Rw property nov 2012


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Rw property nov 2012

  1. 1. Retail hot spots Why retailers are becoming more selective when it comes to location ● Perfect space quality over quantity matters for retailers' expansion plans ● Expert view the challenges facing the retail property market now and in the future ● The entertainer the leisure and retail mix is evolving to increase footfall and dwell time ● The capital and beyond the property needs of international retailers coming to the UK RetailWeek PROPERTY November 2012
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  3. 3. | November 2012 | RWP 3 Seismic change lies ahead A lot can happen in a year. In terms of retail property, 2012 has seen some shifts in the market, as many large-scale retailers reassess their store portfolios in the face of a growing number of challenges. Over the past few months alone – the financial reporting season for many – B&Q said it would examine its portfolio to determine what size estate it needs in an “omnichannel world”, while parent company Kingfisher opened its 1,000th store worldwide; and research from business advisory firm Deloitte warned that retailers needed to downsize their store portfolios and focus on online opportunities. Argos chief executive John Walden put the retailer’s store portfolio under the spotlight although few closures look likely at present, while the space race among the grocery giants has halted, with many now focusing on convenience formats; Morrisons, for example, is pushing its smaller M Local format and plans to add 300 convenience stores to its portfolio by 2014. At the other end of the scale, 2012 brought the roll-out of Portas Pilots across the country – many are keeping a watching brief to gauge what innovative approaches might boost ailing high streets across the UK. In addition, industry heavyweights including Asda boss Andy Clarke, Alliance Boots’ Alex Gourlay and Morrisons chief executive Dalton Philips have all called on the Government for a freeze on business rates to prevent them having an even more damaging impact on the industry. But despite such significant focus on change over the past year, retail property is a sector that requires more long-term planning and foresight. An about-turn or change of strategy is not easily executed,considering the considerable length of leases and time it takes for development – next year’s opening of Trinity Leeds is all the more anticipated for the dearth of openings elsewhere this year. As our virtual round table (page 12) shows, property directors face myriad challenges,and decisions are made on unique considerations – one retailer’s property priority is far down the to-do list as another. But where the development dearth is hitting particularly hard is in retailers’ warehousing requirements (page 23). With new space all but dried up, retailers will have to be particularly forward-thinking – and, some say, risk-taking – to commis- sion suitable properties to secure space requirements in the future. Decisions over property portfolios are increasingly complex. The recession has painted an intricate picture of divides between regions and towns (page 4), and decisions to open new stores are based on extensive research and demographic factors. In addition, there are retailers – both domestic and international (page 8) – that are still expanding rapidly in the UK. What is certain is that, whether because of the pressures of development stagna- tion or the emerging focus on multichannel retail formats, innovative rethinking of what the physical space should offer the customer is required. And with retail increasingly meshed into other uses of spaces (page 17), the next year is sure to bring further seismic change. Anna Richardson Taylor, Supplement Editor Contents 4 Location Retailers are becoming more selective when it comes to finding the right space 8 International Why overseas retailers are looking for property in the UK outside London 12 Round table The priorities for the retail property market now and in the future 17 Leisure Leisure has become a staple part of shopping centres’ appeal to increase dwell time and footfall 23 Warehousing Finding the right distribution and warehousing premises 29 Expansion Retailers re-evaluate their store portfolios when it comes to expansion plans 35 Mapic preview What’s on the agenda at this year’s conference 39 Deals digest Retail property deals around the UK Supplement Editor Anna Richardson Taylor Contributors Sarah Butler, Ben Cooper, Mark Faithfull, Gina Lovett, Matthew Valentine Supplements and Projects Production Editor Tracey Gardner Art Editor Jon Hart Advertising Manager Paul Stewart (020 7728 3555) Account Manager Jennifer Saunders (020 7728 3849) Commercial Director Mandy Cluskey Managing Director, Retail Tracey Davies © Retail Week All material is strictly copyright and all rights were reserved. Reproduction in whole or in part without the written permission of Retail Week is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at the time of going to press, but we accept no responsibility for omissions or errors. The views expressed in the magazine are not necessarily those of Retail Week. Retail Week Property is printed by Headley Brothers Ltd. Ashford, Kent RetailWeek PROPERTY
  4. 4. 4 RWP | November 2012 | W hile new retailers from the US and Europe scour London for their next shiny flagship, the UK’s northern towns face the grim prospects of boarded up high streets and declining centres, as Britain becomes a polarised retail market in the midst of a social shift. This stark scenario is painted in some quarters as many statistics indicate that Britain has become divided geographically, with the affluence line drawn across the Southeast. For example, UK shop vacancy rates hit a 14.6% average in the first half of the year. The Northwest was hardest hit, recording a 20.1% vacancy rate, according to analysis by retail location data firm Local Data Company (LDC). Northern-based retailers such as Morrisons, B&M Bargains and Wilkinson have also set their sights on growth in the South from their tradi- tional bases in the North. But can such a black and white picture of Britain’s retail property market have emerged so quickly in the fall-out from the recent recession? After all, most of the UK’s regional cities have thrived over the past two decades, with a series of retail schemes transforming the centres of Liverpool, Birmingham, Bristol, Manchester and Glasgow,among others,and Leeds being the latest to be going through the redevelopment process. “I would not so much divide it along North- South lines but across primary and secondary,” says Jonathan De Mello, senior director, head of UK research at CBRE. “There are a lot of good trading models outside the Southeast but there is no doubt that fiscal austerity is having a deep impact on how areas are performing. You have the cash cows like Sheffield’s Meadowhall, Manchester’s Trafford Centre, Liverpool One and Birmingham’s Bullring, then you have the smaller towns where you are seeing steep