statement (2013).

10 WYG Planning creative minds safe hands in the district on convenience goods with a further £51.1m spent on comparison goods retail. We have assumed that a total of around £88.2m is spent in the district as a whole, which represents an inflow of around 5.0% of all goods when compared to the £1,886.2m generated in the local area.

In terms of the level of expenditure that is currently retained and spent at existing facilities in Lancaster (£324.1m on comparison goods and £266.6m on convenience goods = £590.7m) then this figure represents circa 15% of the trade secured in the district.

Market Share of Expenditure of Main Facilities 2.22 Having re-estimated the level of expenditure which is generated by the resident population within the defined Study Area, it is necessary to identify the ‘sphere of influence’ of each of the town and district centres through consideration of each centre’s claimed market share of available expenditure. We have also re-assessed the market share claimed by the major retail parks (this latter category effectively being ‘undefined’ in planning terms).

2.23 As previously explained this update has drawn from the results of the 1,700 household telephone interviews within the defined Study Area.

By analysing the results from the survey, it is possible to re- estimate the levels of expenditure which are directed towards each principal centre’s shopping facilities. The market shares for the various expenditure categories were identified in Section 4 of the LRDS and we have not updated these as the market shares are based on trips identified in 2013. For this update, WYG has removed allowances to SFT. Table 5.6 below sets out the differing market shares achieved for each of the main retail destinations across the district, and shows that the main destinations for undertaking shopping trips is Lancaster city centre, followed by Morecambe town centre.

The third most popular destinations are facilities at Central Drive in Morecambe. Joint fourth is Bulk Road Retail Park and Lancaster City Retail Park (Morecambe) with 1.8% market share. Facilities in Carnforth retained just 0.7% of all expenditure spend. The network of local centres (Heysham, Bolton le Sands, Torrisholme, Caton, and West End) when considered together are the least most popular destinations in the district. The results clearly show that the level of clothing and footwear retention in Lancaster is the lowest of all the goods categories examined. The cumulative market share figures is slightly different to those within the LRDS due to the changes in expenditure allocations to that previously considered in the LRDS.

2.24 Overall the facilities within the district retain approximately 31.3% (previously 33.1%) of all local expenditure generated in the Study; this is considered a healthy and sustainable level given the extent of the Study Area (covering south Cumbria), demonstrating that there is limited outflow of expenditure from the core zones.

11 WYG Planning creative minds safe hands Table 2.7: Lancaster District Market Shares by Location Destination Market Shares by Category (%) Convenience Goods Comparison Goods Main Food Top-up Food Furniture DIY Electrical Clothing & Footwear CDs, DVDs, books Small Household Recreation Chemist TOTAL^ Lancaster City Centre 7.2 8.4 9.8 8.4 17.0 18.2 26.5 15.9 21.6 18.8 9.5 Morecambe Town Centre 1.0 2.1 8.0 8.9 4.6 2.8 3.0 5.1 5.9 6.2 2.8 Carnforth Town Centre 1.0 1.8 0.0 0.4 0.0 0.0 1.4 0.2 0.5 2.6 0.7 Local Centres 0.3 5.0 1.3 0.6 0.2 0.0 0.1 0.1 0.0 0.6 0.6 Lancaster City Retail Park - - 5.6 1.9 0.1 0.7 0.0 2.8 0.2 0.0 1.8 Bulk Road Retail Park - - 4.4 7.6 11.7 1.1 0.3 2.4 1.2 0.9 1.7 Central Drive, Morecambe 8.7 3.2 0.9 3.2 0.1 0.2 0.4 0.6 0.0 0.3 2.5 Other (undefined) 25.9 18.6 5.4 5.4 5.5 4.4 10.0 7.4 3.6 8.4 11.7 District Sub-Total 37.5 35.6 35.6 36.5 39.3 27.6 41.8 34.4 33.0 37.8 31.3 Source: Lancaster Household Shopping Survey (2013) ^ Based on cumulative market share of all categories (convenience goods and comparison goods) In 2013 prices Forecast Growth in Expenditure Attracted to Study Area 2.25 With forecast growth in convenience goods expenditure predicted to decrease at an average of -0.3% per annum5 across the whole of the period from 2013 to 2031, it is estimated that the Study Area will experience a decrease in convenience goods expenditure of approximately £5.7m at 2031.

