REBUTTAL STATEMENT FOR INSPECTOR ON TURLEY ASSOCIATES HEARING STATEMENT FOR SAINSBURY S SUPERMARKETS LTD CHAPTER 8: TOWN CENTRES AND SHOPPING

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1 REBUTTAL STATEMENT FOR INSPECTOR ON TURLEY ASSOCIATES HEARING STATEMENT FOR SAINSBURY S SUPERMARKETS LTD CHAPTER 8: TOWN CENTRES AND SHOPPING Introduction 1.1 This rebuttal statement has been prepared by Roger Tym & Partners (RTP) on behalf of South Oxfordshire District Council. It has been submitted to the Inspector in response to comments in the Turley Associates (Turleys) Hearing Statement. The Council considers that this rebuttal statement is necessary because the Turleys statement includes a significant amount of new evidence in the form of a reworked assessment of the quantitative need for convenience floorspace in the District, based on household survey data used in the original RLNA and its Update. 1.2 We wholeheartedly disagree with the outputs from the Turleys revised assessment. The reason for our disagreement is explained in the remainder of this note, focusing on the four changes applied by Turleys to the RLNA Update s assessment of convenience quantitative need. Furthermore, it is appreciated that Turleys (on behalf of Sainsbury s) are promoting a new foodstore on the former Cattle market site in Thame. We do not wish to prejudice the Council s determination of this application, but as part of this note we recap what the evidence tells us on the need for additional retail floorspace in Thame. Special forms of trading 1.3 Turleys suggest that it is inappropriate to allow for any growth in special forms of trading (SFT) in the convenience sector, citing a paragraph in Experian Retail Planner Note 8.1 (August 2010). Instead, they keep the 2.45% figure constant in the forecast years. We agree that some internet shopping purchases are picked from foodstores and this is reflective of the assumptions within the RLNA Update, where we have applied 50% of the Experian forecasts throughout. Furthermore, it should be remembered that SFT does not just include internet spend; it includes sales from stalls and markets. 1.4 Since Turleys clearly acknowledge that there should be some allowance for SFT (through their deduction of 2.45% in 2007), it is surprising that no allowance for growth has been allowed at all. Indeed, the proportion of convenience spending that is expected to be accounted for by special forms of trading is forecast by Experian to increase from 7.4% in 2010, to 9.6% in 2016, 10.1% in 2021 and 10.8% in We consider our 50% discount to these figures is entirely appropriate to allow for shelf picking from physical stores. 1.5 Additionally, whilst we acknowledge that the Tesco and Sainsbury s operate a shelf picking system, other operators such as Ocado (for Waitrose) use warehouses to distribute online sales and it has been announced in the press that Morrisons in conjunction with Freshdirect - are planning to operate a similar system. Additionally, Colliers recent Midsummer Retail Report 2011 states that Tesco are beginning to operate dark stores in

2 Maidstone and Greenford. Since we expect that such dark stores do not have a sales function to visiting members of the public, they can legitimately be described as SFT. 1.6 There is no doubt that online sales are increasing and will continue to do so through the improvement of broadband connections and mobile phone use. It is entirely misleading not to allow for any growth in SFT and we consider that our approach of using 50% of the Experian forecasts is entirely robust. Equally, we consider that the Turleys assessment cannot be relied upon for the same reason. Trading performance of existing retail facilities 1.7 The approach undertaken in the RLNA Update to assess the trading performance of existing stores has been questioned by Turleys. The approach in the RLNA Update used to assess the trading performance of existing floorspace is very simple; it has identified the top six performing stores in the catchment and assessed their implied trading performance compared to company averages. In our view, this is an entirely appropriate response for a district wide long term study. 1.8 It is appreciated that there are other destinations in the study area, which will range from small supermarkets to corner shops. The reliability of survey data for smaller stores in the study area is not as strong, with some stores attracting lower market shares than they might in reality achieve. Therefore, it is assumed for the purposes of the trading assessment that all other stores (including the two Waitrose stores in Henley and Wallingford) trade in equilibrium (i.e. turnover equates to available expenditure). In any event, the quantitative forecasts within the RLNA and its Update do not take direct account of any perceived overtrading. 1.9 It is noted that Turleys have undertaken their own assessment of the trading performance of floorspace in the four main centres in South Oxfordshire, revealing an aggregate level of 31.4 million overtrading across the district and building this into quantitative forecasts. We have not had an opportunity to verify this information (such as benchmark turnover, implied turnover or floorspace), but the approach is very simple; Turleys have compared the survey derived turnover of all destinations and compared this with a company benchmark turnover. It is appreciated that this exercise can provide an indication of the possibility of a store overtrading from a quantitative perspective, and whether there is a deficit in the supply and demand of floorspace. But we urge caution since it is a rather crude measurement of quantitative need without any wider analysis Although the original RLNA study was undertaken prior to the publication of PPS4 and its practice guidance, the practice guidance itself provides some commentary on the type of process adopted by Turleys. Firstly, paragraph B.34 states that household surveys can overstate the importance of the larger centres and stores, and can understate the smaller and less frequently visited stores. Therefore, in the first instance, the implied turnover for larger stores estimated by Turleys and informed by the household data in the RLNA should be treated with a degree of caution Additionally, the practice guidance in paragraphs B.41 to B.44 provides guidance on the use of benchmarks. It explains that it is difficult to devise meaningful benchmarks for