like-for-like sales declines.” De Mello points out that even the Southeast cannot be considered one homogenous market. “I would separate it further between the centre of London, where sales are going up, plus star performers such as the commuter market towns around London. These are performing strongly compared with similar market towns around the rest of the UK, many of The location challenge Many think that there is a North-South divide in the UK when it comes to the retail property market. However, the reality is more complex. Mark Faithfull reports which are more reliant on primary industry and are less affluent.” The upshot has been well documented decline in many cities, especially in the north of England, and an attempted government response through the Portas Pilots that seek to revive town centres through a variety of initiatives. Yet Matthew Hopkinson, director of retail at LDC, points to fundamentals working against many areas. “Retailers are looking hard at unemployment levels, wage levels and house prices and that stands against many Northern centres,” he says. “Consumers are increasingly attracted to major retail destinations, which is why, when announcements about extensions to, for example, the tram system in Manchester are One major problem is when you anticipate a store opening but then find it has drifted. The uncertainty of deliverability can be frustrating Adrian Trotter, Next John Lewis withdrew from the Tithebarn project in Preston With land and buildings available in strategic locations at a size to suit you, it’s no wonder we attract customers such as Marks & Spencer, Sainsbury’s, Amazon and ASOSWith land and buildings available in strategic locations at a size to suit you, it’s no wonder we attract customers such as Marks & Spencer, Sainsbury’s, Amazon and ASOS
  5. 5. | November 2012 | RWP 5 I would not divide it along North-South lines but across primary and secondary Jonathan De Mello, CBRE welcomed, many local authorities don’t realise that in reality this means more people from satel- lite cities travelling into Manchester, not the other way round.” Responding to the market Fashion retailers such as Arcadia and New Look are carrying out downsizing exercises, which involves them exiting smaller high streets to focus on larger stores. Arcadia boss Sir Philip Green has said that if Topshop launched now it would probably be an online business supported by flagship stores. However, it is not all about downsizing. Others prefer to look at different formats to respond to shifts in the retail market. For example, depart- ment store group Harvey Nichols is already searching for further locations for its new Beauty Bazaar format, even before the boutique makes its debut in Liverpool this month.Harvey Nichols group concessions and beauty director Daniela Rinaldi says Beauty Bazaar is likely to open in more big cities. It’s not all about the headline schemes. Although John Lewis managing director Andy Street says the number of stores required to service a national market has gone down dramat- ically – his view being that just 70 stores can now cover the whole country – he also mooted that a different model might benefit smaller schemes. “We will open far fewer full-line John Lewis department stores than we had envisaged,” he admits. Instead, the group is also opening two smaller format stores of 75,350 sq ft stores,which will be supported by online capabilities. The first, in Exeter, opened last month, with York to follow. However, Street stresses: “New developments looking for a John Lewis often needed significant scale to accommodate giving away such a huge chunk of space. By downsizing anchor stores, the developer potentially faces a less onerous task to size a proposed scheme appropriately.” It was John Lewis that effectively pulled the plug late last year on a large-scale redevelop- ment plan in Preston aimed at establishing it as the Northwest’s third city. John Lewis Partner- ship had agreed to anchor Lend Lease’s Tithebarn project four years ago as the core element of the 1.6 million sq ft shopping, leisure and housing project, which would have led to 32 acres of Preston city centre being reshaped and rebuilt, but decided to withdraw in late 2011. Similarly, long-term development plans for Chester remain in incubation, with the original large-scale project on ice, while Newport and Bradford are among those to have gone back to the drawing board to be “right-sized” for the current climate. The moribund development pipeline has undoubtedly hampered retailers. Adrian Trotter, regional estates manager at Next, points to uncertainty of store deliverability as his biggest problem. He says: “One of the major problems is when you anticipate a store opening but then you find it has drifted. You have to be innovative to satisfy the space requirement. The uncertainty of deliverability can be very frustrating.” James Gilhooley, head of property at Waitrose, observes:“Waitrose looks for 10 stores every year. It’s frustrating waiting for [suitable properties] to come through.” There are also some retailers opening stores nationally, including Aldi – with plans for 40 Town and out When looking at a potential scheme in a northern town, the first thing Barnsley-based developer Dransfield considers is whether it boasts an out-of-town supermarket. If there is, “you will not get a grocer into your in-town project”, points out managing director Mark Dransfield. “That is becoming increasingly difficult as local authorities allow more out-of- town planning consents because of the focus on job creation, but it is ignoring the impact those decisions make on the towns themselves.” Dransfield recently introduced independent department store Browns to its Gainsborough project, replacing Carpetright. Such asset management is at the heart of improving shopping provision. Dransfield says he also looks for public spending and infrastructure improvements, such as a new bypass, plus an affluent catchment to support investment in new locations. “You need a strong local authority, willing to back compulsory purchases and with a good sense of direction and a desire to make long-term improvements to their towns,” he says. Leeds is the latest city going through the redevelopment process