Assuming a constant ‘Study Area’ market share of 33.7%, this equates to a decrease (within the district) in retained convenience goods expenditure of approximately -£1.9m at 2031. 2.26 The significant forecast increase in expenditure on comparison goods (an average of 3.3% per annum29 increase in the period 2013 to 2031) (previously 2.5% per annum) would result in a further £864.1m of comparison goods expenditure being generated within the Study Area by 2031 (previously £690.3m). Assuming a constant comparison goods market share of 29.6%, existing facilities within 5 Growth rates taken from Appendix 3 of Experian Retail Planner Briefing Note 13 (October 2015), and are adjusted to take into consideration SFT allowances.

12 WYG Planning creative minds safe hands Lancaster will capture around an additional £255.8m (previously £211.4m in the LRDS) of comparison goods expenditure by 2031. 2.27 This analysis is based on ‘rolling forward’ the current market share within the Study Area for each category of goods. This approach of rolling forward existing market share is in line with standard practice and does not take into account the desirability or need to ‘claw back’ leakage between expenditure directed to centres elsewhere, which might be achieved through improvements in retail provision.

2.28 In order for the Study Area to capture the significant future growth in retail expenditure which is forecast (particularly for comparison goods), it is likely that there will be a need to enhance future retail provision, thereby ensuring that this growth is not lost to competing centres and that the Study Area retention rate does not decline in the future.

2.29 If an excess of comparison or convenience goods expenditure manifests itself within the Study Area, this does not necessarily translate directly into a requirement for additional floorspace. In assessing quantitative need, it is also necessary to take account of:  Existing development proposals;  Expected changes in shopping patterns; and  The current capacity and efficiency of retail floorspace within the established centres.

13 WYG Planning creative minds safe hands 3.0 Capacity in Existing Centres 3.01 WYG has re-examined the need for new convenience and comparison goods floorspace over five year reporting periods to 2028, and then to 2031 to coincide with the lifespan of the emerging Local Plan. At the outset and as demonstrated from the shift in retail expenditure levels since the preparation of the LRDS (2014), it is important to note that an assessment in the long term should be viewed with caution, due to the obvious difficulties inherent in predicting the performance of the economy and shopping habits over time.

In any event, any identified need or capacity identified beyond 2018 should not necessarily be viewed as justification of new retail floorspace outside of centres as this could prejudice the implementation of any emerging town centre redevelopment strategies and the development of more central sites which may be currently available or which could become available over time.

3.02 A complete series of revised quantitative capacity tables are provided at Appendix 1 and 2 to provide further detail in terms of the step-by-step application of the study methodology. Capacity Formula 3.03 For all types of capacity assessment, the conceptual approach is identical, although the data sources and assumptions may differ. The key relationship is Expenditure (£m) (allowing for population change and retail growth) less Turnover (£m) (allowing for improved ‘productivity’) equals Surplus or Deficit (£m).

3.04 Expenditure (£m) – The expenditure element of the above equation is calculated by taking the population within the defined catchment and then multiplying this figure by the average annual expenditure levels for various forms of retail spending per annum.

The expenditure is estimated with reference to a number of factors, namely:  Growth in population;  Growth in expenditure per person per annum; and  Special Forms of Trading (e.g. catalogue shopping / internet). 3.05 Turnover (£m) – The turnover figure relates to the annual turnover generated by existing retail facilities within the Study Area. The turnover of existing facilities is calculated using Mintel Retail Rankings and Verdict UK Grocery Retailers reports – independent analysis which lists the sales density for all major multiple retailers.

14 WYG Planning creative minds safe hands 3.06 Surplus / Deficit (£m) – This represents the difference between the expenditure and turnover figures outlined above. Clearly, a surplus figure will suggest an under provision of retail facilities within the Study Area (which, all things being equal, would suggest that additional floorspace is required), whereas a deficit would suggest an over provision of retail facilities (and in these circumstances it would prove difficult to justify additional floorspace).