3 acceptable performance of a whole centre, or even a single store (para. B.41). It does recognise that such benchmark data is widely available for foodstores, but it states that such turnover benchmarks should not be used prescriptively or used in isolation to indicate a measurement of need (para. B.42). It also recognises the inherent margins of error in this type of exercise, stating that the use of company averages should be treated with caution unless they are corroborated by other independent evidence of under-performance, or strong trading (para. B.43) Finally, the practice states that where company averages are used, it is recommended that these are weighted up or down to reflect local circumstances such as the affluence of the area and accommodation costs. This is particularly relevant to South Oxfordshire, given the affluence of some parts of the District The exercise undertaken by Turleys is a rather coarse assessment of implied survey derived turnovers compared to company benchmarks to assess potential quantitative need. Given the date of its submission, we have not had an opportunity to independently verify the details of the Turleys work. But we suggest that its findings should be treated with significant caution for the following reasons: Survey data will typically over-estimate the turnover of larger stores (and it is noted that the larger stores in the Turleys analysis are shown as overtrading) Turleys have relied on company benchmarks prescriptively and in isolation, entirely inconsistent with the practice guidance, and have not considered any other corroborating evidence (such as audits of stores or visitor survey data) Company benchmarks have been used without any weighting (particularly relevant given the affluence of the area) and thus may have over-estimated the scale of overtrading in this affluent location 1.14 We are firmly of the view that the approach in the RLNA Update is entirely appropriate for an evidence based study considering long term quantitative need forecasts for the District. In any event, the RLNA does recognise the potential for the overtrading of the Waitrose in Thame to be converted to an additional 1,000 sqm net. But, due to the lack of any evidence to suggest that this is restricting consumer choice and competition, it was not considered appropriate to build this into the quantitative forecasts. We consider this approach is entirely consistent with the practice guidance on the use of benchmarks when estimating need. Spend directed to small stores 1.15 As part of their assessment of need, Turleys have reworked the spending patterns in the RLNA Update. The approach taken by Turleys has been to interrogate the survey data to provide a different expenditure split between main food destinations, top up destinations and small shops spending than used in the RLNA Update. Although different for each zone, this comes up with an average split of 71% for main food, 16% for top up and 13% for small shops. This data has then been amalgamated to provide a set of composite convenience spending patterns.