  6. 6. 6 RWP | November 2012 | more – Kiddicare, which recently opened the first of its 10 former Best Buy sites in Nottingham,and Boux Avenue. Owner Theo Paphitis says Boux Avenue has already been“extremely well received” in Glasgow city centre, and is now expanding in Scotland, poised to open its first out-of-town store there in the Silverburn shopping centre. However, the scale of such growth will make little more than a dent in overall availability. Dividing opinion If the UK’s smaller cities and towns are to revive their retail aspirations, there seems little doubt that their cloth will have to be cut accordingly, and plans for Shrewsbury, Dorchester, Stoke and a likely scheme for Oxford suggest all is not lost beyond London. The previously stalled Leeds schemes by Land Securi- ties and Hammerson are also going ahead, but Leeds again breaks out of simple geographical definitions, as it is a primary location and is arguably under-retailed. Once the schemes You can no longer rely on the halo effect of bringing in a big retailer Ian Cody, Hermes for Trinity Leeds and Eastgate Quarters are completed, all of the big UK conurbations will have a modern shopping heart. “The regional divide is really an employ- ment divide,” reflects Ian Cody, director of asset management at Hermes. “In a moribund market Independent department store Browns has opened in Gainsborough London retains the x-factor Central London has enjoyed an extraordinary retail boom, in contrast with the rest of the country. Increasing demand from overseas retailers and a string of new flagships along its principal arteries have created a push for new premium areas beyond the core of the West End. Emerging areas include: Surrounding Oxford Street Park Place will create a new retail zone. But the main focus is on the run to the east of Oxford Circus, anchored by Primark at its eastern extremity. Southern end of Regent Street More youthful brands and a Burberry flagship are benefiting streets such as Glassblower Street and Brewer Street. Surrounding streets in Mayfair Victoria’s Secret has helped connect Bond Street and Piccadilly. Adjacent Albermarle and Dover streets are in demand, while South Molton Street has been boosted by the arrival of Chinese retailer Bosideng’s flagship on a former pub site. Covent Garden’s surrounding streets and Seven Dials The piazza is moving upscale as part of a planned strategy by Capco, and areas around Covent Garden and Seven Dials are encouraging independents and village-style retail. Indies tend to have smaller stores in the surrounding streets, and Seven Dials targets an older demographic. Shoreditch and Spitalfields An east London alternative for retailers squeezed out by West End demand. Its £100 zone A availability plus a strong leisure and cafe offer and high residential density supports seven-day trading. St Christopher’s Place The mixed retail and leisure square, owned by F&C REIT, includes 40 units and has had increased interest from overseas businesses including French retailer The Kooples and Singaporean stationery retailer Prints. the one major positive change has been the fall in mortgage rates, which means if you are employed then your disposable income has been preserved. That has protected the high employment areas, particularly the Southeast.” As a consequence Cody believes retailers have become far more selective about where they will open and that landlords must provide “research- driven”cases to retailers if they are going to entice them into a scheme. “You can no longer rely on the halo effect of bringing in a big retailer,” he stresses. “Each scheme must stand on its own merits, which is why you are still seeing development in a city like Leeds. And retailers now are even more deter- mined to get into the right projects, in the right locations, and they will pay to ensure they get what they need.” ■ Kiddicare’s new store in Nottingham S M L XL
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  8. 8. 8 RWP | November 2012 | I t’s not so much an invasion as an international romance. With nearly 15% of the UK’s stores empty, high streets and shopping malls could benefit from finding some new friends with money to spend. Many British retailers are closing stores as they downsize their portfolio in line with shoppers’ move online and the impact of the recession on consumer spending and behaviour. But international retailers such as Forever 21, Bosideng, Victoria’s Secret and J Crew are keen to present their brands to British shoppers. Retailers from the US have noted the success of Apple, Banana Republic and Urban Outfit- ters and are keen to join their compatriots while the recent arrival of China’s Bosideng could mark an influx of east Asian brands. Despite the economic downturn, the UK is still a big draw for international brands. London is the most attractive international destination, according to a recent survey of European retailers by Jones Lang LaSalle, while Birmingham and Manchester also feature in the top 50. “London attracts international brands for a number of reasons including size, maturity and transparency of the retail market, in addition to the track record of retailers who have successfully opened here,” says Jones Lang LaSalle head of EMEA retail research and consulting James Brown. On the other hand, international players are unlikely to come knocking at lacklustre shopping centres or ailing high streets. Retailers may be seeking a range of store sizes and formats depending on their particular needs, but agents say they are looking for prime locations and mostly in central London. “In the past couple of years, retailers have very much focused on looking for prime sites. They do not want to take the risk of secondary locations in the current environment,” says James Ebel, director of property agent Harper Dennis Hobbs. International retailers seeking property in the UK must vie for the perfect spaces to showcase their brands. So what attracts overseas newcomers looking to British shores, and which areas can tempt them beyond the high-end draw of the West End? Sarah Butler investigates Retailers do not want to take the risk of secondary locations in the current environment James Ebel, Harper Dennis Hobbs retailers, Bond Street continues to attract luxury brands, while areas such as Mount Street and Albemarle Street are increasingly attracting high-profile international retailers including Marc Jacobs and Lanvin. Centre involvement Shopping centre developers have become increasingly innovative in attracting overseas tenants. Hammerson, for example, teamed up with one of its shareholders, Cadillac Fairview, to swap best practice and recom- mend retailers that could travel between North America and the UK. The two companies later joined forces with Macerich, which owns and operates shopping centres on both the west and east coasts of the US. The companies informally refer retailers to each other and share knowledge about poten- tial partners and their requirements, reducing the need to rely on property agents. “These companies have built up trust already and that’s important in building new relation- ships with retailers,” says Sheila King, leasing director for new business for Hammerson. She says international retailers coming to the UK look for a lot more information on sales data, potential competitors and footfall than their UK counterparts. Having direct contact with retailers rather than going through an agent helps smooth the process. Westfield London has also done a good job of persuading luxury retailers to consider shopping mall property. Westfield director of operations Bill Giouroukos says that the strong aesthetics of its“iconic”malls as well as services such as valet parking, free wi-fi and regular events have helped to attract new brands. Victoria’s Secret opened its first UK store at Westfield Stratford, and Westfield benefits from existing relationships with retailers in their home countries because of its global group of shopping centres. “We get close to retailers and partner up to share business plans and understand what they Overseas admirers Duncan Gilliard, associate at agency Cushman & Wakefield, agrees that “interna- tional retailers increasingly seek larger stores in order to make a bigger impact and fully showcase the brand when expanding in a new retail territory”. On the whole, retailers want to kick-start their presence in the UK with one large store that can establish the profile of the brand rather than several secondary stores. Ebel suggests that they are likely to look to Paris, Berlin and Munich for follow-up stores rather than to Birmingham, Manchester and Glasgow. Oxford Street, Westfield London and Regent Street are all big draws for mainstream Victoria’s Secret’s New Bond Street store At the Centre of RetailAt the Centre of Retail