3.07 Although a surplus figure is presented in monetary terms, it is possible to convert this figure to provide an indication of the quantum of floorspace which may be required to meet identified needs.

The level of floorspace will vary dependent on the type of retailer proposed and the type of goods traded. For example, electrical retailers such as Currys (which is considered a bulky goods retailer) have a much higher sales density than other bulky goods retailers such as B&Q, and clothing and footwear (non-bulky goods) operators generally have a higher sales density than bulky goods retailers. Future Capacity for Convenience Goods 3.08 In order to ascertain the likely need for additional convenience goods floorspace for Lancaster, it is first necessary to consider the current provision.

For each centre, it is assumed that future expenditure available to the centre will be based upon its existing market share. Given that the district is already relatively well provided for with a variety of foodstore operators, it is assumed that the future convenience goods expenditure available to Lancaster will be commensurate to its current market share of 33.7%. This current market share is calculated by examining the trading performance of stores in the wider Study Area.

3.09 The analysis of the market share of facilities in Lancaster indicates that the current level of trade at 2013 passing through food facilities originating from inside the Study Area is £266.9m. For each identified convenience goods destination, we have made a judgement as to whether any additional expenditure is likely to be attracted from outside the Study Area. We have considered this ‘inflow’ on a case by case basis, having regard to the size of the store, its operator and its position within Study Area but also the level of tourist spend identified by STEAM and its wider overall tourism offer.

3.10 We estimate that, taken as a whole, approximately £37.0m is estimated to be attracted to convenience retail facilities from outside the Study Area, taking the total expenditure spent at existing facilities within the district to £303.9m (previously this was identified at £296.6m). 3.11 For each destination, the survey-derived turnover is compared to a ‘benchmark’ turnover that indicates the level of turnover that the store would generally be expected to attract, based on company average

15 WYG Planning creative minds safe hands trading levels. A judgement can then be made on the trading performance of existing facilities based on the comparison of the survey-derived turnover with the expected turnover of the existing provision. 3.12 Tables 3.1 and 3.2 indicate the current trading position compared against the ‘benchmark’ (or anticipated) turnover of existing convenience goods floorspace and project this forward to 2031 assuming that the identified market share remains constant. The ‘benchmark’ turnover differs for each operator based on its average turnover per square metre (or ‘sales density’) throughout the country.

Although robust up to date information is available in terms of the convenience goods floorspace provided by large foodstores, it can be more difficult to quantify the extent of local convenience provision as there is no single comprehensive database to rely upon. Where WYG have been unable to verify the exact quantum of floorspace provided by existing smaller-scale convenience stores, we have assumed that stores are trading ‘at equilibrium’ (i.e. the survey-derived turnover equates to the expected level of turnover).

3.13 Furthermore, as this assessment is based upon a ‘goods based’ approach (which disaggregates expenditure by category type) it is important to recognise that major foodstore operators generally sell an element of non-food goods such as books, compact discs, clothing and household goods. To account for this, the typical ratio between convenience/comparison goods provision for each operator6 has been applied to the estimated net floorspace of each foodstore. This provides an indication of the likely sales area dedicated to the sale of convenience goods at each store. 3.14 Whilst survey results are commonly accepted as a means by which to identify existing shopping patterns, their findings should be treated with a ‘note of caution’ as they tend to have a bias towards larger stores and understate the role of smaller stores and independent retailers.

3.15 Our assessment identifies that, across the main convenience goods provision considered together, the expected benchmark turnover of existing convenience goods shopping provision is £291.4m per annum at 2013, which is below the survey-derived turnover (plus inflow) of £303.9m per annum. The derived figure allows for inflow in the manner previously identified. This suggests that, cumulatively, convenience goods floorspace is effectively ‘over trading’ by £12.5m (previously £33.5m in the LRDS). Whilst overall the trading performance of existing provision appears to be satisfactory, there are instances where certain facilities trade either particularly well or relatively poorly.