4 1.16 The approach in the RLNA and its Update is based on a set of composite convenience market shares based on weighting applied to the answers to the survey questions. It is a simple approach and initially applies a blanket weighting the survey results of 85% for main food destinations and 15% for top up destinations, with the third category of spending not included at this stage. This approach was developed with NEMS Market Research Company and is based on the mean spending results for the main and top up destinations across the study area and has been used to establish the market shares for all convenience shopping that is likely to be primarily accounted for by spending in supermarkets We have already highlighted the deficiencies in household surveys when estimating spending to larger stores (i.e. supermarkets). Therefore in the RLNA, it has been assumed that 69% of convenience spending will be spent in main and top-up destinations; the remaining 31% of expenditure has then been built back into the calculations (when apportioning total expenditure growth) and combined with the market shares of small stores, in order to ensure that all growth in convenience spending has been accounted for with the assessment. The 31% estimate is based on Expenditure and Food Survey (EFS) shows that around 69% of expenditure on food and groceries occurs in supermarkets with the remaining 31% in small shops The approach adopted in the RLNA and its Update has been designed to neutralise likely over-estimate the turnover of larger stores derived from household surveys (as highlighted in the practice guidance). Additionally, we have been advised by NEMS that statistically, less reliance can be afforded to the zonal results on mean weekly spending and thus we have been advised specifically not to apply convenience expenditure weighting by zone. Thus, we consider that the approach in the RLNA Update is entirely robust and credible. But it should be emphasised that the spending growth derived from the 31% of spending to small stores has not been lost and it is included within the assessment The approach adopted in the RLNA Update and the Turleys work is not directly analogous (in terms of the approach to expenditure weighting) as the method is slightly different. In any event, we consider that Turleys have relied too much upon the data within the household survey to estimate spending splits and thus we advise significant caution over turnover outputs from this analysis. We are firmly of the view that the survey derived spending patterns in the RLNA are robust, given the acknowledged limitations of household surveys. Market share adjustments 1.20 The RLNA and its Update have been criticised by Turleys and other respondents by the failure to increase market share in the convenience sector in order to claw back expenditure, although an increase in comparison market share for the Didcot has been modelled. This is not an oversight and is based on a careful consideration of the circumstances for each centre The approach in the RLNA and its Update is to assume, for the convenience sector only, a constant market share throughout the plan period. The practice guidance acknowledges

5 that in many circumstances it will not be appropriate to maintain market share, in policy terms. The factors identified include population growth, sustainability of current network and the potential for certain centres to accommodate growth. Additionally, both quantitative and qualitative needs and other factors, such as development opportunities and impact considerations, should be used to test alternative options and develop a preferred strategy We acknowledge that in certain circumstances it will be appropriate to model and increase in market share in the convenience sector. But, as explained in the practice guidance, a holistic approach must be adopted and whilst there might be opportunities for increases in the convenience market share through development, these must be sustained and married with the physical capacity for centres to accommodate the floorspace necessary to deliver a step change in market share The RLNA took into account all these factors when considering whether it was appropriate to plan for an increase in market share in the convenience and comparison sectors; this is evidenced by the approach taken for Didcot in the comparison sector The approach undertaken by Turleys is purely a theoretical approach and is based on manual upwards adjustments to the zonal market shares of each centre in the convenience sector. This is based on a consideration of market shares only and not the wider issues such as qualitative evidence or physical capacity to accommodate new floorspace in the centres, or indeed impact. Therefore, the approach is inherently narrow and it cannot be relied up in any detail to support a long term Plan A further concern over the Turleys approach is the failure to recognise overlapping catchment areas. In other words, not all centres will necessarily be able to increase their market share because it will be balanced against a reduction in market share elsewhere in the District. For example, Turleys forecast that Didcot will increase its market share drawn from zone 9 (which is the Wallingford zone) from 17.5% to 22%. Inevitably, due to the geography of the zone, this is likely to erode the market share of Wallingford, but Turleys also forecast an increase in market share of Wallingford from zone 9 from 41.2% to 55.0%. On its face, this appears inconsistent The simple explanation is that not all centres will be able to increase their market share as such increases will result in a reduction in market share of other destinations. Whilst some reductions might arise at the Asda in Wheatley and some from outside the District, but since convenience shopping is a localised shopping activity, it is inevitable that there will be competition between the existing centres and they will trade off against each other if increases in market share across all centres are modelled. Therefore to expect all centres to increase their convenience market share is plainly unrealistic and cannot be relied upon without further testing on how these adjustments will impact on different destinations in the District and beyond. Evidence on Thame 1.27 As explained above, in this note we recap the evidence on Thame given that Sainsbury s are promoting a new store on the former Cattle market site in Thame. Firstly, under constant market shares, there is only a small quantitative need for convenience floorspace,

