Scottish Government

3 Retail Capacity Assessment

Introduction

Overview

3.1 For the purpose of this review "Retail Capacity Assessment" ( RCA) is taken to be a technique, or group of techniques, for identifying primarily quantitative "need" or "deficiency" in or for retail provision. In terms of quantitative techniques RCA typically is concerned with an assessment of both future supply and future demand for retail floorspace.

3.2 In Government Policy Statements there is no clear definition of either retail "need" or "deficiencies". Although examination of legal decisions and practice indicates a general understanding of what would constitute a needs based assessment and the essential differences between "need" and deficiency".

3.3 As will be noted in the following review the role of RCA is the subject of considerable debate. In general RCA in Scotland has a lower profile than in other parts of the UK. However it is also evident that certain authorities in Scotland place store on this methodogical approach as a basis for identifying quantitative need for new retail floorspace e.g. the G&CV Structure Plan policies on retail provision are based on retail capacity and other authorities e.g. Fife, Perth, Angus have all commissioned consultants' studies that include significant retail capacity calculations. Certain retailers and developers (e.g. Asda responding to the current Competition Commission inquiry in the grocery market) strongly criticise the use of retail capacity as a key part of the "needs" test as being anti-competitive and an inappropriate planning tool.

Lack of Guidance

3.4 Unlike both Northern Ireland and Ireland no detailed guidance on retail capacity techniques is provided in Scotland, England or Wales. The reviews of both NPPG8 ( SE, 2004) and PPG6 ( ODPM, 2004) identified that further guidance on good practice would be useful. Furthermore in the survey that was undertaken as part of the Scottish review it was concluded that NPPG8 was considered to be unclear in the context of retail need. In contrast draft Policy Guidance in Northern Ireland ( DfRD, 2006) and the Irish Retail Planning Guidelines (Irish Government, 2005) set out in annexes the principal steps to be undertaken for establishing quantitative retail "need".

What is Need?

3.5 Neither "need" nor "deficiency" are defined by Government Policy. Goddard (1999) poses the question how is need defined and by whom? England (1999) considers that quantitative need comprises the following elements:

• The economic capacity in terms of demand arising from expenditure growth within the catchment area of a proposal.
• Leakage of trade from an area, which suggests lack of provision to meet the needs of shoppers.
• Retailer requirements - demand from retailers for representation in a particular centre, and the potential for competition and innovation.

3.6 This approach is supported by that of others including, for example, Baldock et al (2000) who indicated that, following an extensive survey of planning authorities in England that " need is mainly interpreted as quantitative retail capacity".

3.7 The above only provides factors for considering the measurement of "need" (and, equally "deficiency"). To get a clearer understanding regard has to be made to relevant legal cases.

Legal Context

Scottish Position

3.8 Part of the debate about the role of need/deficiency relates to the legal context for the role of need/deficiency as a material consideration for determining planning proposals. The key reference here is the City of Edinburgh decision (House of Lords: City of Edinburgh Council v Sec. State for Scotland - summarised in SE, 2004 para 7.12 et seq). In relation to need Lord Clyde concluded that it is: 'the kind of necessity which would, for example, justify the sacrifice of some amenity for the purpose of the development". However, he accepted that "quantitative deficiency is a concept different from that of need" which could be assessed by: trends in consumer expenditure; expenditure reflected in the turnover of the available shopping facilities; comparing the amount of shopping facilities and the amount of customers in the area; and reference to stores in the area trading at a level which is above what would be expected of them.

3.9 The review of NPPG8 also reviewed the work of Jeremy Rowan-Robinson et al (2001). Their review states: "this source suggests that lack of need for a particular development is not a planning reason which would normally support a refusal of planning permission. In the Hambleton District Council case, the decision was made on the basis that an applicant for planning permission did not have to justify an unobjectionable proposal….It is suggested that need should be proven in exceptional cases where a strong policy of constraint is in operation to prohibit further development because of possible harm to interests of acknowledged importance. However in conclusion, Rowan Robinson et al., use a phrase in NPPG1 (and now repeated in SPP1) that "planning policies and decisions should not prevent or inhibit development unless there are sound reasons for doing so". From this, the authors conclude that "in Scotland an applicant should not, as a matter of policy, have to justify an unobjectionable proposal" ( SE, 2004." ( SE, 2004 para 7.14).

