Retail Risk Index 2016: 10 observations on Dutch shopping centres

The future success on a certain retail location is not just dependent on the performance of the shop itself. The complete playing field of supply & demand, as well as the development of other stores in the area all determine the future “chance of survival” of this particular store. We summarise this chance of survival in the Retail Risk Index (RRI). We recalculate the RRI annually, on the basis of the most recent information. 

In this blog, I have summarised the 10 most important developments and predictions on retail within Dutch shopping areas:

  1. A new record: 20,625 retail locations have a very high risk profile in 2016 [1]. This is 14% of all retail locations within shopping centres. 
  2. Of the retailers that had a very high risk profile three years ago, more than 50% has quit by now.
  3. There are great differences between regions. Shopping areas in the provinces Noord-Holland, Utrecht, and Flevoland are doing relatively well. Problem areas can be found in Limburg, Drenthe, and Overijssel.
  4. A high risk profile is caused by (1) high vacancy rates and (2) many quitters. This may sound obvious, but we clearly see danger of contamination here. When vacancy rates are high, more retailers in the direct surroundings quit, too.
  5. The city centres (shopping areas with more than 400 retail outlets of products) have the healthiest profile: the highest positive spikes are the central areas of Amsterdam and Utrecht.
  6. Recent bankruptcies of Macintosh Retail (shoes, fashion), Paradigit (computers), and Foto Klein (photo, electronics) are not isolated events. The sectors in which these companies operated are under high pressure. These branches have a higher than average number of retailers that quit: 15-20% in 2015.
  7. Branches with many quitters:
    1. Video rental stores (41%)
    2. Travel agencies (22%)
    3. Computers (21%)
    4. Kids’ fashion (21%)
    5. Temporary employment agencies (19%)
  8. Sectors with many starters:
    1. Massage salon (29%)
    2. Second-hand clothes (26%)
    3. Lunchroom (20%)
    4. Takeaway/Delivery (19%)
    5. Icecream shop (19%)
  9. Positive: the latest data support the scenario that the amount of shops (retail outlets of products) in the Netherlands will not decrease dramatically, but only with a few percentages.
  10. In the past year, there were more than 12,000 starters. The number of new retailers does not decrease, but rather increases. The newcomers represent a shift towards more independent stores, and less chains.

[1] Red: highest risk interval. The chance that the retailer will quit within one year is between 16.0% and 31.5%.

Retail Risk Index (RRI)

The Retail Risk Index sketches the risk profile of shops and shopping areas in the Netherlands. This information reduces uncertainty about the future of store locations - but what exactly is the RRI based on?

Gerard Zandbergen

Gerard Zandbergen is CEO of Locatus and frequently brainstorms with players on the retail market about the chances for the future. Locatus’ goal is to clarify the retail market, so that her clients have a candid overview of their risks and opportunities. Over 15 years of information forms the basis for this process.