As UK music and film retailer HMV calls in administrators, investors should think again about how they gain exposure to the British retail market, writes George Mitton.
HMV could go the same way as Jessops, a seller of photographic equipment, which said last week it would close 187 of its shops. Before Christmas, electronics retailer Comet went bust with a large number of job losses.
The accumulation of bad news has had commentators once again discussing the death of the UK high street.
The causes of the decline are familiar: a recession, changing consumer habits and increased competition from low-cost online retailers such as Amazon, which, as was reported recently, often pay less tax than companies with networks of brick-and-mortar stores.
But does that mean investors should withdraw from the UK retail space? Not necessarily. As Funds Europe discovered last year, investments in certain kinds of retail property have performed well.
The best performers are often large, out-of-town shopping centres not far from affluent areas, which combine a variety of shops with leisure facilities. Bluewater and Brent Cross shopping centres, both close to London, recorded returns of 5.4% in the twelve months to the end of June 2012, according to performance analysis firm IPD.
Now is a good time to reread our investigation into “destination shopping” and the investment insights it offers: REAL ESTATE: The rise of destination shopping (Register for free to read the article).
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