3.10 This analysis is similar to that of England (1999) and Arnold (1998) who also reviewed the 1998 Hambleton District case and concluded that:

• That need could be a material consideration in certain circumstances, e.g. if there is evidence of a quantitative or qualitative need which supports development, but a developer does not have to demonstrate need for a development.
• That a proposal which would not sustain and enhance a town centre could still be acceptable if it meets the sequential tests and other key tests in PPG6 (Arnold, 1998).

3.11 The NPPG8 study team conclusions in respect to the role of need/capacity, in a Scottish context, with regard to the role of deficiency was as follows:

1. Unless there is clear evidence of demonstrable harm to acknowledged planning interests of importance, there should be no automatic necessity to prove the need for retail and associated development.

2. Need can be distinctly separated from quantitative deficiency. The latter can be helpfully addressed by looking at consumer expenditure levels and retail floorspace provision to assess overall balance and whether there is evidence of high levels of trading for particular retailers in any particular area.

3. Quantitative deficiencies can be taken as a material consideration to be assessed by any planning decision maker as part of Development Plan policy or as part of a material consideration.

4. Studies of retail assessment techniques conclude that it can be helpful on an area wide basis to assess overall expenditure and provision levels in order to assess overall levels of capacity and to inform policy and planning decisions.

5. Quantitative deficiency should not be considered in isolation and arguably greater weight should be attached to qualitative deficiency and impact.

( SE, 2004 para 7.15)

3.12 Interestingly, at para 7.44 of the NPPG8 Review, where the above points are summarised, the study team concludes that "therefore there must be an appropriate place for quantitative capacity assessments in the demonstrating of the case for new retail proposals". From our reading of the review it would seem that this conclusion is not logical. Whereas it may be advisable or desirable that such an assessment is undertaken the conclusion of the analysis of the legal position appears to be that deficiency alone would not be a reason for refusal but would be a material consideration in support of an application if this can be demonstrated (as per para 39 of SPP8). But it does not follow that such an analysis is not inevitably required.

3.13 The above is a significant conclusion in terms of the interpretation of the role of retail deficiency in Scotland and the SE may wish to consider this further outwith the narrow context of the current study.

English Position

3.14 The position in England is materially different from that in Scotland. This is acknowledged by England (1999) who notes that the Hambleton position was short lived when in February 1999 Richard Caborn (as Minister responsible for Planning) stated "Proposals which would be located at an edge-of-centre or out-of-centre location…should be required to demonstrate both the need for additional facilities…In the context of PPG6 and this additional guidance, the requirement to demonstrate need should not be regarded as being fulfilled simply by showing that there is capacity (in physical terms) or demand (in terms of available expenditure within the proposal's catchment area) for the proposed development. Whilst the existence of capacity or demand may form part of the demonstration of need, the significance in any particular case of the factors which may show need will be a matter for the decision-maker" quoted in England, 1999, pp102-103) .

3.15 The key point from this is that demonstration of quantitative need became a clear national policy requirement in the determination of applications in England. This has now been incorporated into PPS6 at paras 2.34 (in the context of development plans) and 3.10 (in the context of determining planning applications).

3.16 In this regard it is useful to note that there are, therefore, two clear differences between the position in Scotland compared to that in England:

• In Scotland the issue concerns "deficiencies" as opposed to "need" - the latter being a stricter test.
• In England there is national policy requirement to demonstrate need for retail proposals whereas in Scotland addressing a deficiency is a material consideration which may be a factor in support of an application if it is otherwise contrary to the provisions of the development. This difference has been noted in the most recent report of the Competition Commission in their current investigation of the groceries market (Competition Commission, 2007b, para 25). It is notable that the Competition Commission in the same report (ibid para 153) consider that "t he lack of a quantitative need test in Scotland, compared with England, Northern Ireland and Wales, does not appear to have resulted in a greater proportion of newly-built supermarkets being in larger size categories. This appears to suggest that the need test, by itself, does not represent a constraint on the construction of larger supermarkets". Conversely it can be noted that the presence of a needs test in England and elsewhere compared to Scotland does not appear to be significantly affecting the size and type of supermarkets that are being built.