For example, the new results show that facilities in Zone 1 (Lancaster) are now trading with a benchmark turnover of £136.3m and is comparable to the survey derived turnover of £136.6m (including inflow); whereas facilities in Zone 2 (Morecambe) claim around £15.5m more than the benchmark turnover of £122.6m. Similarly, in Zone 6 (Carnforth), the survey identifies that facilities have an estimated turnover of 6 Taken from Verdict Food & Grocer Retailers (2012)

16 WYG Planning creative minds safe hands £31.2m, which compares to an expected benchmark of £29.1m, so overtrading by £2.1m (previously estimated to be overtrading £6.5m). The results show that the changes to the economic information available shows that existing facilities in Lancaster and Carnforth are not as over trading as previously identified in the LRDS and are trading at expected levels with a degree of variance, however the results still show that there is still over trading occurring at Morecambe. 3.16 Accepting the caveat provided at paragraph 3.14, the survey indicates that a number of stores are performing particular well in and around the main three main city/town centres.

In particular facilities in Zone 1 (Lancaster) including the edge of centre Sainsbury’s store on Cable Street, the out of centre Asda at Ovangle Road, the Aldi at Morecambe Road and the Booths at Hala Road are all overtrading but not to the level previously found. As before, other stores, mainly located in the city centre are trading below expected benchmark levels including. Overall facilities in Zone 1 are now trading at expected benchmark levels.

3.17 As in the LRDS the results show contrasting performances at different stores in Zone 2 around Morecambe. In the town centre, facilities are not trading well with the Iceland which is performing below expected levels and since (April 2015) the LDRS (2013) the Tesco Metro in the Arndale Centre has closed and is to be re-occupied by Home Bargains. Out-of-centre facilities also show a mixed trading performance, with the Aldi at Marine Road West trading at expected levels, the Asda at Lancaster Road and the Morrisons at Central Drive all trading higher than expected benchmark levels. However, Sainsbury’s at Lancaster Road is trading at around 72% of expected levels.

As before, Heysham and Torrisholme local centres are trading at expected levels whilst facilities in the West End is perform well below expected benchmark levels. When considering the collective performance we found that generally existing facilities are trading above expected levels (+15.5m). The closure of the Tesco Metro may have implications on the other stores in the vicinity and this will need to be monitored in due course.

3.18 In terms of Zone 6 (Carnforth), the results show that facilities in the town centre (Co-operative Food and Booths) are cumulatively trading at around 80% of expected levels, with the Tesco at Lancaster Road still trading well above expected benchmark levels. 3.19 The individual performance of each of the main convenience goods facilities are identified at Table 5 of Appendix 2. It should be noted that, although the level of trading in some cases is high, such trading performances are not uncommon and will occur at numerous stores operated by the ‘leading five’ supermarket retailers and also at successful ‘discounted’ stores.

17 WYG Planning creative minds safe hands 3.20 In order to appraise the need for additional convenience goods retail floorspace, it is necessary to consider how this collective overtrading may be affected by future growth in expenditure. Accordingly the next series of tables set out the anticipated increases in expenditure which will be available to the district’s convenience goods retail facilities, assuming that the current market share is maintained. It is also assumed that the turnover of existing floorspace will improve through improvements in floorspace efficiency as set out in Experian Retail Planner 13.

Following this exercise, we then consider the effect extant planning commitments will have in addressing any identified convenience shopping needs.

Convenience Goods Quantitative Need in Lancaster (District Wide) – Baseline 3.21 Table 3.1 indicates that, through increases in both population and expenditure applied to the current trading position and inclusion of inflow from beyond the Study Area, there is a convenience goods expenditure surplus of £15.0m at 2013. By 2018 after increase population and expenditure figures coupled with increases in productivity, we estimate that there will be a surplus expenditure of £19.4m at 2018, decreasing slightly to £18.7m at 2023, up to £20.4m at 2028 and £20.6m by 2031 (based on the revised market share (33.7%) being retained).

