How free parking could be costly for the High Street

Offering free parking in St Helier on Saturdays might not benefit Jersey’s wider economy

Reducing or removing parking fees on a Saturday in Jersey’s capital St Helier might reasonably be expected to provide a welcome boost to weary retailers hoping to increase their trade after the recent difficult recessionary years. Therefore, it was no surprise that a study carried by out by Parsons Brinckerhoff confirms that would indeed be the case. 

We assessed that town centre retailers could potentially see turnover increase by more than £23,000 on a Saturday as a consequence of generous free parking measures being adopted. However, what was perhaps less expected was another finding – when accounting for other losses, such as trade at alternative shopping locations, bus fare losses and reduced car park revenue – the free parking policies could actually mean an annual loss to the island economy of up to £500,000.

Although this is a worst case scenario, the assessment was stark in terms of the implications and unintended consequences. The States of Jersey’s Economic Development Department is currently working closely with the local Chamber of Commerce to assess whether other spending subsidy options to make St Helier’s town centre more attractive to shoppers and leisure visitors may be more effective.

Parsons Brinckerhoff was appointed by Jersey’s Transport and Technical Services in conjunction with the Economic Development Department in October 2013 to assess the size of the beneficial impact on retail sales in St Helier and the costs of the measures being proposed. The intention was to either reduce or remove parking charges within the capital as a way of stimulating retail trade in the city – and the Economic Development Department would make funding available to offset the loss in revenue that would be incurred by Transport and Technical Services, the department operating the parking.

Specifically, Parsons Brinckerhoff’s report aims to help inform the debate by establishing if this would be a good use of the Economic Development Department’s money through two potential Saturday parking policies: providing free parking at short-stay sites in the city or providing free parking at all sites in the city.

The review was intended as a ‘first step’ estimation of the likely benefits, using aggregate figures and other assumptions alongside data from a series of surveys undertaken on one Saturday in October 2013. High and low estimations of the impacts were developed, with the top end taking a more optimistic view of the potential to create additional trade with the lowest cost impact.

I led the work following my research in the US last year on developing a model to quantify the value of parking at large institutions such as universities. The work had to be carried out in a matter of weeks if it was to be effective. We had a number of discussions with both the client and internally regarding what could happen, what was important and what, in the time and budget we had, we could quantify. For instance, we recognised that free parking on a Saturday could cause some people to delay the shopping that they ordinarily would do on a weekday to the weekend, but for pragmatic reasons we decided not to factor this into our study. 

The other key aspect of the work was to assume that a pound spent on a bus fare or on parking was a direct contribution to the local economy. By contrast, only a proportion of every extra pound spent in the shops remained local; part of that spend was, to some extent, exported and consumed by bringing the goods in from overseas.

Conducting the surveys

Surveys with the public were set up at four locations on the island, with questions at each adjusted from a template list. This efficient approach allowed bespoke questions to be put solely to the bus users while also asking equivalent questions about the internet to all users across the whole sample.

Undertaking the survey was an excellent example of the positive working relationship we developed with the States of Jersey and the co-operative support we received from local staff to get things done quickly. Survey staff were provided by a local supplier at short notice and the survey field sheets gathered on the Saturday evening, were coded by a States’ employee during Sunday for return and use by us that evening.

Benefits to St Helier’s retail

The intention of the policy for free parking was to draw additional car-borne traffic to St Helier – principally through additional shopping, business and leisure activity. 

The study considered this shopping to come from two sources: A transfer of purchases made on the internet and other spend that would be abstracted from out-of-town shopping locations across the island. While the former would generate a net benefit to the island economy by retaining the gross profit of any sale on the island, transferring sales from one centre to another provided no overall change.

It was estimated that the free parking policy would transfer between 3% and 5% of the 2,300 cars observed visiting other retail centres across the island, into St Helier on a Saturday, redirecting between £5,000 and £8,000 of spending.

Internet spend in Jersey was based on calculations using total retail and leisure spend provided by the States of Jersey Statistics Department and Office of National Statistics data on the proportion of retail sales in the UK that are conducted on the internet. Surveys with shoppers asked about their last internet purchase and the reasons that they chose to use the internet rather than a (bricks and mortar) shop.

Our surveys with shoppers revealed that neither parking costs nor availability of spaces were big factors in their choice to buy their last purchase online. Availability, choice or cost accounted for over 80% of the primary reasons people had used the internet. Based on these responses and estimates of the total amount spent on internet shopping, the low and high levels of internet spend that would transfer to the High Street if parking was free was calculated to be between £1,000 and £15,000.

Costs of the proposed measures

Parsons Brinckerhoff considered three key cost streams as consequences of the policy:

• lost trade to other locations
• bus fare losses
• car park revenue losses.

For the first, it was clear that out-of-town shopping locations would lose the equivalent to whatever spend was gained by St Helier. Thus, other shopping locations would lose between £5,000 and £8,000.

Second, the bus operator would lose fares if passengers chose to use their cars and benefit from free parking and the assumption was that these losses in ridership would not offer any operational savings. 

Surveys from the bus station revealed that 24% of bus travellers had access to a car as an alternative. They showed that up to 11% would switch if short-stay parking was free, while if long-stay parking was free bus users travelling for work purposes would also switch, taking the potential loss of ridership up to 18%. Such a move could also potentially jeopardise the viability of some rural bus services.

Third, lost car park revenues were assessed using data readily available on St Helier car park usage on a number of Saturdays.

Net benefits

Parsons Brinckerhoff found that town centre retailers would see an increase in turnover of between £5,700 (Low) and £23,600 (High) on a Saturday as a consequence of free parking. Based on other research, it was assumed that 30% (High) and 15% (Low) of this was gross profit across the retail mix. Thus, this means the policy would provide town centre traders with an additional gross profit of between £900 and £7,100 per Saturday.

Considering the lost trade to other shopping locations on the island, the bus fare losses and the car park revenue losses, the total costs of short-stay free parking would be between £6,700 and £7,300 per Saturday. The total costs of free parking all day would be higher at around £11,500 per Saturday.

Half of the money saved by shoppers on parking was assumed to be spent in the High Street or in a way that generates a similar net contribution to the island economy elsewhere.

Car park utilisation data was used to confirm that weekly results could be annualised by a factor of 52. On this basis the policy offers a net positive value of £25,000 over the whole year for the short-stay ‘High’ scenario. However, for the High scenario all-day free parking and for both ‘Low’ scenarios, it remains negative (-£162,000; -£286,000 and -£517,000 respectively).

Conclusion

Our findings were interesting given how topical car park charging is regarding High Street viability. It became clear that free parking would improve sales in the town centre, but the unintended consequences of such a policy meant that the overall effect was not so clearcut and erred on the downside. 

Bearing in mind that a pound spent in the High Street does not yield a pound’s profit to the retailer, the debate in the UK regarding High Street viability does appear to be moving from parking charges to more direct areas of help such as a reduction in rates.

Based on these findings the Economic Development Department is undertaking consultation with the town’s retailers to assess whether there are other spending options that – based on investing the equivalent of what the cost of offering free parking would have been – could help support footfall in the town. This discussion does not rule out using some form of parking incentive. But, for now, the jury is still out on what policy will eventually be adopted to make St Helier’s town centre more attractive to shoppers and leisure visitors.

Andrew Potter is technical director of Parsons Brinckerhoff, a global engineering consultancy. He presented a paper on parking in St Helier at the Transport Practitioners’ Meeting in London on 2-3 July. He will be speaking at Parking World in London on 6 November.

www.pbworld.com