3.17 In this section the focus has been on comparing Scotland to England. It should be noted that current policy in Northern Ireland, Ireland and Wales reflects the position in England. In both Ireland and N. Ireland specific guidance is provided on the approach to be adopted for identifying "need".

3.18 The difference in the status of deficiency/need in Scotland compared to elsewhere is a factor that results in different emphasis between those recommending the approach to be adopted for both RCA and RIA techniques in Scotland and other parts of the UK (notably England).

Practice in Scotland

3.19 Notwithstanding the legal position in Scotland highlighted above (and indeed the policy framework summarised in Section 2) it is evident that a quantitative assessment of retail demand/supply has been undertaken by a range of planning authorities for at least 20 years. In 1992 Drysdale ( SO, 1992) noted that regional councils interpreted reference to the 1986 National Planning Guidelines to "determining the extent and general location of opportunities for new forms of shopping" as a requirement to undertake a detailed quantitative analysis of shopping provision " in order to calculate, in monetary terms, the gap between expenditure and turnover and hence the scope for new floorspace". He comments "the habit of planning authorities to embark upon quantitative calculations is despite the guidelines advice not to rely solely on comparisons of supply and demand" ( SO, 1992, para 3.42).

3.20 At the present time a number of planning authorities in Scotland are using assessments of demand and supply to identify the scale of need for retail floorspace as part of the formulation of development plans. This is clearly seen, for example, in the Glasgow and Clyde Valley Structure Plan Team (e.g. Technical Report 7/06 Convenience & Comparison Shopping Capacity Assessments at 2011) which is used to underpin structure plan policies and, in the context of development control, Strategic Policy 10 of the G&CV Joint Structure Plan 2000 also requires for developments that are deemed to be departures from the Structure Plan to demonstrate " clear evidence of a shortfall in the existing and planned supply of land for …retail development within the appropriate shopping catchment area" ( GCVSP, 2000 page 87). Elsewhere in Scotland the more typical approach is an obligation to demonstrate that developments which are outwith town centres/edge of centre locations should address quantitative or qualitative deficiencies (e.g. Edinburgh and Lothians Structure Plan 2015 Policy RET2 or Dundee and Angus Structure Plan 2001-2016 Town Centres and Retailing Policy 4). There are, however, examples of planning authorities using retail studies commissioned by the planning authorities which indicate that a lack of quantitative capacity would be a consideration against retail proposals.

Quantitative Retail Capacity Techniques

General Approach

3.21 There is a standard approach which is generally advocated for the calculation of quantitative retail capacity in support of the identification of either a quantitative "need" or "deficiency". England (1999) summarises this as comparing the shopping supply and demand in the form of existing retail floorspace (and estimated turnover) in an area and retail expenditure in the same area. An excess of expenditure, in the form of leakage of spending out of the area, is regarded as an opportunity for retail provision. More specifically the current turnover estimate is subtracted from the forecast potential turnover estimate to provide an estimate of what England describes as "expenditure headroom". This figure can then be converted into a "floorspace capacity".

3.22 Reflecting the differences between England and Scotland some English based practitioners identify the role of identified quantitative need as the first stage in undertaking a retail impact assessment (e.g. England 1999, Hillier Parker " CREATE" technique). England suggests that " a capacity analysis can confirm that any major new development would result in impact on trade in existing centres" .This statement although generally true, would depend upon the precise assessment of trade diversion assumptions (see Chapter 4 below).

3.23 Hargest (2003) confirms that, in a development plan led system the principles underlying retail capacity should be both sensible and helpful on the basis that it would be important, in planning terms to identify the extent to which an area is capable of supporting new floorspace as a result of either increasing affluence and/or population. He sets out the basic equation that would be used for calculating quantitative capacity:

Note: the issue of leakage is used by some practitioners and not by others - this is discussed further below.

Guidance elsewhere in the UK and Ireland

3.24 As noted above specific guidance on the technique is set out in Policy Guidance in England, Northern Ireland and Ireland.

