The Chamberlain News

New Street Gateway shops just the ticket for Network Rail and Birmingham council

Network Rail can look forward to a bumper return on the £600 million refurbishment of Birmingham New Street after trading figures revealed a sharp up-turn in spending at railway station shops.

Retail sales at stations managed by Network Rail grew by 7.8 per cent in the final quarter of 2013, the best performance on record and significantly outstripping high street sales which rose by only 0.6 per cent over the same period.

The figures, reported by the British Retail Consortium, reflect a growing trend to transform city-based stations, replacing the traditional dull retail offer of newsagents, cafes and bars with purpose-built shopping centres conveniently placed to lure passengers and provide guaranteed footfall.

New Street Gateway, the station refurbishment scheme, was described as a shopping centre with a railway station attached when work began. Critics pointed out that while customers would be able to enjoy enhanced waiting areas and a new John Lewis department store, the new-look station wouldn’t deliver more trains or additional platforms.

Capacity issues at overcrowded New Street, where trains routinely queue to get into the station, will be just as bad when the Birmingham Gateway refurbishment scheme is complete. The only relief for long-suffering customers will be extended platforms able to accommodate longer trains.

Only when HS2 arrives in Birmingham – if it ever does – will capacity be eased on the West Coast Main Line, enabling more local train services to run through New Street.

From a financial point of view, however, the Gateway project may pay rich dividends for partners Network Rail and particularly for Birmingham City Council, which bought the Pallasades shopping centre adjoining New Street Station for £91 million in 2009.

The Pallasades is undergoing extensive refurbishment as part of the Gateway scheme and will be renamed Grand Central Birmingham when the work is complete next year with the opening of a £100 million John Lewis store.

It is uncertain whether Grand Central Birmingham will remain in the ownership of the council for long since the local authority is considering disposing of land and property assets to help pay down a £1,1 billion equal pay compensation bill. The shopping centre could be sold for more than the council paid five years ago, although a disposal would involve the council sacrificing a lucrative rental stream.

Network Rail said the growth in station-based shopping highlighted “the growing demand for convenience retailing and the power of stations to deliver consistently lucrative trading environments for British retailers”. Profits from Network Rail’s retailing and property activity is all re-invested in the railway.

Hamish Kiernan, commercial director of retail, Network Rail, said: “Station trading continues to grow dramatically, significantly outpacing the high street. Guaranteed footfall and convenience are key drivers of this growth and both are great selling points for the railway.

“Stations offer a vibrant and healthy trading environment and we are continuing to attract new brands to meet the needs of passengers and local communities alike.”

Top performing stations include King’s Cross (+26%), followed by Manchester Piccadilly (+10.7%) and Liverpool Street (+8.7%) when compared to the same period last year.

Trading at King’s Cross has benefited from a major investment scheme enabling new retail facilities to be added to the station environment, and offering customers a wider choice of food and beverage as well as retail brands.

Pubs and bars performed best in stations this period (+13.9%), followed closely by Specialist Food (+15.8%). Other top performing categories include Dining (+14.1%) and Health & Beauty (+12.7%).

High performing brands include Wasabi (+19%), Paperchase (+16%), Body Shop (+14%), Boots (+12%), Hotel Chocolat (+12%), Caffe Nero (+8%), M&S (+8%) and Oliver Bonas (+8%).