Table 3.1: Baseline – Quantitative Need for Convenience Goods Floorspace in Lancaster District Year Benchmark Turnover (£m) Available Derived Expenditure (£m) Surplus Expenditure (£m) 2013 288.9 303.9 15.0 2018 280.3 299.7 19.4 2023 280.3 299.0 18.7 2028 280.3 300.7 20.4 2031 280.3 300.9 20.6 Source: Table 6 (Table 1a) Appendix 2 2013 prices Table 3.2: Baseline: Quantitative Need for Additional Convenience Goods Floorspace in Lancaster District – After Commitments Year Convenience Goods £m Floorspace Requirement (sq.m net) Surplus (Taken from 3.1) Implemented Residual Min Max 2013 15.0 10.6 1.8 142 368 2018 19.4 8.8 10.6 800 2,200 2023 18.7 8.8 10.0 800 2,100 2028 20.4 8.8 11.6 900 2,400 2031 20.6 8.8 11.8 900 2,400 Source: Table 6 (Table 1c) of Appendix 2 In 2013 prices

18 WYG Planning creative minds safe hands 3.22 WYG understands that since completion of the LRDS a number of planning permissions have been implemented totalling 952 sq.m (net) of convenience good floorspace proposed across the district, including the extension of the Aldi store at Morecambe Road in Lancaster (Zone 1) and the building of the Aldi store at Scotland Road in Carnforth (Zone 6). WYG estimates that the proposed floorspace will have a turnover of £9.5m once all are trading at 2018, and we estimate that £9.1m of this will be derived from the Study Area. As shown in Table 3.2, implemented permissions effectively absorb circa 45% of the expenditure capacity identified (£8.8m of £19.4m) at 2018; and, a need for between just 800 sq.m and 2,200 sq.m of additional convenience goods floorspace by 2018 is required.

Given the limited expenditure and population growth this is expected to increase to between 900 sq.m and 2,200 sq.m between 2028 and 2031. We have also assumed that the previously identified turnover derived at the Tesco Metro will be transferred to the Home Bargain store in the Arndale Centre once trading although it is unlikely to trade at the levels achieved by Tesco Metro. 3.23 In addition, there are a number of extant planning permissions for additional convenience goods floorspace in the district, which have a combined net floorspace of 3,907 sq.m across three schemes The largest extant development as identified in the LRDS is the new replacement Booths store at Scotforth Road with a net sales of circa 1,850 sq.m, which is a replacement foodstore for their Hala Road store.

As with the LRDS we also have assumed that the existing Booths store will be re-occupied by a discount retailer7 . There is also a CLUED for the existing B&Q store on Aldcliffe Road in Lancaster to be used for a foodstore, although the B&Q is still trading at the time of this Study update.. Table 3.3 below show the need for further convenience goods development in the district taking into account the implemented and extant convenience goods floorspace.

3.24 The majority of any capacity will be absorbed by five extant planning permission which includes one new major supermarket (namely the Booths at Scotforth Road) in Zone 1 (planning permission reference 10/00251/FUL), which is a replacement foodstore for their Hala Road store. We also have assumed that the existing Booths store will be re-occupied by a discount retailer8 . There is also a CLUED for the existing B&Q store on Aldcliffe Road in Lancaster to be used for a foodstore, although the B&Q has still remained trading for three years seen approved and WYG believe that there are question marks whether this will ever be implemented but have still treated this as a commitment for the purposes of this update.

7 WYG has assumed that there will be a full transfer of trade of the existing Booth store (Hala Road) to the new store, as a like- for-like replacement (albeit larger) and the existing store will be re-occupied by a discount retailer. 8 WYG has assumed that there will be a full transfer of trade of the existing Booth store (Hala Road) to the new store, as a like- for-like replacement (albeit larger) and the existing store will be re-occupied by a discount retailer.

19 WYG Planning creative minds safe hands Table 3.3: Net Quantitative Need for Convenience Goods Floorspace in District – Extant Planning Consents Year Convenience Goods £m Floorspace Requirement (sq.

m net) Residual (Taken from 3.2) Extant Residual Min Max 2013 1.8 2018 10.6 19.9 -9.3 -700 -1,900 2023 10.0 19.9 -9.9 -800 -2,000 2028 11.6 19.9 -8.2 -700 -1,700 2031 11.8 19.9 -8.1 -600 -1,700 Source: Appendix 2, Table 6 (Table 2c) Planning commitments within LCC provided by LCC Council. 3.25 Table 3.3 show that once the implemented convenience goods retail developments and extant planning consents are taken into account, there would be a deficit in convenience goods expenditure available at 2018 of -£9.3m. By 2023, there would remain a surplus of -£9.9m convenience goods expenditure, decreasing to -£8.2m at 2028 and -£8.1m at 2031.