  9. 9. At the Centre of Retail | November 2012 | RWP 9 want,”says Giouroukos.“Many years ago when retailers were hot to expand, just doing a good deal was maybe enough. Today they are far more discerning.” Good neighbours Giouroukos says the developer works with retailers on store design, the potential for mezzanine floors and on installing the latest technology and services. Westfield also focuses on one of the most important factors for many retailers entering the UK – getting the right mix of neighbours. Signing Louis Vuitton was a vital part of its campaign to bring luxury retailing to Westfield London by helping to set the right tone. It proved that it could attract a new type of customer just a stone’s throw from London’s historic luxury heartlands of Bond Street and Sloane Street. “Bringing in similarly minded co-tenants, quality real estate and public realm as well as iconic buildings can all attract international tenants,”says Kevin Farrow, a senior director at property consultancy CBRE. Regent Street worked on all those measures to turn itself into a sought-after destination for internationalbrandsafteryearsinthedoldrums. It is home to Spanish retailers Zara and Mango, US brand Anthropologie and Japan’s Uniqlo, as well as more international brands such as Hoss Intropia and Coach. Bosideng’s UK store on South Molton Street (also left) and Forever 21’s Birmingham Bullring shop (bottom) Landlord The Crown Estate has introduced attractive dining and entertainment areas just off the main drag and improved the paving and condition of the buildings to attract tenants. The new restaurants have brought in more shoppers and improved dwell time. The Crown Estate also made some bold moves in bringing in experimental interna- tional brands to give the street a higher profile. Apple’s huge London flagship near Oxford Circus was one of the first arrivals. “Bringing in Apple was a brave call, before it had any significant retail experience. Who would’ve thought that sort of store could drive such amazing footfall and become a bench- mark for other retailers,” says Farrow. A new retailer needs to get assurance of full support if something goes wrong Wayne Zhu, Bosideng At the Centre of Retail
  10. 10. 10 RWP | November 2012 | In addition, Gilliard points out that many of Cushman & Wakefield’s international clients launching in the UK will look to areas already boasting retailers of the same nationality. “A large amount of French brands have opened first stores in either South Molton Street or Westbourne Grove where there are many existing French retailers,” he says, citing French lingerie brand Aubade, which opened in both places to be close to French retailers such as The Kooples and Zadig & Voltaire. Service and support It’s not just a case of ‘if you build it they will come’, however. Landlords need to back their promises and investment in infrastructure with research demonstrating the kind of shoppers they can attract and how they are likely to spend. Wayne Zhu, chief executive of Bosideng, which recently opened on London’s South Molton Street, says: “Service and support provided is very important for a new overseas brand like Bosideng. Data on local demographics, street footfall, trading patterns and peer store It’s not about whether the store is in London or not but whether the customer profile is right Ben Tolhurst, Hermes Real Estate performance provide key points in making a decision. Also a new retailer needs to get assur- ance of full support if something goes wrong.” Bosideng assesses the potential of a market using a sophisticated model that incor- porates demographics, local purchasing power, customer buying patterns, competitor brands and occupancy costs. And it’s certainly not alone. But the clamour for premium sites by brands such as Bosideng has driven up rents in some prime locations while other less salubrious sites struggle to attract tenants. The demand in the most sought-after spots is high so it can take some time for retailers to get their dream site. Away from the capital Regional centres can offer an attractive alterna- tive to the congested London scene. Forever 21 launched in the UK in Birmingham’s Bullring while it waited for a large enough site to become available on Oxford Street. Meanwhile, upmarket coffee brand Nespresso opened in Manchester before finding a London flagship on Regent Street. And many brands are keen to find the right demographic outside the capital. Abercrombie & Fitch’s sister brand Hollister is expandingacrosstheUKinareaswitharelatively affluent catchment and young demographic. Hermes Real Estate Investment Manage- ment asset manager Ben Tolhurst says: “It’s not about whether the store is in London or not, but whether the customer profile is right.” Regional centres have to make international retailers and their agents aware of the poten- tial spending power of their shoppers and the advantages of larger space and potentially lower rents. Tolhurst says that, provided the customer profile is correct, these advantages can mean greater returns for brands. Hermes Real Estate invested £40m in reposi- tioning The Friary Centre in Guildford, Surrey to enlarge stores and attract brands such as Armani Exchange and Hollister. Forever 21 is looking at sites across the country, Bosideng is considering Manchester and Edinburgh and Apple is moving into regional centres such as The Glades in Bromley. Regional centres may not be able to invest in enlarging stores but all are capable of adding value through offering modern services such as wi-fi, and drawing customers in through better dining and entertainment spaces, a more considered mix of tenants and exciting marketing using social networking or events. With international retailers still on the hunt for space in the UK there’s plenty of opportu- nity to tempt them. n About £40m was invested in The Friary shopping centre in Guildford, Surrey Brands snapping up UK space n Bosideng The Chinese clothing retailer is looking for 2,000 sq ft to 3,000 sq ft stores in shopping centres or high streets, first in London but also in Manchester or Edinburgh. n Forever 21 The US young fashion retailer said in 2010 that it wanted 