Keeping retail relevant in an online world is all about understanding consumers, and closely researching how they spend their time.
What has changed since the global recession, and with the rise of internet retailing, is how we see our own role as landlords and our definition of ‘prime’.
We believe there are four common components to ‘prime’ retail:
- A location that is locally preferred and accessible;
- The right environment, physically and through the quality of services on site: creating the right mix of complementary retailers and leisure;
- Affordable rent so retailers can trade profitably;
- Good configuration and flexibility.
A prime shopping centre or retail park does not have to be swanky or slick or huge - it simply has to give shoppers and retailers what they prefer and be relevant for the target catchment.
This summer at British Land we have learned from our experiences on three assets that back up this argument.
In May, we opened our £90m Old Market Hereford shopping centre in a joint venture with Stanhope. It has attracted one million visitors within two months. It has immediately become the locally preferred place to shop, with latent local spend that was going to Birmingham, Cardiff and beyond returning. Provide those shoppers with a new, prime local centre and even in a digital world they will flock to it.
Hereford was also 96% let on opening because it was affordable and flexible for retailers, creating a strong line-up including Debenhams, Waitrose, Next, H&M and Outfit.
Many of the restaurants at Hereford are ranked in those chains’ top performers nationally, Odeon has experienced turnover strongly ahead of budget and the L’Occitane and Clarks’ units are among their top performers in the region.
Food and beverage trading has also been strong, which goes back to creating the right environment, and explains why we are experimenting with innovative food concepts in our portfolio. The centre supports the rest of the city because it provides the modern flexible space people were crying out for. To generate rental growth, we have to help retailers drive total sales at each asset by creating the right environment.
Many landlords are still content to sit back and take the rent, without helping retailers by creating the right environment to support growth.
At our Mayflower Retail Park in Basildon, we have upgraded Next’s store, added a Marks & Spencer Simply Food, signed up Outfit, and improved landscaping and car parking - with the result that footfall is up significantly year-on-year.
And why shouldn’t landlords do this? In June, our Gibraltar Limited Partnership joint venture between Hercules Unit Trust and The Crown Estate sold Leamington Shopping Park to Ignis for £72m.
The property was first-generation retail park - the type many people wrote off in the depths of the recession - but after undertaking an extensive refurbishment, either re-letting or reconfiguring almost every unit and adding Debenhams, New Look and Frankie & Benny’s to the mix, we achieved a 4.4% yield on the sale.
Our exit surveys are telling us more and more about how people are shopping in a post-recession, digital world.
For example, up to 25% of people who visit mid-size shopping parks use them for click and collect on the day they visit, which is far more than at larger shopping centres.
We now know that people visit our assets on average 60 times a year, which makes it all the more important for us to work hard to retain their loyalty.
With occupancy of nearly 99% we’re confident that while online retailing will continue to grow, at the same time more people will spend more money in physical shops - the upturn we have seen this summer is testament to that.
What has changed, post-recession, is that the internet has made the upturn more competitive.
Where a spending upturn used to lift all landlords and retailers, now the only locations that will benefit will be the new prime.
Charles Maudsley is head of retail and leisure at British Land