Retailing booms: in railway stations

The recession has brought the troubled High Street onto the front pages of the business news over the last few years. There’s the very bleakest news stories: Shop vacancies rise to highest level in four years as retail sales plummet or Up to 40% of high street shops ‘could close over next five years’. Just last week Game came up in a blog. Another story without a happy ending. But its not all doom and gloom, and there are fantastic retail opportunities for firms to cash in on. It might be something experimental like ‘pop up shops’ or another growing trend: railway retailing.

I picked up on this in The Economist, when my eye was caught by the fact that while high-street stores suffer falling sales, station retailing is growing apace and returns are rising. The newly developed Kings Cross station in London has twice the retail space it had before.

One reason is the astonishing growth in train travel: journey numbers have nearly doubled since 1993-94 to 1.4 billion. Nearly 150m people a year pass through London’s Liverpool Street, the country’s busiest station; a billion visit the 18 railway stations directly owned by Network Rail, the firm that runs the tracks. And both commuters and leisure travellers are typically rich.

High “footfall” means such stores do better than comparable shops elsewhere, thinks the British Retail Consortium, a trade body. The type of goods stations sell—small, convenience, often impulse buys—are more resilient to economic pressures than retailing as a whole. Food is the biggest growth area but increasingly passengers can buy clothes and jewellery too.

Airports make at least half their revenues from non-air services such as shops and car parks. Railway station owners, which make little money from train operating companies, have the same ambitions similar ambitions. They are already introducing multiple airport-style departure screens to encourage passengers to roam rather than stand beneath a big central departure board, for example.

Unlike high-street landlords, which simply charge rents, stations take an average 20% cut of sales. When London St Pancras was renovated in 2007 it was intended to be “a station more about staying than leaving,” says the station’s owners. The ticket offices aren’t the main draw; shops dominate the centre of the station. It has worked: in 2011 sales were up 15% year-on-year. Of nearly a million weekly visitors, a quarter come to eat, drink or shop rather than take a train.
Other stations will follow. Waterloo in London will open a 220m-long balcony of retail space before the Olympics. Birmingham New Street wants to create 50,000 square feet of shops and cafés by 2015; Leeds and Glasgow Queen Street have similar proposals.