100 UK stores covering every major city. Even though it has since revised that plan, the retailer continues to grow, opening stores at Manchester’s Trafford Centre and Bluewater in Kent. n Hollister Abercrombie & Fitch’s sister brand already has four stores in the UK, all near London, except West Quay in Southampton. It is to open at least four more this year including an 8,500 sq ft store in Milton Keynes, and shops in Bristol’s Cabot Circus and Liverpool One. Fellow sister brand Gilly Hicks has also opened on London’s Regent Street and now has more than six stores in the UK. n J Crew The US retailer is likely to open on Regent Street in the former Burberry store. Boss Mickey Drexler has said the retailer will open “a few” UK stores in the next couple of years. n Victoria’s Secret The US lingerie chain launched in the UK in Westfield Stratford and has a 16,500 sq ft store on London’s Bond Street. n Uniqlo The Japanese retailer already has 12 stores in London but is also seeking a 40,000 sq ft flagship in the capital. n Monki Swedish fashion giant H&M’s quirky girls’ brand is looking for a London flagship. At the Centre of Retail
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  12. 12. 12 RWP | November 2012 | What are the key property challenges facing your business and retailers in general at the moment? Collins: The retail industry constantly evolves. This is apparent with new technology and the use of internet and mobile affecting the way people shop. We’re lucky that we have a strong, well-established brand and we’ve benefited from being an early entrant into online retail – the challenge is to stay ahead of the game. Harris: The greatest challenge facing retail is finding good value properties that satisfy business needs but have a sensible containment of risk. To stimulate new retail businesses, it’s important to have a more fertile ground for them to flourish. Before the property problems of three to four years ago, retailers were being asked to sign up to completely unrealistic things [such as long-term leases]. Risks have improved but haven’t gone away. Mason: The key challenge with property is cost. For example, last year we saw rate increases of 5.6%. At a time when rents are growing and when sales are difficult, it’s an extra burden. The other challenge is getting out of some excess in the property portfolio by either moving to smaller units in the same catchment area or downsizing the existing units to reduce the overall property cost – or staying in the same place and looking at new deals to reduce the rent. How worrying is the lack of high- profile new developments at the moment? How has this affected property priorities? Collins: Retail needs regular investment in order to remain competitive and offer a compelling reason for shoppers to visit. Retail is also important from a social perspective, in terms of employment and giving back to the local community. Facing the futureAs retailers face property challenges including steep increases in business rates, Gina Lovett spoke to three retail property directors for our virtual round table to discover the priorities, now and in the future The greatest challenge facing retail is finding good value properties that satisfy business needs but have a sensible containment of risk Peter Harris, Hotel Chocolat Harris: It doesn’t worry me in the slightest. Sometimes developments are just too big. There are places where retailers are forced into oversized shops. That wouldn’t be a problem if the landlord was paying the rates. Mason: I don’t think it matters at the moment. We’re seeing a real polarisation in the market, between really good high-quality prime sites and the first generation, bulky secondary stuff. There’s still a reasonable amount of stock that landlords are able to split to make schemes better. What are some of the key regions or demographic areas you are focusing on? Collins: John Lewis Exeter, our first flexible- format shop, opened in October. The flexible format allows the business to consider opening in locations that had not previously been considered as viable for a large traditional John Lewis branch. Our target market has not changed. This new approach to the size of our shops allows us to forge ahead with our growth plans to introduce John Lewis branches and our full-line assortment to cities and towns where we have long wanted to have a presence. Harris: We’ve just opened a shop in Aberdeen, our second shop in Scotland, but our approach is that we’re not looking to go to many new locations. We’re exploring and developing new formats, one of which is Roast + Conch. We’re looking at other possibilities within the types of property we have. Mason: We already have quite a large footprint, so we’re not looking at new areas. The place where we’ve really struggled [to get sufficient suitable space] is in central London. That’s an issue because we can’t do our full offer in terms of our We Fit service or getting in free car parking. Our 460-store footprint with a 20-minute drive time is absolutely central to our plan going forward. How should forward-thinking retailers tackle the rise of multichannel retailing? Collins: We have moved from having multiple single shopping channels (shops, online, mobile, catalogues and telephone) to a world that Jeremy Collins, property director, John Lewis Peter Harris, co-founder, Hotel Chocolat Andrew Mason, head of property, Halfords
  13. 13. | November 2012 | RWP 13 recognises that customers shop using multiple channels. We seek to offer our customers the flexibility to shop the way they want to, when they want to with a seamless and consistent level of customer service throughout. Harris: We started off in mail order and internet, developing our business this way for about 10 years before opening a shop, so for us it’s not a big issue. We developed our database before opening new stores and were able to review where we thought they’d be successful. We just look at the challenge in terms of John Lewis Exeter is the retailer’s first flexible-format shop Hotel Chocolat delivers to more than 30 countries our customers – not as multichannel or a physical shop. Mason: We’ve found that more than 85% of our internet orders were being reserved from store stock to pick up from store. That led us to launch order and collect, where people can order from all of the online range, in store or not, and we’ll guarantee to get it to the store for collection, as long as they order before 6pm, by lunchtime the next day. The beauty is that we can effectively offer the full range from even our smaller 3,000 sq ft stores. Are you looking at international expansion? Mason: Not at the moment. We’re in the Republic of Ireland but beyond that it’s not on the radar. We have enough space there. Collins: Not at present but we do have an international delivery service to more than 30 countries worldwide. Harris: We opened in Amsterdam earlier this year and are about to open in Copenhagen. That’s a much more‘experience store’. It’s early days for us in the US but we’re planning some expansion in the near future.
