As ever it is great to have the opportunity to listen to views on what is happening in the UK retail and leisure sectors and last week was no exception when I attended the BCSC North conference near Chester. Below are some of the key takeaways I noted down.
- An increasing volume of space in stores is being given over to non-merchandise areas – essentially this is about creating social spaces. Niketown has for a long time been good at experience areas but it seems that places to just go and chill out within a shop are taking off.
- Where political will exists for redevelopment then things happen. Grand Central in Birmingham was the case in point where the drive for a grand entrance to Birmingham resulted in the new John Lewis anchored development by the train station. That said one person observed that the dominance of the John Lewis store makes it more of a welcome to John Lewis Birmingham rather than the city itself – I shall leave that for you to decide when you next visit.
- Re-designation of planning can work and one of the cases cited was Abbeywood Bristol, which was a poor location for retail and had a poor tenant mix. Re-designation of planning to residential along with A1 Food use has resulted in a significant uplift in value. It was purchased for £20m and received £14m of investment to make the changes. It is now valued at £54m – not a bad return!
- Creating the right environment is about making it aspirational and a key aspect of this is tenant mix. What aspirations do your consumers have and how can you meet them both as an environment builder (investor) and a stage setter (occupier)?
- Technology is everywhere and often it is talked of as a cost but it was very good to hear that it can result in significant savings and have a big impact on its environment. IN this case it was car park lighting where LEDs have replaced flickering strip lights in dingy car park dungeons!
- Online impact on retail sales is significant and if you doubted it then just look back at Black Friday and Cyber Monday! That said Mark Charlton of Colliers set up some excited questions when he said that it would peak at 16% of sales in 2022 from its current level of 12.5% (ONS data).
- Without people we have no need for shops so it was interesting to be shown a break down in population growth estimates. Between 2012-2037 the South East is due to grow by 6m yet in the NE it is a mere 100,000. Will the current HS2 and other plans help spread this massive inequality in growth estimates across the country?
- A big number that came out was that £25bn of comparison goods (clothing, shoes, white goods etc.) sales are set to go online which equates to 4.7m sq. ft. of trading space per annum. Now that things have picked up so has the retail development pipeline, which will see 4.7m sq. ft. of new shopping centre and retail park space being added! This for me, along side the 50,000 currently vacant units means that we are in for another bubble. I say this because online is making significant space redundant, we are building even more space, which means existing occupied space will also become redundant. WATCH THIS SPACE!
- Polarisation of this new and old space is also interesting and this was evidenced by the fact that dominant shopping centres (Westfield, Trinity Leeds, Cabot Circus etc.) represent 14% of the total stock and with schemes such as Oxford and Bradford this is only set to increase. So will shopping centres be the dinosaurs that are replaced by the mega malls?
- David Atkins of property REIT Hammerson made a number of interesting points and ones, which I have never heard a major landlord/developer say or indeed admit to. The BIG ONE was that he discussed impact of new developments of town and city centres and cited that there is always 5 years of impact but overtime expenditure grows which enables the outside of the development units to stage a comeback but is 5 years too long and how should this impact reality be managed for the benefit of all?
- Bricks and mortar stores are a key part of retailing (some call it multi channel, others omni-channel but I call it total retail as channel is irrelevant to the consumer – whether you take the car, bus or train it is all travel). The halo impact of having stores is key to driving online engagement and sales. John Lewis is the often-cited example of how the total retail consumer spends much more than just a physical or online shopper.
- The delivery of Total Retail does not come cheap in a fiercely competitive world. John Lewis has just spent £90m revamping its website and on top of that has added a vast distribution centre near Milton Keynes.
- For those readers with children you will relate to this next point, which is about the different behaviours and expectations between the digital immigrants (born pre 1986) and the digital natives (born post 1986). Pre 1986 people remember newspapers, shops closed on Sundays or a half-day in the week and having to stand up and press a button to change TV channels. That said those of us who are digital immigrants are working hard to adopt digital as shown by Facebook’s stats from 2013-14 where women over the age of 55 are the fastest growing group. That said perhaps Facebook is no longer cool for the Digital Natives as their parents are now in on the act!
So lots of good content to think about and clearly the biggest challenge for any organization is tracking the change and then adopting the right strategy to optimize impact and returns in their chosen field. Who, why, where and when has never been more relevant than today.
How do you keep your finger on the pulse?