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Retail Update - November 2013

 

Posted At: 14 November 2013 16:13 PM
Related Categories: Administrations, Retail, Retail Property, Retail Statistics, Retailers

 

In spite of what seems to be a gradual recovery in the UK retail market, with shopping centre landlords planning extensions and refurbishments to their portfolios, retailers announcing ambitious growth plans both for the UK and abroad, and international retailers making their debuts in the UK – J Crew, Carven - November saw the demise of two high street names - Blockbuster and Barratts.
In the news:

Blockbuster appointed Morrfields Corporate Recovery as it collapsed into administration for the second time in year. Failure to reach a licensing agreement with its former parent in the US hampered plans for a new digital platform to enable Blockbuster to compete in the online market. Despite the initial expectation that all stores would continue trading, 72 stores are now earmarked to close.

Duff & Phelps were appointed as administrator to Barratts, as the footwear retailer succumbed to difficult high street trading conditions for the third time since 2009. Barratts had been looking to secure an emergency loan to help pay for stock in the run-up to Christmas prior to appointing administrators. It is hoped the business can be sold as a going concern, although store closures and redundancies have not been ruled out.

Abercrombie & Fitch have announced that it is to close its standalone Gilly Hicks stores, including its five UK stores, in relation to its long-term strategic review. The Gilly Hicks brand will still be available to buy in Hollister stores and online.

• Cinemas are becoming an increasingly popular anchor for smaller, mixed-use developments as retail demand stalled in the last few years. Cushman & Wakefield have predicted that 60 new cinemas will open between 2014 and 2017. (Read More)

Bicester Village has retained its ranking as Europe’s most productive outlet scheme according to the rankings from Magdus. Bicester Village has held this status since 2008.

• Online sales continue to grow month-on-month. Monday December 2 has been predicted to the busiest shopping day in the run up to Christmas 2013 according to IMRG Capgemini e-Retail sales Index, kick-starting two weeks of high sales that will help take online sales for the month of December to £10.8bn. The analysis also suggests that spending in the nine weeks covering November and December will hit £20.4bn.

November signals the beginning of the festive season, with retailers’ airing their TV ads and launching their range of festive treats in-store as they fight to win shopper spend. What remains to be seen though is the result of these campaigns and if they actually make a noticeable difference in the battle for shopper spend over the crucial Christmas trading period. Keep up-to-date with all things festive, and how the retailers fare, on SnapShop.

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Retail Update - February 2013

 

Posted At: 19 February 2013 10:59 AM
Related Categories: Retail, Retail Property, Retailers

 

According to new data published by BRC, January saw the sharpest fall in high street shopper numbers for two years – high street numbers were down 3.3%; out-of-town declined 7.2%; and shopping centres saw a drop of 5.2%. Average footfall for all retail locations was down 4.6% year-on-year. ONS, retail sales in January do not represent a great start to the year, but on a more positive note, online sales for January rose 16% year-on-year, according to the IMRG Capgemini e-Retail Sales Index. Notably, clothing sales soared 23% year-on-year representing the largest increase since July 2011. The Coffer Peach Business Tracker showed that pubs and restaurants suffered in January as a result of the bad weather, recording a 2.4% decline in like-for-likes, following a relatively successful Christmas. Inflation remained unexpectedly flat for the fourth consecutive month in January at 2.7%, according to ONS figures.

Cushman & Wakefield are expecting an influx of luxury international brands from Italy, France and Spain to dominate London’s prime streets this year, pushing retail rents to record levels. There are now 10 international brands for each store that becomes available on Bond Street or Sloane Street, representing a 20% increase in the last year.

A report produced by Conlumino for Hammerson – The Reshaping of Retail – suggests that retail spending is expected to grow at an annual average of 2.4% between 2013 and 2022, with 62% of this growth being generated by the over-55s. The report also forecasts that by 2020 mobile spend will account for £53.9bn of sales.

Liverpool hardware store Rapid and young fashion retailer Republic have followed Blockbuster, Jessops and HMV into administration. Meanwhile Store Twenty One is suffering severe financial difficulties and is likely to be placed into administration in the near future after it failed to pay its rent.

