Retail | Business Outlook 2020

GARDEN CENTRES

In 2019, transactions within the retail sector were dominated by the sale of 145 Wyevale Garden Centres, the biggest sale of garden centre assets in the UK. We brokered 57 individual transactions by optimising our regional network and collaborating with management, solicitors and the client to maximise proceeds, which were based on an aggregated guide price of c. £444 million. The project generated an avalanche of interest and twice as many offers than we typically see across our sectors. This suggests a strong appetite for the alternative investment market. Christie & Co continues to speak with business owners across a wide-ranging mix of trades as a result of the project, giving us an opportunity to diversify our offering in 2020 onwards.

PROJECT DOUGLAS
A “TRANSFORMATIONAL DEAL”

The sale of 145 Wyevale Garden Centres completed in November 2019. Christie & Co’s carefully designed marketing campaign reached over 60,000 people and promoted an aggregate guide price of c. £444 million. Our professional execution ignited interest and created an avalanche of activity in horticulture and beyond into the finance and real estate sectors.

Close collaboration between all stakeholders and management ensured significantly greater net proceeds than any likely group deal. 

CONVENIENCE STORES

Convenience trading fundamentals remained strong as declining footfall, store closures and job losses continued on the high street and some retail parks. Non-food retailers battled against insolvency in some cases with consumers increasingly opting to shop online. Consumer behaviour continues to move in favour of convenience retail and this has underpinned transactional activity.

This year we also saw a landmark decision imposed by the Competition & Markets Authority, with the formal block of the proposed £13 billion merger of Sainsbury’s and ASDA over findings this would disadvantage consumers. 

Continued rationalisation of large portfolios and disposal of surplus assets was a key theme amongst large chains. Throughout the year Christie & Co brought to market a number of convenience stores on behalf of Co-operative Food and in September, Sainsbury’s announced the closure and disposal of up to 125 stores.

As we continue to expand both our team and network, the number of local convenience transactions in 2019 has increased by over 10%.
 

PETROL FILLING STATIONS

The petrol filling station (PFS) market faces similar dynamics to convenience retail. Developments in alternative fuel vehicles (AFVs) present a forthcoming challenge for the sector as the Government pushes on with its ‘Road to Zero’ strategy to cut CO2 emissions.

The initiative brings with it many questions for the PFS market. However, recent reports of modest increases in
electric vehicle (EV) sales suggest petrol filling stations will remain relevant for the foreseeable future. Christie & Co will be monitoring this aspect of the market closely through our initiation and involvement in regular cross sector discussions.

The PFS market remained robust in 2019, which is evidence there remains strong ongoing interest in PFS assets amongst investors. Fuel margins remained buoyant and we have seen a general upwards gross profit margin trend to meet rising costs this year.

Whilst Christie & Co transacts more PFS than any other agent, we are also the valuers of choice to many leading operators. We supported Sewell Retail’s six site acquisition through our valuation of the portfolio for RBS. We have also worked extensively with other leading PFS operators such as MPK and its stakeholders, Stratford Capital and Penny Petroleum.
 

MARKET PREDICTIONS

We expect to see a rise in convenience franchising as suppliers make attractive offers, inviting retailers to participate in premium brands such as Co-operative Food

There will be continued rationalisation of large portfolios by the multiples, whilst ongoing acquisition programmes will drive better performance in their top stores – necessary to mitigate rising wage and other operating costs

Ongoing strong demand for petrol filling stations, with an increase in overseas investment in the UK fuel market.
 

Steve Rodell

Managing Director - Retail

T: +44 7738 182 407

E: steve.rodell@christie.com

CASE STUDIES

• COUGHLANS BAKERY

Christie & Co was appointed to market Coughlans Bakery, an award winning, family-run artisan bakery and café business, comprising 23 retail outlets in affluent boroughs of South London and 29,000 sqft of freehold head office and bakery space in Croydon.

• PROJECT ANGEL

The Co-operative Group appointed Christie & Co to market a small number of convenience stores that no longer fit their long term plans. This successful pilot led to further (ongoing) instructions.