  14. 14. 14 RWP | November 2012 | Ciaran Bird, head of UK retail, CBRE Some of the key challenges facing retailers at the moment include property inflation, the tax burden and the lack of new development and quality space, especially given difficulties in the funding of high street and shopping centre developments in locations other than the top markets. Many retailers are seeking larger, better-configured space in the leading destinations in order to showcase their full product range and to support consumer desire for click-and-collect and in-store web browsing, so the lack of new development is concerning. Retailers with the reserves to undertake such programmes without resorting to debt financing have a major advantage. They will have to be ever more creative in exploring relocation and store expansion and, in some instances, how they can significantly reduce stock room space. Retailers should embrace multichannel retailing and take advantage of online and mobile technology, while using their stores to display and showcase product. Consumers are driving demand for innovation and accessibility, so real estate portfolios will have to be focused on improved click-and-collect facilities. Landlords and developers are increasingly seeking to provide quality space in shopping centres to retailers, incorporating exacting standards. On the high street this has proved more difficult other than where it is controlled by one owner. The challenge will be for local authorities and owners – where there is fragmented ownership – to come together and deliver quality space. For retailers with a robust UK business and that are well-funded, international expansion is the next stage in markets where demand and competition and real estate supply allows quality profitable growth. Guy Grainger, lead director UK retail, Jones Lang LaSalle The key challenges facing retailers in this type of market are how best to engage with their core customer through their stores and the retailing experience, as well as providing the most efficient model for performance. The most requests we are receiving relate to clients who are optimising their property portfolio for maximum efficiency and coverage throughout the UK. In the current climate, it is difficult to justify large-scale new retail development in many of the mature markets. This has led retailers to explore new formats and work with landlords to reconfigure existing buildings to provide better space. Department stores, in particular, have been reliant on a new development pipeline, so their strategy has been adapted either by considering new formats or moving out of town, or placing more emphasis on international expansion. I see the store of the future providing the customer with a better all-round experience. Aided by technology, there will be more and better-trained staff providing a better service. There is likely to be less stock per sq ft as much of this will be ordered online and delivered to the customer’s place of choice. This is likely to affect how we value property and the method of applying rent to direct sales from the store or indirect sales online. It is fundamental for us to understand the macro market opportunity from a retail perspective. We will identify the optimum city retail roadmap to understand the local market retail dynamics and competitive landscape. The agents’ view We seek to offer customers the flexibility to shop the way they want, when they want Jeremy Collins, John Lewis Customer service is increasingly important in Halfords’ stores How do you think the ‘store of the future’ will play out on the UK’s high streets and in other shopping destinations? Collins: The most successful retailers have an excellent physical presence where they grow an emotional relationship with customers, complemented by an effective, efficient and engaging online presence that can meet their needs on convenience. Shops will increasingly become a‘leisure’ option and therefore it will be important to be engaging and innovative. Providing excellent facilities and good service will become increasingly important. Harris: There’s shopping for convenience and there’s shopping in a leisurely, engaged way. Our Covent Garden store is a bit of a window to the future. With Roast + Conch, you experience the culinary, the history and the background [of the brand]. Creating those experiences gives us unique appeal. Mason: For Halfords, physical stores will revolve around customer service and fitting. Fitting has become a service revenue stream and an important way in which we use the store. In our ‘Lab’ stores we are experimenting with product presentation areas, wi-fi, tablet display, QR codes and product searches – all the things that allow customers to shop in a much more connected way. But what we’re not going to let this do is increase the footprint of the store. All this is in existing space. n
  15. 15. Working in partnership to create the first flexible format John Lewis store Now open in Exeter
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  17. 17. | November 2012 | RWP 17 Leisure has become a staple of shopping destinations as developers and retailers realise its effect on footfall. Matthew Valentine explores the evolving leisure-retail mix in shopping centres and on the high street Leisurely shopping F rom the ‘male crèche’ of the nearest public house to a place to entertain bored children or feed tired parents, retailers have long known that convenient leisure facilities can extend and enliven shopping visits. But the standard of leisure offers required to make a retail destination stand out is evolving fast, and arguably there is more rapid development than the shops they complement. Lend Lease’s Bluewater development in Kent is now more than a decade old,and has included a leisure offer alongside its shops from the beginning. The centre houses an Odeon cinema and a growing selection of restaurants and bars alongside some less conventional leisure facili- ties. “We have a 36-hole golf course here. We’ve got the lakes, the fishing, the boats,” says Bluewater general manager Robert Goodman. There is certainly no shortage of variety. Goodman describes the centre as having retail anchors, catering anchors and leisure anchors – and says it is the catering and leisure offers that have seen the biggest changes since Bluewater opened. This has included a rapid expansion and growing sales from the various restaurants at the centre, with many more premium outlets now trading. And with the opening last year of Glow, a 55,974 sq ft events space, Bluewater has taken its leisure offer to a new level. Events including wedding fairs and The Baby & Toddler Show have already been hosted at Glow, making it a destination for varied customer groups, some of them new to the mall. “Among the interesting findings from some of the events we’ve been running, for example, was that with BBC Good Food we attracted guests who had not been to Bluewater before,” says Goodman. Unique appeal The Wedding Fair in September attracted more than150exhibitorsandhighnumbersof visitors, many of whom visited Bluewater’s shops and restaurants. Calum Taylor, managing director of organiser Mercury Events, explains the offers a unique appeal. “Unlike almost any other venue in the country, it has a fantastic comple- mentary offer in the restaurants and shops that Bluewater provides,” he says. Live sports are the next leisure development on the agenda at Bluewater. Olympic boxing champion James DeGale MBE last month defeated his French rival in one of a series of boxing events scheduled at Glow. Like the cinema, these events will help to maintain high footfall levels into the evening. Retail venues in town and city centres might not have the luxury of space that centres such as Bluewater can offer, but they do benefit With BBC Good Food we attracted guests who had not been to Bluewater before Robert Goodman, Bluewater Bluewater hosted the BBC Good Food Show