England - PPS6 2005

3.25 In England an outline of the approach that should be adopted is provided in paras 2.34 and 3.10 of PPS6. This does not set out a detailed method but indicates the future demand for additional retail floorspace should be based upon a realistic assessment of: existing and future population levels; forecast expenditure for specific classes of goods sold; and the forecast improvements in productivity of floorspace. In the context of planning applications it states that the need for additional floorspace should normally be assessed no more than 5 years ahead.

Northern Ireland - Draft PPS5 Annex 6 2006

3.26 In N. Ireland the draft PPS5 Annex 6 sets out a "best practice" guidance prepared by Roger Tym and Partners ( DfRD, 2006). This identifies the following steps that should be undertaken:

• Define the catchment area for the settlement under consideration. This should be based upon a household survey and recognise the relationship between facilities within the settlement and neighbouring centres.
• Estimate expenditure and turnover within the catchment area. The guidance states that if the former exceeds the latter then there is leakage but if the latter exceeds the former there would be net inflows of expenditure and the centre would be "overtrading".
• Calculate the projected retail expenditure for the principal retail goods categories (convenience, comparison and bulky goods).
• Convert the resulting figures into floorspace by the use of sales densities - it notes that sales densities will vary but do not offer advice on how these should be obtained.
• Deduct existing approved and committed floorspace from the estimated future requirement.

3.27 The advice is described in the draft PPS but, in essence, follows the same principles identified above. At this stage it is inappropriate to provide a critique of the method but it is evident (e.g. the reference to net inflows being indicative of "over-trading" are demonstrative of a limited understanding of the operations of retail markets).

Ireland Retail Planning Guidelines Annex 3 2005

3.28 This identifies three stages to be addressed: 1. Existing Retail Floorspace; 2. Market Demand; and 3. Assessment of Need.

3.29 In the examination of existing retail floorspace the Guidelines emphasise that the starting point is to measure the health of town centres and to measure the amount of floorspace. Floorspace data would relate back to a national census undertaken in 1988 updated with development control records or use of a special survey. The second stage concerns an examination of market demand from a range of sources including planning records, and consultations with the property industry.

3.30 A "broad" assessment of need is the third stage. This follows the conventional approach: projecting changes in population and consumer spending. Catchments should be identified for retail centres taking into account cross-boundary flows and in urban areas surveys of shopping patterns may be required. The advice states that "the projected growth in available spending can readily be converted to retail floorspace using appropriate sales density ratios for different types of retail formats". In Ireland there is an Annual Inquiry undertaken by the Government which addresses issues about net sales areas and turnover of businesses.

3.31 Significantly the guidelines note that "the resulting estimates should be treated as broad planning guideline requirements which can be monitored and adjusted over time.." (GoI, 2005).

Variations in Approach

3.32 Although there are slight differences in the emphasis on specific actions for calculating quantitative deficiencies and need there is a general accordance about the overall approach and stages that should be adopted. In terms of practice, the principal variations in assessments that have been observed both in the general literature and in examination of specific RCA's relate to the following:

Definition of Catchment Area.

3.33 In many instances RCAs are identified on the basis of administrative boundaries. In rural areas this will typically result in leakage of expenditure to larger towns and cities - especially for comparison goods. In large urban areas, especially where there is a strategic planning authority (e.g. G&CV) a wider area can be taken closer to observed patterns of expenditure (in this regard it is notable that the G&CV identifies larger catchment areas for the assessment of comparison goods than catchment areas for convenience goods centres).

3.34 For many planning applications an RCA frequently identifies the catchment area that would be served by the proposed development rather than a catchment area for a defined centre. This reflects the focus of the proposer of the development identifying the level of deficiency purely within the area that would be served by the development proposal.

Treatment of Turnover Rates

3.35 A key issue in the application of the techniques is whether average or actual/observed turnover rates are identified for the calculation of retail supply. This relates both to the examination of the existing situation and for the conversion of potential available expenditure into floorspace. The most common approach is the use of national average rates for multiple businesses (from Retail Rankings/Verdict) but varying notional average rates for independent businesses (with densities varying according to the size of centre). For example Drysdale states ( SO, 1992):

"An important requirement of this exercise is that the "turnover requirement" of existing floorspace is not an estimate of actual turnover but is an estimate of the turnover which retailers would regard as normal or reasonable in a market where demand is matched by supply….it is possible that shops in the area will be achieving turnovers well in excess of "normal" levels and these levels of actual turnover will be much higher than the level of turnover requirement estimated in a capacity analysis."

