4 Reasons Retailers Don't Need Free Parking to Thrive

Shopkeepers consistently overestimate parking's role in their success.

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A major rationale for the supply of parking spaces in city shopping centers is that customers won't come without them. The anecdotal argument makes sense — retailers believe that most consumers arrive by car and believe free or cheap parking plays a major role in choosing a destination — but the actual evidence is scant at best. A new review of commercial centers in Greater London, released late last month (via David King), concludes that retailers vastly overestimate the role free parking plays in their success.

The review was conducted earlier this year by the cross-party policy group London Councils. The group performed a thorough meta-analysis of the existing academic and public agency research on the role of parking in urban commerce. It also sent parking questionnaires to all 33 London boroughs (comprising the city center, as well as inner and outer areas) and conducted market research with shoppers at three commercial centers in the outer regions. The findings can be reduced down to four main reasons retailers don't need free parking to thrive.

1. Free, plentiful parking often hurts more than it helps. Retailers prefer an abundance of cheap or free nearby parking because they believe that given the choice between a store with parking and one without, drivers will choose the one with it. In some respects they're right, particularly as one moves away from the central city and established lines of alternative transport. However free commercial parking, especially in the city, has several downsides too.

For starters, according to the London Councils report, it's not really free. A true "free" parking spot can be quite expensive, and when it's offset by higher retail prices, those who drive get a subsidy and those who don't get an additional cost. This incentive to drive pressures local authorities into shifting resources and space toward roads (instead of transit) and parking (instead of additional retail developments). It also creates congestion, particularly when on-street parking is involved.

Above all, concludes the new review, free parking often hinders the shopper turnover it's meant to entice. Recent research has found that available spaces are often used by nearby workers and not by shoppers, and that shoppers given free spaces tend to stay for long periods of time, which means fewer visitors arrive each day on average. A 2012 Dutch study of 80 urban shopping centers found that higher parking rates led to higher parking-space turnover and therefore higher retail potential — except in outer areas where car access is a determining factor.

2. Shopkeepers overestimate how many customers arrive by car. If you ask retailers why they want free parking, they will answer that most shoppers drive to their stores. However that perception doesn't square with the numbers. On the contrary, available evidence suggests that more people reach town centers by transit, walking, or biking than by car, according to the London Councils review.

One recent study of the British city of Bristol shows the gap between retailer perception and shopper reality [PDF]. That survey of 840 customers and 126 shopkeepers found that the retailers believed that only 12 percent of their customers lived within a half-mile when in fact 42 percent did; believed cars were the most frequent mode of arrival when in fact walking was; believed parking would elevate the shopping experience when in fact shoppers said less traffic and more area improvements would.

When the researchers compared their results to a similar study in the Austrian city of Graz, they found the same trend of misperception:

The findings also extend to a city as large as London, says the new review. A 2011 survey [PDF] of nearly 5,000 London visitors found that those who walked were most likely to visit a town shopping center at least five times a week (50 percent). Those who biked (37 percent) or took a bus (27 percent) were also more frequent shoppers than those who drove (14 percent). Despite those figures, retailers continued to believe more people drove than actually did; a 2008 study of the Camberwell district of London overestimated car shoppers by more than 400 percent.

3. They also overestimate how much car customers spend. When people reach a shopping center by car, they do tend to spend more on that single visit than people who get there by other modes. The 2011 survey found they spent, on average, 41 pounds per visit, compared to 26 pounds for walkers. Over the long term, however, those figures favor non-drivers: in an average month, car shoppers spent 226 pounds, while walkers spent 373 and those who arrived by transit (239 for train, 282 for bus) also spent more.

4. A mix of retailers is more important than parking supply. When you actually ask shoppers what brings them to a particular commercial center, as one recent survey of 2,000 London customers did, they rate mix of stores and general atmosphere more highly than parking and accessibility. An interview of visitors to 15 major town centers found that the range of shops and amount of traffic were the most important shopping factors, with only 6 percent citing parking — and this for outer London.

The irony here, as the authors of the London Councils review point out, is that additional parking might increase congestion and thereby reduce the attractiveness of a retail center.

Some things to keep in mind. For starters, London is a very transit-friendly place, perhaps more than most cities. Additionally, several of the studies considered by the council did find that outer shopping centers need parking to entice shoppers who might otherwise visit similar outer shopping centers. Still the axiom "no parking, no business" seems much less of a no-brainer than many retailers hold it to be.

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