  18. 18. 18 RWP | November 2012 | acknowledges that to attract those who have bypassed more convenient shopping locations to get there it must also consider the wider picture.“We invest a lot more time now than we envisaged five years ago in thinking, ‘what can we provide that makes this an engaging place to be?’” says Dunnett. Part of that approach is working more closely with the city to develop the overall retail-leisure mix. Close links Association of Town Centre Managers chief executive Martin Blackwell is another supporter of close links between stakeholders in any area. Landlords, retailers, leisure operators and local authorities should all be involved in strategic decisions on how to develop venues, he says. If that is the case, then he believes that leisure facilities can help retailers to thrive. “At Westfield’s new Stratford centre, a quarter of all the units are not retail. It is about leisure, food and drink largely, but that’s the highest proportion I have seen and I think it is a really good illustration of the way things are moving,” says Blackwell. Retailers are responding positively to the growing leisure offer at many retail destina- tions. Indeed, for some, leisure is already a core component of their own offers and supporting facilities have a big impact on the sites they choose.Build-A-Bear Workshop was created the retail matched the leisure, and yes, we intro- duced our own leisure too, then that would make it [Liverpool One] attractive.” Research shows that the combined retail and leisure offer really has paid off in terms of consumer appeal. The centre brings shoppers from a catchment area that extends to a travel time of about 80 minutes, a distance that provides a possible catchment of 4.1 million people. While 55% of shoppers polled by Liver- pool One said it was their destination of choice because of the selection of retailers, 45% said there were additional reasons for their decision to go there.“That’s nearly 50% of our customer base saying they have made an explicit choice in their mind, that Liverpool is the place they want to be when they are shopping, but it is not exclusively because of the shops,” says Dunnett. The centre claims its catchment has grown by 27% since 2010, and achieved a 10% increase in sales during 2011. Sales have risen by 2.3% so far in 2012, and stores at Liverpool One have traded 26% ahead of the UK average. The centre is dedicated to constantly refreshing the stores on offer to make sure it provides shoppers with the best range. But it from adjacent leisure facilities, which can signifi- cantly enhance their appeal as destinations if managed efficiently. Connected offer Miles Dunnett, head of asset management for the Grosvenor Liverpool One Fund, says that from the perspective of a landlord it is impor- tant to ensure attractive leisure opportunities are included in any planning and development. Recalling his own experience, he says: “But before we got to that, we put an awful lot of importance on the city centre perspective too, in making sure that the way the scheme was delivered connected to the other parts of the offer around the city.” Liverpool One already hosts 35 restaurants and has submitted planning applications to create more by turning some A1 units over to A3 use, says Dunnett: “We also have on our doorstep the Albert Docks with, at one extreme, the Beatles Tour, the Beatles Story and the Duck Tour and, at the other, Tate Liverpool. So, as far as a leisure offer goes they were easy wins for us. As long as we recognised the fact that people wanted to come into the city if the total offer of Celebrity Peter Andre launched Christmas at Bluewater last year At Westfield’s new Stratford centre, a quarter of all the units are not retail Martin Blackwell, Association of Town Centre Managers Liverpool One hosted a Land Rover off-road experience Children in Need attracts crowds
  19. 19. Outgrowing your warehousing? To become a Tenens’ tenant call Simon Emms, Estates Manager, on 08702 415640 visit us at or email us at Howard Tenens Associates Ltd, Kingfisher Business Park, London Road, Thrupp, Stroud, Gloucestershire GL5 2BY. Maybe it’s time to become a Tenens’ tenant. Because we own 3,000,000 ft2 (278,700m2 ) of high quality storage space across the UK, you’ll find Howard Tenens can always offer you a tailored solution in your ideal location. l Warehouses available from 5,000 ft2 (465m2 ) up to over 200,000 ft2 (18,580m2 ). l Locations include Andover, Ashby de la Zouch, Boston, Felixstowe, Sharpness, South Ockendon and Swindon. l Excellent transport links to all UK delivery points and beyond. l Modern warehouse facilities in a contemporary business environment. The space is flexible and scalable, perfect for expanding businesses or those with seasonal peaks and troughs and, since we have complete control over our own costs, our rates are highly competitive.
  20. 20. 20 RWP | November 2012 | E n t e r t a i n i n g customers will remain a key objective for Build-A-Bear, which is in the process of launching a six-store US trial of its ‘store of the future’ format. “The first store was opened three weeks ago. That is in West County Centre in St Louis, Missouri, and another one opened in California last week,” says Parry. “And there are six stores that will all be open in the next couple of weeks. Those six stores form the basis of the trial.” The new design features more interactive elements and a lot of new technology to entertain customers, he says, and will be The night time economy (NTE) and its leisure provisions play an increasingly important role in attracting visitors. Including restaurants, cinemas, theatres, museums, pubs, bars, cafes, performances, events and retail, the NTE can drive large increases in footfall. In a new report commissioned by the Association of Town Centre Management (ATCM) and Visit England, economists TBR and MAKE Associates estimate that the value of the NTE in 2009 was £66bn, or 27% of economic turnover in UK towns and cities and between 5% and 10% of employment. While local residents can fear a growing NTE, which they sometimes associate with antisocial behaviour, the report suggests that “without exception, improvement of the NTE comes through sound management”. The report was published during Purple Flag Week, held in September, an event showcasing the quality and diversity of night time activities in 20 UK towns and cities. The Purple Flag accreditation scheme, run by the ATCM, will recognise locations that manage their NTEs well. The night time is the right time A customer will spend about 50 minutes to an hour making their bear, so we have to be in a good leisure environment Roger Parry, Build-A-Bear Build-A-Bear aims to provide an interactive retail experience rolled out during 2013 if it proves successful. Entertainment retailer HMV is another retailer that likes to be close to leisure facilities. “Our store at Westfield Stratford City, for example, isn’t really with a lot of other retailers, it’s located near the food court,” says an HMV spokesman.