The role of retailing in urban regeneration

Abstract

Recent ‘best practice’ research and guidance has emphasised the important role that can be played by retail-led urban regeneration projects, particularly in ‘under-served markets’ in the UK. This builds on ideas first formulated in the USA by Michael Porter through his close relationship with the Initiative for the Competitive Inner City (ICIC). This paper critically examines the role of retailing in urban regeneration nationally and locally in the UK, focusing on in-town shopping centres located in inner city areas of the UK. The paper is based on case study research in these centres, and was completed during 2003 for The Office of Science and Technology. The paper examines how employment impact in retail-led regeneration is commonly measured, and calls for more research to determine the real impact of retail in deprived communities using other, relevant measures.

Keywords:

• Retailing
• regeneration
• employment
• property performance
• multiplier effect

Acknowledgements

The research on which this paper is based was commissioned by the Foresight Retail and Built Environment and Transport Panels, and funded by the Office of Science & Technology and the Harold Samuel Trust. The views expressed in this paper are those of the author and the author alone. The author's thanks is owed to the anonymous referees for their helpful comments on this paper.

Notes

See also the other, commissioned research by the DTI Retail Strategy Group (Templeton College, 2004; DTZ Pieda, 2004; Cushman & Wakefield/Healey & Baker, 2004).

The locus of study is defined in more detail later in this article.

Inner Cities are defined by ICIC (www.innercity100.org) as core urban areas that currently have higher unemployment and poverty rates and lower median income levels than the surrounding Metropolitan Statistical Area (MSA).

Indeed the importance of ethnic minority businesses is well recognised in a policy context as a rich source of business start-up in inner city areas (Ram & Smallbone, 2001). For example, South Asians are strongly represented in the catering, clothing and food retailing sectors.

This is in contrast to the case study section later in this paper, which focuses on in-town shopping centres located within wider, inner city localities in the UK.

See http:\\www.theinnercity100.org/.

The authors estimate that that 60% of a typical franchised restaurant's expenditure stays local, equivalent to £900,000 a year. With a local multiplier effect applied, this generates a further £2.2 million of local spending.

The multiplier effect of spending money in local economies has also received recent scrutiny from the New Economics Foundation (NEF) in the UK. Their ‘Plugging the Leaks’ programme (Ward & Lewis, 2002) on money flows shows the benefits of keeping local spending within the local economy, and making sure regeneration benefits are focused on local people and local employment.

For example, previous research (see Dixon & Marston, 2003b) of historic data has calculated the value of retail employment multipliers as: Type I Employment multiplier (ratio of direct and indirect output changes to direct output change due to unit increase in final demand), 1.2; Type II Employment multiplier (i.e. ratio of direct, indirect and induced output changes to direct output change due to a unit increase in final demand), 1.5. More up-to-date ‘official’ multipliers are available for Scotland only (see www.scotland.gov.uk). However, for the UK as a whole, National Statistics (at the time of writing) has not updated its 1995 input–output tables in terms of either basic prices or the derivation of ‘Leontief matrices’ (the main building block of multipliers), making it difficult to calculate more up to date multipliers.

Other multipliers may also be calculated. For example, output multiplier, showing secondary spending effects outside retail) and income multiplier (showing household spending impacts).

It is suggested that for centres developed during 1995 or post-1995, ABI data and revised AES data should be used. Again, this data is available from NOMIS at a local level.

See also Dixon & Marston (2003b) for an examination of how regeneration schemes can generate construction jobs.

For example, further indirect national and local benefits include an increased Income and Corporation Tax revenue from households and businesses moving into the area, and increased business rates and council tax revenue.