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Market overview
Shopfitting embraces virtually every trade of the construction industry at a micro level; it represents a specialist component due to the individual nature of fixtures and fittings manufactured to bespoke standards.

The market is changing and becoming more orientated towards customer service, with partnering arrangements common on major roll-out programmes. According to research by Market & Business Development, this wider market is worth some £2.5bn per year (see chart). After a year of stasis in 2004, market value is expected to rise significantly in 2005.

On a macroeconomic level, the retail sector is heavily influenced by economic factors such as interest rates, unemployment levels and disposable income and is thus a good barometer of prosperity.

New-build retail construction is influenced particularly by matters relating to planning permission, so whereas out-of-town retail developments stimulated opportunities for shopfitting in the mid- to late-1990s, the current planning restrictions have reduced the level of work in this sector.

The demand on fit-out has shifted to town and city centres, resulting in an increase in regeneration and mixed-use development projects reusing brownfield sites and remodelling existing properties.

The UK market for shopfitting has been fuelled by the ease of consumer credit and by low interest rates, particularly through the release of equity from remortgaging.

The microeconomic factors that affect activity in the shopfitting market include:

• Availability of property in the right locations for retailers
  
• Level of rents
  
• Flexibility of lease arrangements
  
• Operational costs, employment, and service charges
  
• Costs of store fit-outs, refurbishments and roll-outs.

Although the rate of market growth in the sector may have eased recently, reflecting the general slowdown in the market as a whole, shopfitting represents almost 10% of new non-residential building work in the UK and should not be overlooked.

Case study
Gardiner & Theobald has been involved in the recently completed Bullring development in Birmingham for the Birmingham Alliance, the largest single retail project to be constructed in Europe for more than a decade.

The development has been critically acclaimed and its success is in no small measure due to the effective management of the design, co-ordination and integration of shopfitting works in close dialogue with each retailer.

The role included tenant management, comprising tenant liaison, shopfit management, merchandising delivery co-ordination and management of service connections.

A dedicated shopfit manager co-ordinated and implemented the process of design with the landlord's team, through to the management and completion of shopfitting works on site. This central decision-making role was crucial to ensure that the landlord's design philosophy allowed maximisation of retail opportunities.

A Shopfit Guide dealing with design issues and site restraints was prepared and issued to all retail tenants as a working document for their site teams and designers, to facilitate a smooth process.

Tenants and their shopfitters were encouraged to visit the site, as soon as the lease had been executed, in order to survey the space and to comprehend the constraints associated with it.

In recognition of the high degree of offsite fabrication, particular consideration was given to providing the shopfitters involved in the scheme with adequate space during site operations for unloading and delivery and for the removal of rubbish.

Future developments
To take a general overview of the market, shopfitting firms are increasingly seeking to generate workload from other public and private commercial building sectors, such as museums, leisure centres, airports and headquarters offices.

This has reduced shopfitters' reliance on the retail sector and has, to an extent, altered the focus of many companies, leading them to embrace interior design.

The recent boom in lottery funding for arts projects has also generated more work for the niche market of museum and gallery fitting-out.

Nevertheless, the term "shopfitting" has largely been retained, despite this sector diversification.

Delivery and lead times
As for most types of construction scheme, the key issues for shopfitting end-users – the retailers – centre on cost, time and quality. The right balance needs to be achieved between the usual retailers' requirements of:

• Optimum sales and merchandising area densities appropriate for the store type
  
• Achieving the right ambience or environment, commensurate with the retailer's image, quality of goods and profile in the market
  
• Minimising the construction and fit-out work to enable the earliest possible start of trading
  
• Tailoring the fit-out costs to achieve viability, as with any commercial proposal.

Simple, small-value fit-outs tend to be procured on a single-stage specification and drawings basis, with the contractor happy to work up the design and complete the works. This allows a quicker start on site and is more reliant on the co-operative contractor input, working to tight programmes but against penalties for missing trading dates.

This has historically been further limited to a single-source tender and hence has tended to attract premium costs. The lack of control from this approach is perhaps what has tarnished the industry in the past.

For the more complex small fit-outs, a two-stage process ensures that a shopfitter can be involved early in the co-ordination and design, allowing early cost certainty and an agreed basis for valuing changes that the retailer may require. The success of this process will depend on the project team's ability to work together to respond to changes in client requirements.

Most national retailers with roll-out programmes use a form of two-stage tendering, taking the benefits of serial pricing from one project to the next.

The larger and more complex fit-outs tend to follow a design-and-construct route, whereby the shopfitter takes overall responsibility for the design. This approach is more suited to retailers that have fixed or repetitive designs or systems for single or multiple sites, as the shopfitter can take responsibility for adapting the design to suit the various site and base-build conditions.

The key programme factors for shopfitting works generally follow the principles applicable to any construction project, in terms of lead-in order periods for critical-path items and size and complexity issues.

The chart (see left) illustrates typical programmes for the design, manufacture and installation of sales area finishes, services and merchandising systems for shopfitting projects.

Tender prices
Most shopfitting contracts commence work from a developer's shell. The scope of works undertaken by a professional shopfitter may include activities such as:

• Surveying the premises
  
• Obtaining permissions
  
• Completion of design
  
• Dealing with health and safety issues
  
• Procuring all parts and components
  
• Warehousing to store, pick and pack standardised parts
  
• Construction on site, including co-ordination of artists and tradesmen
  
• Handover of a fitted shop.

Construction work elements encompass a wide range of trades and skills and, coupled with the variety of retailers' specifications, generate a diverse range of benchmark costs.

In broad terms, the more expensive the goods, the more expensive the shop furniture and backdrop required to display and sell them.

A new product launch can provide a boost in the budget available for shopfitting.

Design sophistication continues to be refined as retailers compete for advantage in terms of ambience, in order to maintain their market position.

The combined effect of the varying scope of fit-out works being undertaken, specification variety and product promotion makes it difficult to define comparable benchmark standards.

Timing is another major driver determining the level of shopfitting costs. As most rental deals are triggered on possession of the premises, the fit-out has to be completed in as short a time as possible, in order to allow income generation at the earliest opportunity. Shopfitters typically work on accelerated programmes that involve double shifts and working outside normal hours.

The costs shown on the chart (see left) are indicative and professional advice should always be sought. It is interesting to note that, in contrast with the chart, a high-end fashion store of 1000 ft² can cost anything upwards of £650 per ft² to fit out, with more than half of this attributable to display equipment and fittings.

Shop fit-out costs continue to be buoyant as retailers continually refresh their product, seeking to improve market share. Tender prices in this sector are expected to rise some 3-4% during 2004.