3.36 The corollary of the above is that, in certain situations, shops could also be trading at below average or normal trading levels.

Treatment of Leakage

3.37 Examination of RCA studies indicates a split between those studies undertaken that treat leakage of expenditure as a potential deficiency and those that consider that identified leakage should be continued into the future and deducted from the RCA calculation (e.g. as shown in the formula above). It can be argued that if leakage exists this is a clear indication of a retail deficiency and this has been identified as a material consideration in planning appeals in Scotland. However others have considered that leakage is an inevitable part of the network of centres (e.g. more significant centres draw from a wider area - e.g. Glasgow City Centre turnover for comparison goods would be higher than the available expenditure generated by the city whereas there will inevitably be leakage from smaller centres). Examples of the latter include the G&CVTR 7/06 and the Dumfries & Galloway Retail Study (Halcrow, 2006).

Conversion to Floorspace Potential

3.38 The majority of RCA studies convert notional surplus expenditure into floorspace equivalent (i.e. surplus expenditure divided by average sales density). However some studies (especially those associated with planning applications leave the assessment expressed as a monetary value (in effect expenditure leakage from the defined catchment).

Role of Tourist Expenditure

3.39 In a number of assessments regard is had to available expenditure generated by tourists in many (especially in calculating convenience capacity) this factor is ignored.

Criticisms of RCA

3.40 There have been significant criticisms of RCA as a planning technique. These have related to both the theoretical and conceptual aspects of the techniques and also to practical issues relating to data availability and the sensitivity of the results generated.

Conceptual Criticisms

3.41 Notwithstanding the importance attached to identifying quantified need in England and elsewhere it has been the subject of significant criticism. England (1999) considers that "capacity analysis is most useful for assessing the scope of comparison goods floorspace but for convenience goods it is less useful" (England, 1999 p101). He also notes that the approach has major limitations:

"Above all it is simplistic. The analysis takes no account of the dynamics of the retail system, particularly for changes to occur in shopping patterns as new developments take place. It assumes that the retail system is in equilibrium state in the base year and that the turnover of existing shops will increase very gradually over the forecast period. In reality, where existing shops are under-trading there will be scope for a more rapid growth of turnover which will therefore reduce the capacity for new development. Where existing shops are over-trading there will be less opportunity for growth in floorspace efficiency and so the potential for new floorspace could be greater".

3.42 In their review of NPPG8 the CBRE team ( SE, 2004 para 7.16) noted that a range of criticisms of RCA described by Hargest (Hargest, 2003) points to fundamental problems with the capacity assessment methodology.

3.43 These criticisms are as follows:

• Any RCA is based on an analysis of existing patterns of expenditure flow (which is itself a pre-requisite for assessing retention and leakage between centres) and the RCA must either assume that these patterns will remain constant in the future or make a manual assessment of changes in patterns based on a judgement (or on policy aspirations). Retailing is, however, highly dynamic and constantly changing and the only thing that can be guaranteed is that future patterns will be different from those found today.
• Through the use of different assumptions RCA introduces value judgements that rarely can be supported by empirical data. These assumptions will have profound effects on the results of an RCA.
• RCA normally relies on the use of "average" turnover rates - i.e. it makes a judgement as to what rates ought to be achieved by different retail sectors, subsectors and by stores run by the same operator. This creates difficulties in choosing which rates to use. However the relationship between turnover rate and viability is not straightforward - the costs of a business operation will vary between different locations and planners are not privy to this type of information.
• RCA bears little relationship to the realities of the market place. Although planning is not about serving market needs it is evident that planning policies that are in fundamental conflict with the market will achieve little. RCA's typically conclude that small towns have potential for new comparison floorspace - but there is no demand from operators to occupy this space.