Capital Shopping Centres has officially rebranded itself as Intu Properties, and will invest £25m in new digital infrastructure for its shopping centres over the next three years. The group is also believed to be close to acquiring Legal & General’s Midsummer Place shopping centre in Milton Keynes.

Some highlights from this month’s retail news include:
- Victoria’s Secret expanding outside of London
- Danish retailer Tempur Mattresses to open its first European store at Bluewater
- Karl Lagerfield has begun searching for a 2,000sq ft West End flagship

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Simply having a coaxing Christmas time

 

Posted At: 01 December 2011 15:23 PM
Related Categories: Christmas, Retail, Retail Property, Social Commentary

 

Ok so it’s been a bit quiet on the blogging front recently – probably a reflection of the amount of time the team here have (not a lot) to be pondering but I couldn’t help but notice how hard shopping centres are trying to increase their footfall.

Moving on from the traditional Lights switch on, Retailer Discount days, Santa’s Grotto choirs and brass bands, here are a few of this year’s new inspiring events:

  • The Oracle in Reading is hosting a Boden pop-up shop until Christmas Eve and for the customers who spend £15 or more inside the centre a free gift wrapping service is available.
  • The Red Bull Formula One team will be attending an event at Midsummer Place in Milton Keynes
  • Life size snow globes at Silverburn
  • One New Change in London is hosting a Dickensian story teller from the Museum of London
  • David Hasslehoff (AKA The Hoff) visiting Cabot Circus, plus there will be an Ice Rink in situ until early January.
  • Real life reindeer in Glasgow’s Princes Square
  • Charity Santa run at White Rose Leeds

It’s enough to put even the coldest of Scrooges in a festive mood (yes I sit with a few, so I should know).

So if retail information is your pressie of choice this month, FSP can be your department store – let us know what you are after and we can supply it.
 

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Retail Store Closures – May – June 2011

 

Posted At: 24 June 2011 15:46 PM
Related Categories: Retail, Retail Property, Retailers, Store Closures

 

• On 22nd June 2011 – Comet announced to close 17 underperforming stores and no new stores are planned. Retailer said margins were hit in a highly promotional trading environment in the UK and lost market share

• On 21st June 2011 - Life & Style reported closing 22 of it 150 stores and making 274 people redundant after it fell into administration earlier in June

• On 17th June 2011 – Haldanes closed all its 23 shops after the owners filed an administration order. It is expected four will reopen

• On 25th May 2011- The administrators of Focus DIY are expected to announce the closure of more than 120 stores

• On 20th May 2011- Firkins Bakery closed its production bakery in Blacklake, West Bromwich, with more than 40 workers made redundant

• On 18th May 2011- Mothercare plans to close around 110 of its high street stores by March 2013, after seeing underlying UK profits slump by 70% in the last year

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According to LDC, in the last two years retail store closures have resulted in a tripling of the shop vacancy rate to 14.5% and the number of profit warnings from retailers has increase tenfold. This could be attributed to a number of factors like significant growth of out of town retail at a rate greater than that of in town, increasing internet sales, growth and expansion of supermarkets etc.

Network Rail, however, is presenting a very different picture, with  retail sales increases at its stations outstripping the high street. Whilst overall retail sales from January to March 2011 dropped 0.8% YoY, trading at train stations across the UK rose 5.17% with London stations outperforming other stations during the quarter.

At the same time it was relieving to see that Harrow council hopes to mask the effects of economic decline by creating London’s first high-tech “fake shop”, turning a boarded-up property into what appears to be a florist’s in an effort to attract independent retailers to the high street as one in five shops in north Harrow is vacant.

With the changing nature of UK high street there is a need to rethink the futures of these empty shops. To read more about FSP’s approach to attracting town centre and shopping centre occupiers, click here

Related Blogs:

Empty Shops level – Q1 2011

Empty Shops level rises to all-time high

Squeezed Middle

Retail Administrations 2010

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Rearranging the Deck Chairs on the Titanic

 

Posted At: 10 July 2009 16:12 PM
Related Categories: Finance & Investment Management, Future of Retailing, Retail Property, Retailers, Town & Shopping Centre Management

 

A quick Google for the term “Save Our Shops” throws up 220,000,000 results in 0.29 seconds. The top results come in from The Evening Standard – championing the capitals independent shops; BBC iPlayer – re-running Mary Portas’ “Save Our Shops” series; and, interestingly, the Portsmouth Today newspaper site – which is covering the issue locally. These are just the top of the pile, for the list of people championing British retail in a vain attempt to rejuvenate the high street is seemingly endless. But why did it come to this?

