The travel retail sector is booming and with footfall numbers at Britain’s train stations set to increase, Network Rail and operators are already investing in regeneration initiatives to take advantage of this growing commercial opportunity. But could they be doing more?
The latest data from Network Rail, which owns and manages 19 of the UK’s biggest train stations, reveals that retail partners at its terminals experienced sales growth of 4.36 per cent in 2018/19, with like-for-like sales increasing 1.32 per cent, well ahead of sector-wide data from the British Retail Consortium for the same period. This success has been put down to increased footfall, with an estimated 900 million people passing through Network Rail stations each year.
Among the most prominent examples of retail-led regeneration on Britain’s rail network is St Pancras International, which was renamed as such in 2007, shortly after it was confirmed as London’s new Eurostar terminus. Run by a public-private partnership (PPP), this project has transformed a busy rail terminal into an upmarket retail and leisure destination, attracting a strong mix of mid-market and luxury brands including John Lewis, MAC, Aspinall of London, Fortnum & Mason, and Whistles.
Elsewhere in the capital, the redevelopment of London Bridge station has led to the creation of some 70 purpose-built retail units – the highest number ever seen at a Network Rail station – and another exciting scheme to transform London Waterloo into a prime retail destination covering 135,000 square feet by 2021 is also underway.
Investment in large-scale rail infrastructure programmes, such as HS2, has also sparked retail-led regeneration initiatives beyond the capital. Among them, Birmingham’s new-look Grand Central Station, with a wealth of shops and restaurants and direct links to the adjacent Bullring shopping centre, was officially opened in 2015.
Despite the regeneration success stories at many of the network’s busiest stations, others have failed to capitalise on the retail opportunity. There are many reasons for this of course, not least a dysfunctional franchise system, which makes it difficult for train operating company (TOC)-managed stations to take a long-term view. The structure of ownership at many of these stations, with Network Rail owning the infrastructure and TOCs responsible for its management, is also a barrier to investment. In many cases, TOCs know there is an opportunity to invest in revenue-generating regeneration but lack the funding and strategic vision to make it happen.
Other reasons for TOC-managed stations appearing to be slow to respond, is their localised approach and lack of access to specialist resources. Network Rail benefits from a dedicated, centralised retail team to lead the design and development of regeneration projects across its network and forge relationships with retail brands. By adopting a group structure, many TOCs could achieve the scale necessary to emulate this approach; centralising delivery and developing a strong business case for investment.
Of course, when considering the assets owned by Network Rail and those managed by TOCs, we’re not comparing like with like. In many cases, TOC-managed assets are more rundown, due to years of underinvestment, further undermining their ability to secure investment. A smarter approach is needed to strengthen their proposition for investors and retailers.
For example, by using the PPP model, a more collaborative approach to investment could be undertaken, helping to unlock retail opportunities. Many stations require upfront investment to smarten up the environment, rethink its layout or change the flow of people through the space, before creating retail units. This preliminary activity could be jointly funded by project partners in exchange for a share of the earnings from retail unit rentals.
Instead of collaborating and phasing regeneration activity, some stations have pulled in retailers before the groundwork has been done, which could be limiting their revenue-generating potential. Those with poor layouts, where shops can only be accessed from the platform, or where a waiting room is situated at one end of the platform, with the only coffee shop at the other, are unlikely to generate the best yields. While TOCs are right to be proactive, a more strategic and planned approach to maximising each station’s retail opportunity would deliver better returns.
Even regional stations on metropolitan routes could be making more of their assets. The latest statistics from the Urban Transport Group’s Number Crunch 2019 survey show that regional rail use has increased 29 per cent in the ten years to 2017/18, with some 389 million passenger journeys made last year. Such increases suggest the time is right to develop plans to introduce retail opportunities to meet the needs of these consumers.
To secure investment, each station’s retail proposition must be compelling to its target audience. If investment has already been secured to ‘tidy up’ the station, prior to the construction of retail units, this will be massively beneficial. Where Wi-Fi exists, the use of datasets about dwell time, peak flows, passenger profiles and preferences, could help to persuade retailers that a new outlet would perform well. Among the prime targets for stations on busier routes would be retailers such as Greggs and WH Smith, which are actively pursuing store openings at travel catchments including railway stations, motorway services, and airports.
Armed with a strategic investment plan and data-based insights, operators right across Britain’s rail network could be doing more to cash in on the retail opportunity and with changes to the franchise system long overdue, there is no reason to wait.
Phil Bulman, Director, is a transport sector specialist at management consultancy, Vendigital