02 November 2021

The lure of the Guernsey high street

The retail sector in Guernsey is dynamic and diverse. Its roots can be traced back to the 1770s to a time when a syndicate of local merchants obtained an Order in Council to construct the Market Buildings in St Peter Port, and what is now a hub for retail activity.

The high street will of course evolve according to prevailing consumer habits. That evolution has been brought into sharp focus by the pandemic, where retailers have had to adapt to the restrictions imposed on non-essential retail at certain times combined with the general growth of e-commerce.

That said, the retail market in Guernsey compares well to the UK market and is seen as an attractive opportunity for retailers, both for well-known UK brands and local independents alike.

Some of the factors for that, based primarily upon data sourced from the most recent population, household, expenditure and tourism reports made available by the States of Guernsey, are examined below. 

Market analysis

  • Household spend: It can be said that annual household expenditure is high, in the region of £18,000, when compared with the average in the UK (approx. £12,000). The available spend per year in Guernsey computes to in the region of £500m. This reflects Guernsey’s affluent profile and population and can in part be attributed to its leading finance sector which provides well paid and steady employment. 
  • Comparison goods: The island ranks well in the UK market in terms of potential market for 'comparison goods', that is, higher value products, such as vehicles, household goods or clothing. Guernsey is within approximately 2% of all centres in the UK. This places Guernsey alongside the likes of satellite centres to London like Horsham and Uxbridge as well as Wimbledon and Canary Wharf.
  • VAT free: Although the introduction of GST is possible in the future, at the time of writing, Guernsey is a VAT (and GST) free territory, the result of which is that most, but not all, retail goods are available cheaper than that in the UK.
  • Tourism: While during the pandemic global restrictions have of course impacted upon tourism to the island, it is anticipated that as we step towards the post-pandemic and recovery phase that tourism will rebound in the short and medium term. Up until the pandemic Guernsey benefited from over 500,000 visitors per year, allowing retailers to benefit from an additional customer base during tourist season.
  • Leakage: Given the geographical position of Guernsey as a standalone island, in comparison to the UK, there will be less retail leakage; that is, locals spending a larger amount of money on goods than local businesses report in sales, as consumers on Guernsey cannot travel to other towns or centres as easily as can be done in the UK.
  • Opportunities: There are opportunities for retailers on the island at present in areas such as house and home or durable goods, given almost 60% of households are occupier owned, as well as for young people's fashion where it can be seen that fashion brands present on the island experience strong sales.

New entrant

An example of Guernsey's attractiveness came with the recent completion of a new lease at the Market Buildings we advised on for The Outlet. A relatively recent entrant to the retail market locally, The Outlet, sells well-known high street and designer fashion, at discounted prices and, since opening last year, has seen strong sales, reflecting the resilience of the retail industry in Guernsey.

Indeed, Carey Olsen's full service commercial property team was able to support the owner of The Outlet, Matt Grange, on the full scope of his letting arrangement requirements thanks to our wealth of experience in acting for both landlords and prospective retail tenants in the negotiation, drafting and settlement of leases for retail units.

And with the many advantages Guernsey's retail sector has to offer, as shown by the market analysis above, there is little to stop well-known UK retailers or local independents following the example of The Outlet and set up shop soon themselves.

 

An original version of this article was first published by Business Brief, October 2021. 

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