We all know there is a recession going on – whether it is affecting us or not – but the problems were there before they were compounded by the current financial crisis. The rise of the clone town was being rebelled against; rents were increasing and people were aborting in-town shopping efforts in favour of the easier out of town retail park experience; all issues closely intertwined and ones that we are now facing the consequences of. And so the golden era of “build it and they will come” is well and truly over. If only the planners had listened sooner…

It’s not really fair to blame developers though. Developers, after all, respond to economic indicators which are essentially fuelled by our actions.

An element of greed is at play on both parts, but we should take some responsibility instead of blaming all and sundry.
It wasn’t just the banks – of Iceland, America or the UK - or Labour, Gordon Brown or Tony Blair – that got greedy, it was everyone.
Our celebrity obsession began to influence the decisions and aspirations we made and had; we became a consumer culture, punching well above our weight, and it was unfortunate that there was no ‘Big Brother’ around to say no when we asked for “more sir”. We got given credit that we couldn’t repay; we bought things that we couldn’t afford; and we artificially inflated the growth of the economy to breaking point. Quite literally. So, as an investor, a bank, a developer, why wouldn’t you take advantage? If the statistics are telling you to build, you build, and as our gold plated wallets got larger, so did the developments. Some may say that regeneration and development proposals became so large that town centres could no longer accommodate them, so they were sent elsewhere…somewhere ‘out-of-town’ (sure, it was all political). The clue is in the name. At the end of the day. it’s vain to argue that the capacity is there to support two healthy shopping destinations in one place. In most case, it wasn’t, and the survival of the fittest came into play.

At present, 65% of comparison goods shopping is done in town centres, 45% elsewhere; in 10 years time, it is expected these figures will do a flip turn. Basically, some town centres will die. Will we be upset? For a while…but people don’t like town centres – why would they? They’re not practical, and they’re full of people who hate shopping, so what will we be losing? A sense of community? Not really – when was the last time you went shopping and everybody knew your name? Its sad, but its industrial evolution, and at present, it doesn’t look like it can be avoided.

But, we can try. There are some cool initiatives in place – some councils and regeneration schemes, for example, are planning to buy up empty shops and letting them at a reduced price; resident-owned shops are springing up in an effort to revitalise ‘community spirit’; and entrepreneurs like Red or Dead footwear founders Wayne and Geraldine Hemingway are thinking up new, cheaper ways to bring retailers back to town centres, with things like their rent-free pop-up shops.

All is not lost, but a long hard look at the future is most certainly needed; jumping up and down screaming “save our shops” is not enough. Bandwagons are all very well and good, until the wheels fall off...

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Westfield London: Shopping Heaven or Hell of a Centre?

 

Posted At: 07 November 2008 15:00 PM
Related Categories: Retail, Retail Property, Town & Shopping Centre Management

 

Well, I jumped on this bandwagon and visited the new Westfield development in London, along with all the other curious people with notepad in hand, rather than wallet!

What can I say?  It’s big!  But then that’s no surprise as we already knew we were betting the largest in-town shopping and leisure destination in Europe.

The food court area was very much the centre of scheme and was very busy when I arrived at 2pm – possibly all those people updating their notepads, rather than weary shoppers taking a break!  Certainly very few of them had any bags.
 
Sadly, much of The Village is not yet open and Louis Vuitton, the one they have been harping on about for ages, will not open its doors until March 2009!  Also, rather curiously, the House of Fraser department store is at the end of village and unless you come from Shepherds Bush station you could easily miss it.

The size of the centre is daunting and there’s probably some psychological theory which states that after a certain point, the success of the centre is in inverse proportion to its size (the retail consultants at FSP can probably get their heads round this better than I), but with the retailers clustered in merchandise groups e.g. jewellery all together, your shopping trip can perhaps be accomplished without having to trawl the whole 1.6m ft2 of it to find what you want!

