RETAILERS in York are witnessing an exodus of customers to neighbouring towns, fuelled by the lack of new department stores in the city, it has been claimed.

A comprehensive study into retail in York says city centre shops are capturing a far smaller share of local business than seven years ago.

In 2001, 37 per cent of customers' money was spent in the city centre, but that has now fallen to 28 per cent, with shoppers turning instead to Leeds, Harrogate, Hull and out-of-town shopping centres such as Monks Cross and Clifton Moor.

The study, by consultants GVA Grimley, says the city centre is generally healthy and performing well, but it warns that if nothing is done, the city centre will suffer further losses.

GVA Grimley also reiterated the importance of the Castle Piccadilly area to York's future economy, saying it was the "key development opportunity" in the city centre.

In a summary report to councillors, city development officers Rachel Macefield wrote: "A department store-anchored scheme at Castle Piccadilly would have significant benefits for the city centre."

Adam Sinclair, chairman of York Business Pride and owner of Mulberry Hall in Stonegate, said a major name department store would be a boost for York, but said there was no point having more floor space "just for the sake of it".

He said York had endured a period of stagnation from 2001 to 2005, due to the uncertainty surrounding the Coppergate II scheme, but he said York had done very well since, adding: "The last thing we need to do is go back to such uncertainty."

He said: "My clear view is that the city centre of York is doing extremely well, relative to economic trends, in terms of shopping and brand offering, and it has developed remarkably since the end of 2005, with the introduction of new brands such as Ghost, Coast, Jigsaw, L'Occitane, LK Bennett, Jaeger and most recently Cath Kidston."

In her report, Ms Macefield said York city centre took about £402 million of shopping expenditure a year. She also said the nature of shopping was changing nationwide, and becoming more of a "quasi leisure experience".

She wrote: "The study concluded that these national trends are reflected in York, which is in an excellent position to take advantage of the growth in population, affluence and tourism expenditure experienced in recent years.

"Nevertheless, York also faces significant challenges to maintain and grow market share in the face of growing competition."

The document will be considered by councillors on Tuesday, as part of their work on York's Local Development Framework, a landmark document that will shape the future of the city.