WYG hold reservations on whether the B&Q store on Aldcliffe Road will be converted to a foodstore; however, even if this was removed from the capacity estimates there would still be very limited capacity over the plan period beyond existing implemented and extant planning permissions. Therefore, it is evident that in the short term (up to 2018) there is no capacity to support additional convenience goods floorspace. 3.26 WYG recommends that the Council carefully monitor the implementation of extant planning permissions and the performance of the Home Bargains in Morecambe over the next five years and review how if implemented these influence existing shopping patterns moving forward through the next review as these results show given the structural changes in the convenience goods market then changes can occur quickly.

Convenience Goods Quantitative Need in Lancaster Urban Area (Zone 1) 3.27 As with the previously LRDS we have re-appraised the need for additional convenience goods retail floorspace in the main urban area around Lancaster, we have considered the trading performance of existing facilities in Zone 1 which forms the main urban area around Lancaster. The area includes facilities that are located in and around Lancaster city centre, as well as other undefined locations (including ‘standalone’ edge and out of centre stores and local parades). As set out in the LRDS the results show that existing facilities in the Zone 1 retain 79.7% of the available main food expenditure and 89.9% of top up food expenditure generated within the Study Area, this is considered strong and

20 WYG Planning creative minds safe hands with improvements to the existing Aldi store then this may improve retention further in Zone 1. AS before there is very limited lose of main and top up trade to facilities outside the district. 3.28 Drawing on information contained in Table 5 of Appendix 2 and identified earlier in this section, it is evident that convenience goods facilities within Zones 1, when considered together, are trading at expected levels, with a benchmark turnover of £136.3m at 2013, compared to a survey-derived turnover of £134.9m. The survey-derived figure allows for inflow (£19.5) in accordance with STEAM estimates.

The update shows that given wider availability of expenditure, existing facilities in Zone 1 that were once over trading (cumulatively) (by £7.4m) are now trading at expected levels, but more interesting are trading at a higher level to that identified in the LRDS (£136.6m compared to £131.4m).

3.29 Table 3.4 indicates that, at 2013, an expenditure surplus of +£1.6m (previously £7.4m) (above the expected benchmark turnover) is attributed to facilities in the Lancaster Urban Area. This surplus derives from the overtrading mainly driven by the significant over trading experienced at the edge-of- centre and out-of-centre stores, which then masks the under-performing stores in the city centre. The results also indicate that the trading performance of convenience goods facilities in Lancaster city centre (Zone 1) is below expected benchmark levels. Facilities in Lancaster have a convenience goods market share of 14.8% in the Study Area (previously 15.2%), which represents 43.8% of the retained expenditure in the district as a whole.

As before this coupled with relative high retention levels of main food (79.7%) and top up food (89.9%) trips with most of the other trade retention being spent at facilities in Zone 3 (Morecambe). We also note that 55% of Lancaster’s facilities derived turnover (£75.3m of £136.6m) is derived from its primary catchment area (Zone 1), 11% is drawn from Zone 2, 8.5% from Zone 3, 3.8% from Zone 5 and 3.5% from Zone 6 and 14.3% as a result of inflow from beyond the Study Area. In total 78% of Lancaster’s facilities draw is from Zones 1, 2, 3 and 6. Table 3.4: Quantitative Need for Convenience Goods Floorspace in the Lancaster Urban Area Year Benchmark Turnover (£m) Available Derived Expenditure (£m) Surplus Expenditure (£m) 2013 134.9 136.6 1.6 2018 130.9 134.6 3.7 2023 130.9 134.3 3.4 2028 130.9 135.1 4.2 2031 130.9 135.1 4.2 Source: Table 6 (Table 2a) Appendix 2 In 2011 prices 3.30 Table 3.5 provides a breakdown of the capacity for additional convenience goods floorspace in monetary terms.

Assuming existing convenience goods facilities maintain their existing market share

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