Practical Criticisms

3.44 A key issue that RCA needs to address is that the results are highly sensitive to the data inputs. This reflects the fact that the calculation of capacity is based on a subtraction - the closer the expenditure and turnover figures are the greater will be the susceptibility of the result to changes in assumptions. Morley (2004) comments "relatively small changes to either future expenditure or average turnover of existing floorspace will result in disproportionately large changes to the capacity figure. It is essential that accurate baseline figures are calculated and realistic forecasts made as to how these are likely to change".

3.45 As a result of this Morley identifies a number of key sets of assumptions that need to be examined carefully as part of a capacity assessment calculation. These relate to the sales densities used (and the extent to which assumptions should be made for these to grow in the future), expenditure growth rates to be used and the role of the growth of internet sales. He considers that there are now more proactive data and information providers available to retail planners but despite this "quantitative retail capacity assessment is much more challenging than it was a few years ago".

3.46 Stock (2003) has commented on the problems created by having different data providers. He noted that there were (in 2003) three primary sources available for the estimate of available expenditure (MapInfo, Experian Business Strategies and CACI). However this created more problems rather than solved them. He comments:

"Illustrating the problems that this situation can create, the parties at one recent call-in inquiry in Stoke-on-Trent were unable to agree the choice of data source. As a result much debate centred upon the appropriateness and reliability of one data source over another. As the Inspector observed at the end of the Inquiry this situation is unhelpful to the decision maker….

"It is difficult to foresee a situation in which the Government …could direct or even advise on the most appropriate data source" and

"Finding consensus on the detail behind the figures will become increasingly difficult". (Stock 2003 p19)

3.47 These problems may seem academic but the very nature of the retail capacity calculation means that differences in assumptions have profound effects on the results of the assessment and the conclusion as to whether there is, or is not, a quantitative capacity for a proposed development. Hargest (2003) illustrates the effects of altering different assumptions for a simplified retail capacity calculation. The example given shows a situation in which a set of assumptions relating to the principal variables that require to be addressed in a retail capacity calculation produces a notional gross floorspace capacity of 2525 sq m GFA. The principal variables considered are: available expenditure; level of leakage; average turnover rate for existing and proposed floorspace; committed retail floorspace; and assumptions about net to gross floorspace ratios. The example then alters each one of the assumptions by only 10% and shows that the resultant "capacity" figure ranges between 230 sq m GFA capacity through to 5051 sq m GFA. The most sensitive factor being the assumptions about available expenditure (which is the factor highlighted by Stock as the subject of argument in Stoke on Trent). Hargest also raised all of the assumptions by 10% and this resulted in the retail capacity for new floorspace being reduced to -230 sq m GFA.

Role for Retail Capacity Techniques

3.48 It is evident from the preceding review that, outwith Scotland and especially in England, there is a policy requirement for retail capacity to be undertaken both as part of the development plan system and for the appraisal of particular retail development proposals.

3.49 In Scotland the position is less clear. It has been noted that in parts of Scotland quantitative capacity is used in support of development plans. The Review of NPPG8 ( SE, 2004) has noted that this can be considered to be consistent with para 84 of NPPG8 but that "there is evidence that local authorities are interpreting the issue as "quantitative need" for additional retail floorspace over the plan period" ( SE, 2004 para 7.19). Similarly in the context of the determination of applications or appeals the same source states "the deficiency criterion in para 45 of NPPG8 has been interpreted as necessitating a demonstration of capacity or need, in quantitative terms for additional; retail floorspace in a catchment area. There is also evidence in the decisions of planning authorities that failure to demonstrate quantitative capacity for additional floorspace is sufficient to justify refusal, even in situations where impact on vitality or viability is not proven to be unacceptable " (ibid 7.20).

3.50 The Review of NPPG8 also notes that there is confusion surrounding the concept of deficiency and its relationship with impact and therefore further clarification on this would be welcomed.

3.51 The only other comment in the literature on the role of retail capacity in Scotland that we are aware of are the concluding comments of Hargest (2003). In the light of the difficulties identified above the approach is " fraught with difficulties" but:

"This does not mean that it is worthless and has no role in planning. However its limitations should be recognised….it needs to be subject to sensitivity testing to indicate the potential range in capacity that could be planned for. If …this shows enormous variation then caution should be exercised in developing policies, or justifying proposals, based on these calculations. Furthermore the fundamental difficulties with the principles underpinning the technique should be recognised. This would suggest that whereas retail capacity may have a role it is likely to be a minor contributor to the development of policy". (Hargest, 2003 p7).