Along with a load of retailers you probably never heard of – which, like Golden Point and Yamamay, are already featured on SnapShop – there are the old favourites, like Clintons, Beauty Base and Superdrug. Curiously, the location of these established retailers, which seem to be geared to the less well healed visitor, is an area which they have cleverly made to feel like the old part of the centre as if it was already there (weird)!

My verdict is that Westfield London is well worth a visit.  Its big, there are some interesting new retailers and some favourites that have upped their game. However the lack of retailers open in the village was a disappointment and the frankly run of the mill department store offer means Selfridges won't be shutting up shop any time soon!

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Driving Us Crazy

 

Posted At: 15 July 2008 10:22 AM
Related Categories: Retail, Retail Property, Town & Shopping Centre Management

 

In the same way that more rats have been “spotted” since fortnightly bin collections were introduced, trips to out of town shopping centres are allegedly declining since petrol prices started rocketing.  It’s always much more newsworthy to hang your story on something that’s already making headlines.

Yes, petrol (and, even more so, diesel) is increasing in price at a disturbingly fast rate and yes, Jo Bloggs may well be giving serious consideration to whether her journey is necessary, but is this really impacting on out of town retail centres?  Isn’t it more to do with the fact that we have less time to ourselves and better ways to use it?  Being time-poor is a much surer way of focussing our minds to get what we need in the most economical way, than actually being cash-poor.

A more substantive point is that the FootFall figures over a number of years have shown no correlation with retail sales; so why are we getting so excited about a drop in pedestrian flow?  And is the drop of any major proportions, or just one in an ocean?  Despite John Lewis recording a decline in weekly sales figures at out of town stores, House of Fraser has reported sales in regional centres were up more than the rest of their estate.  Selective reporting of this information has focussed the attention on only one side of the story.

It should also be noted that commentators refer to “out of town” retailing but all the evidence is drawn from regional shopping centres.  Most out-of-town retailing is in relatively local retail parks.  These are not generally covered by Experian et al.  Referring to regional shopping centres as out-of-town is merely muddying the water and adding to confusion.

It seems highly dubious to be stating that people are abandoning their cars anyway – the school run is certainly still alive and well!  According to the RAC’s annual report on motoring (2008)*, stress and fuel prices are not yet pushing motorists off the road. Nine in 10 motorists say Britain remains a car dependent society (92%). Over half (51%) expect gridlock in the next 20 years, while 73% of motorists say they would find it very difficult to adjust their current lifestyles to being without a car.  Astonishingly, one in 10 drivers admit they now never walk anywhere!

So don’t abandon your plans to expand your store portfolio in out of town centres just yet!  FSP can help you see the light in this gloomy tunnel.

* http://files.the-group.net/library/aviva/client_upload/File/RAC_Report_on_Motoring_2008.pdf

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Retail Rents

 

Posted At: 23 June 2008 17:00 PM
Related Categories: Retail Property

 

The Colliers CRE Midsummer Report was issued last week and reports that “in real terms rents have fallen by 3.1 per cent since the early 1990s”, whilst also highlighting a fall in the amount of new shopping space in the pipeline.  I am somewhat sceptical of calculations based on “Constant Prices” – the weightings used to translate from current to constant prices are inexact.  For example, the deflation of the price of electronics is based on the idea of comparing “like-for-like” products.  In an area of very rapid technological advance this means comparing what is now mainstream with what at the time was highly specialist.  Within the context of shop rentals, traders pay for access to target customers but rents are proportional not just to the number of shoppers passing the shop but also to the time they are in front of it (for which the length of frontage is a surrogate measure).  As retailers make better use of their shop space (the advent of flat screen televisions has dramatically reduced the space required by electrical retailers) and their shop frontages, they require less overall space.  So, they now do not require the same space as 20 years ago to make an equivalent impact on shoppers.

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The Better Retail Property Guide - Henny Penny or If?

 

Posted At: 24 April 2008 14:46 PM
Related Categories: Retail Property

 

Delays in five retail developments have recently been announced. In Cheste, Dumfries, Newbury, Newport and Portsmouth, respected and experienced developers have put major projects on hold. In each case, rising costs of construction, land acquisition and market conditions have been blamed.