6 and the need that does existing is at the back end of the plan period. I.e. the requirement is 0 by 2011 and 2016 and only increasing to 600 sqm gross when looking at the timeframe to 2027 (RLNA Update 2010 Table 4.3). This is excludes any possible overtrading in the Waitrose store, but it should be noted that Sainsbury s have now opened a store in the former Woolworths unit on Thame High Street, which will inevitably have reduced the trading performance of Waitrose (particularly through its top up shopping role) In terms of market share, the zonal market share for Thame is about 65% (RLNA para. 7.60); it was concluded that this is sufficient for centre the size of Thame given the number of overlapping catchments in the area. Whilst clearly this isn t 100%, as explained above the practice guidance advises that a holistic approach should be applied. Furthermore, it should be emphasised that any increases in market share through the plan process must be assessed very carefully as if increases in market share are wrong, it simply means that the impact on existing destinations will be much sharper (especially if a site is not within the town centre). Given that the practice guidance advises considering impact as part of this process, the evidence cannot simply model an arbitrary increase without consideration of wider issues Turning to qualitative need, Thame has a good range of foodstores both in the town centre and in the surrounding rural areas (RLNA para 7.59). At the time of the RLNA in 2009 it had a large Waitrose store, together with a smaller Co-op and a Sainbury's Local located slightly outside the main centre, plus the large Asda store located to the west at Wheatley, and a further Co-op in Chinnor. Since then, the Woolworths store on the High Street has closed, and Sainsbury's has moved in. This store has therefore gone from comparison to convenience use. The Sainsbury's Local store at the petrol station at 50 Thame Park Road has now been replaced by a Marks and Spencer Simply Food. Therefore, the convenience offer for Thame residents has actually increased since the time of the original RLNA As explained in the RLNA (paragraph 9.47), there is no evidence that Waitrose's overtrading is a hindrance to shoppers, for example, the visitor surveys did not identify any clear desire for a further store and our visits to the store did not identify any of the acknowledged indicators of qualitative deficiencies (i.e. full car parks, unreasonably long queues at checkouts, limited stock etc...). Indeed, the successful trading of the Waitrose store is actually a benefit to Thame because shoppers can park in the store car park and walk through the pleasant Greyhound Walk, which has good shops, into the heart of Thame centre (thus contributing to linked trip spending) In respect of the comparison sector, the RLNA shows at Appendix 4 (Table 4.2) on diversity of uses, that Thame has more than the national average amount of convenience floorspace, but below average on comparison floorspace, with particular gaps like a lack of footwear outlets. The RLNA recommends that site opportunities at Thame should be planned through the Site Allocations DPD and that it should be used to provide a better basic level of locally generated comparison goods spending Thame has one clear development opportunity site of a reasonable size (the Cattle market) and the evidence shows no clear quantitative or qualitative need for another

7 supermarket. Indeed, the recent opening in March 2010 of a new Sainsbury s store on the High Street has clearly improved choice for Thame even further. Furthermore, it has been announced by Sainsbury s that the High Street store would close if permission is granted on the former Cattle market site 1. This statement, in itself, highlights the reason that caution should be applied to increases in market share since inevitably it will cause an impact on the town centre and the amount of quantitative need generated through claw back must be questioned Overall, the Council will need to determine the most appropriate land use for Cattle market site through the LDF process. If any application is submitted for a supermarket or any other use on the site, the Council will determine this in accordance with the development plan whilst having regard to material considerations, such as national planning policy. This note has simply sought to clarify the evidence for Thame and we have not sought to prejudice any decisions the Council may take through the LDF or development management processes. Concluding remarks 1.34 It should be emphasised that the assessment of quantitative need is not an exact science, whilst the evidence should be proportionate to the task. The work in the RLNA and its Update is based on a series of assumptions that have been explained quite clearly with the evidence and explored carefully with the Council to ensure that a holistic approach has been adopted. This note has sought to explain any remaining uncertainties that have arisen through the recent submission from Turleys. It has also highlighted some of the main headlines in the evidence for additional retail floorspace in Thame. We remain of the view that the headline quantitative need outputs from the RLNA Update are robust and credible and should remain within the Plan. 1