3.52 He further asserts that retail capacity does have a role as a useful first step but must be combined with other information, for example Health Check indicators of centres, market indicators and an examination of the physical attributes of centres. In this regard it is notable that these comments seem, to some degree, mirror the approach advocated in the Irish Retail Planning Guidelines published in 2005. In terms of the role of RCA for planning applications his comment is that the focus of a quantitative appraisal should be on the retail impact of the development on the vitality and viability of centres.

Qualitative Retail Capacity Techniques

3.53 Unlike quantitative RCA there is less accordance over the method for assessing how to identify qualitative deficiencies. England (1999) states the following:

Qualitative need is usually defined as a sectoral or geographical gap in the distribution of facilities. Less commonly, planners are concerned with a deficiency in the quality of provision".

3.54 In PPS6 the following factors are identified that should be considered in assessing a qualitative need:

• An appropriate distribution of locations is achieved subject to the key objective of promoting the vitality and viability of town centres and improving accessibility for the whole community;
• Provision is made for a range of sites for shopping which allow genuine choice to meet the needs of the whole community, particularly those living in deprived areas.

3.55 The above references focus primarily of the geographical spread of shopping facilities. However regard is frequently had, within applications and appeals within Scotland to the type or format of shopping provision within geographical areas. This reflects an assumption that, within retailing, there are clear sectors whether or not these are recognised in land use planning terms. For example reflecting Competition Commission investigations one can recognise at least four broad sectors for grocery retailers including large mainstream superstores (e.g. Asda, Tesco etc) which are primarily aimed at serving weekly shopping trips; smaller general grocers/convenience stores aimed at local top-up shopping (includes a range of independents, the Co-op, Somerfield plus the major operators); upmarket grocery retailers (e.g. M&S, Waitrose); and Limited Assortment Discounters[ LADs] (e.g. Lidl and Aldi). As far as the Competition Commission is concerned these can serve different retail markets and there is limited overlapping between these (Competition Commission 2007a paras 12 and 93). Clearly there is a wider range of type of retail unit within the general comparison and bulky goods sectors. The most extreme case of this proposal that has been proposed in Scotland to our knowledge is that put forward on behalf of Aldi at a recent inquiry in Fraserburgh where it was suggested that, since Aldi have a unique offer (notwithstanding the proposal was on a site opposite a Lidl store) then the proposal would address a qualitative deficiency. The logical extension of this argument is that any town without an Aldi (whether or not it had one or many LADs already present) would be suffering a qualitative retail deficiency!

3.56 In 1997 the English Historic Towns Forum gave guidance as to what it considered to be considered in assessing qualitative need in terms of the following questions:

• Are the current facilities outdated?
• Are better facilities offered by competing centres?
• Is there a leakage of trade from the catchment area?
• Are the existing facilities cramped and overcrowded?
• Are there gaps in the types of stores?
• To what extent is there an unserved catchment population?

3.57 Other qualitative factors that have been proposed in support of applications have related to the size and format of units. Quite common is the proposition that a lack of modern retail warehouse units (whether for bulky goods or general comparison goods) can represent a qualitative deficiency.

3.58 It is possible that this wider approach to qualitative deficiency can draw some support from SPP8 paras 30-33. The thrust of this section is related to transport accessibility but the discussion in relation to social justice and health improvement (para 32) and access to fresh food as a contributor to health (para 33) raises issues on not simply physical access to facilities but also affordability. This is a factor that has been raised by LADs being located in deprived areas but raises important issues reflecting that LADs are not distinguishable from other forms of retailing in land use planning terms.

3.59 The general conclusions from this review are that:

• There is limited discussion within the general literature or policy guidance as to what constitutes a qualitative deficiency.
• Policy tends to refer to a geographical distribution of retail floorspace - in this sense it can overlap with concepts of quantitative deficiency.
• In planning applications and appeals a wide range of situations have been used to support notions of qualitative deficiency relating, for example, to specific retail sectors and sub-sectors and also to the size, type and configuration of retail units. These notions can draw some support from the comments of organisations such as the Competition Commission.