Who provides the better guide to the appropriate response - Henny Penny, who in the nursery rhyme was hit on the head and immediately assumed the sky was falling or Rudyard Kipling in his popular poem, If?

Clearly, the UK retail property market is at a point of inflexion and its direction in both the short and longer term is uncertain. However, the fundamental drivers of successful retail developments remain the same – sufficient unsatisfied demand from shoppers for a better place to shop, suitable available space for shops and retailers able to delight the identified shoppers. The challenge is not that the fundamentals have altered. The new imperative is for a more thorough understanding of each element and their inter-relationship.

For example, shopper requirements need to be quantified more precisely and greater insight into shopper requirements teased out. In an increasingly competitive environment, a new development is in itself not enough. The shopper demand has to be understood as coming from distinct consumer segments. We all understand that a Porsche or BMW buyer is different, and wants something different from a Skoda customer. The distinction is less well understood when it comes to shopping centres. To choose two centres at random, how do MetroCentre and Newcastle shoppers differ? Are these two shopper groups different from one another or the same people looking for a different experience or different merchandise at each location?

If the need in the present uncertain market is to understand both shoppers and retailers more thoroughly, then neither Henny Penny nor Rudyard Kipling is a particularly helpful guide. The sky hasn’t fallen but nor is a stoic forbearance an appropriate response. What’s needed is a better understanding of the drivers of the retail property market. Surprise, surprise – just what FSP offers!

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Imagination is more important than knowledge

 

Posted At: 20 March 2008 14:44 PM
Related Categories: Retail Property

 

Albert Einstein’s insight is surprisingly pertinent to retail property professionals who commission research projects.

The retail property market has various sources of information about shopping catchment profiles. Each producer, whether CACI, Experian, the National Survey of Local Shopping Patterns (NSLSP) or one of the others, will argue that his is the best system. Independent consultants, such as FSP, take the view that each system has its benefits and drawbacks, so the best one to use depends on the problem to be solved.

However, in numerous discussions with ex-CACI Directory of Retail Property Consulting, Ken Gunn, since he joined FSP, it has become clear that the differences between the information systems are far less important than their interpretation. The quality of a retail property consultant lies in the ability to understand the implications of the data, to correctly target the shopping centre and its tenant mix. This is a skill that combines both analytical ability and retail experience. Amongst the FSP consultants there is now a total of over 60 years experience of retail property consulting. This gives FSP an unrivalled depth of experience complemented by the ability to choose the best system for the task in hand.

Therefore, in commissioning retail property research, it is worth focusing on the experience and track record of the consultant who will interpret and apply the information. Of course the data underlying the analysis is important but even more important are the inferences and recommendations that flow from the work.

The full Einstein quotation is, “Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.” FSP does not claim all this but is not afraid to use its imagination.

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Calling the tune in shopping centres

 

Posted At: 24 January 2008 14:47 PM
Related Categories: Retail Property

 

The prospects for retail property in 2008 range from a disaster scenario, much loved by journalists in search of a good story, to an expectation that the bottom of the market will be established. What is certain is that active asset management will once more be prized.

The conventional shopping centre economic model is that the interests of tenants and advertisers predominate. After all, they provide the income. However, in essence they are agents, willing to pay to have access to their target customers. In this light, it is the shoppers who need to be attracted and delighted.

Therefore, active asset management involves understanding the needs and aspirations of the particular groups of shoppers who use or might use the centre. While not entirely predictable, since shoppers are human, shopper behaviour is fortunately not random. It is possible to discover what actual and potential shoppers want. All too often, the mere identification and enumeration of shoppers is thought to provide sufficient insight. But knowing the number and demographic profile of shoppers is not an adequate basis to predict the kind of shopping centre they want.

As the choice of retail venues increases, shoppers will gravitate towards the shopping experience that most clearly fits their needs. Identifying and understanding the role for a particular centre in the shopper repertoire is essential. It is a particular skill that can be developed and honed and improved with experience. It is also a skill that FSP uses a lot and we would be delighted to use it on your behalf to address the real issues in your centres.

Perhaps 2008 will be the year when the old saying, “He who pays the piper calls the tune” will be widely applied across the shopping centre industry.

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