“There’s a massive overlap between entertainment, retail and leisure.” Shoppers are demanding more leisure facili- ties as their needs change, he says:“We know we have to take it up a notch. We can’t afford for shopping to be a passive experience. We will increasingly look to roll out more leisure facilities within our shops.” Included in the plan will be a greater emphasis on personal appearances by music and film celebrities, and more in-store cafes. The latter will feature recharging points for mobile devices and free customer access to the My HMV wi-fi network – which may give a hint of the next opportunity for all retailers to spread the word of their leisure offer: the rapid growth in social media networks and the uptake of mobile devices is allowing customers who feel they have been entertained to share the experience with their friends from the comfort of the nearest cafe. n with the objective of entertaining customers while they created their own personalised teddy bears. “The difference between Build-A-Bear and most retailers is that you can’t really shop it without there being good engagement between associate and guest. We see it as an interactive retail experience,” says the company’s UK managing director, Roger Parry. He adds that the retailer actively seeks out sites that offer enhanced leisure opportunities from other companies. “We do look for those kinds of locations, and if you look at our portfolio of 60 stores you will see that we are in a lot of locations that meet that description. Certainly for us, because on average a customer will spend about 50 minutes to an hour making their bear, we have to be in a good leisure environment. People have to be able to give a decent amount of dwell time. Our core guests,if I had to sum them up,would be families coming out for half a day,or a day,where they can shop, eat and maybe take in a movie,” says Parry. Reasons to be cheerful Build-A-Bear works closely with shopping centre management teams to identify more reasons for families to make leisure-based visits. Personal appearances by relevant celebrities, with CBeebies presenter Justin Fletcher a favourite, and Pudsey Parties, to support Children in Need, are examples of the kind of activities that work well for the retailer.
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  23. 23. | November 2012 | RWP 23 The search for spaceHigh street vacancy rates tend to grab the headlines, but retailers face another property challenge – finding the right distribution and warehousing property. Ben Cooper takes the measure of the market R etailers taking on new warehousing space used to be spoilt for quality options, and retail warehousing tended to be a safe bet for developers creating a constant supply of sheds across the country. However, recent figures from Cushman & Wakefieldshowthatof the29GradeAwarehouses on the market in England only two are between 500,000 sq ft and 600,000 sq ft,and there are none more than 600,000 sq ft. Multichannel has created new reasons to ensure smooth logistics operations, which can mean moving into new,modern warehouses.And as supermarkets – big users of logistics and retail warehousing – continue to put thousands of new products on the shelves each year, demand for distribution centres is anything but decreasing. “Retailers have a quandary,” says Cushman & Wakefield head of national logistics and industrial property Mark Webster. “Some people can’t look 20 months ahead, let alone 20 years. But if people aren’t able to move then it’s a big issue. A crisis looms in terms of the supply of new buildings.” So with little new supply in the warehouse pipeline but new space still required, what can retailers do to get the sheds they need? Before the economic downturn the appetite for warehousing space was between 13 million sq ft and 14 million sq ft in an average year, and about 10 million sq ft was being built.But the meltdown in the financial world, the main driver of property development, caused the system to arrest. Webster explains: “People just stopped building. Nothing has been built and nobody has done anything speculatively since then. Nobody wants to take any risk.” Four years post-crash, there is still hardly any development and many fear a crisis point. Due to banks’ continuing aversion to significant lending, without a pre-let developers won’t get backing, so the only solution, according to Jones Lang LaSalle research director Jon Sleeman, is for retailers to approach developers with a specific order to get warehousing built for a specific purpose. “Right now one of the challenges for retailers is to find quality space,” he says. “There hasn’t been enough development. So retailers have to negotiate with developers over build, to suit designs, and that can take longer.” But this isn’t straightforward either. The problem with having a shed made to order is that the developer is usually starting from scratch, and while a warehouse is quicker to build than a store, it can still take far longer than many assume. “Retailers really need to plan ahead and consider the whole life span of a building,” says Webster. “43% of retailers start thinking about their next step one or two years away from a break or lease expiry. This isn’t enough. There’s a lot to think about, people aren’t giving themselves enough time to go and get something built.” The challenge for retailers is to find quality space. There hasn’t been enough development Jon Sleeman, Jones Lang LaSalle Boots’ new distribution centre opened this year in Burton on Trent InvestIng In the bestProviding for the long‑term future of our Global customers. UK | europe | China | Middle east
  24. 24. 24 RWP | November 2012 | Partly as a reaction to the slowdown in supply, retailers are adopting a ‘less is more’ approach, to make maximum use of existing warehouse space. The Co-Operative Food head of logistics service Mark Leonard says: “The next 12 months will see the last of the large composite sites ramp up and this will see a reduced rate of growth in logistics and warehouse space.The trend will then be to get more from these facilities by increased centralisation and collaboration. In short, lean supply chains are the priority in the retail sector.” Less is more Making the most of existing facilities is a growing trend across UK retail, says Rick Ballard, director of supply chain management consultancy The Logistics Business. However, the decision to opt for this approach is still tricky. “The big companies are looking to condense space and make better use of it,” he says. “But it’s always a compromise because if you have fewer warehouses you have higher transport costs. It’s all a trade-off.” Reducing property outgoings will therefore have a huge impact on transport options, an area of the supply chain that will be the next game- change for the industry, according to Sleeman. “Retailers now understand much more than they did that logistics is at the heart of their competi- tiveness. It’s not just a cost,” he says.“Big retailers like Tesco, The Co-operative, Somerfield and Waitrose are all going through a realignment of their supply chains. Especially where retailers are sourcing supplies from overseas, they need to look at the railways and deep sea ports for new warehousing facilities.” Future warehousing decisions will be linked to such infrastructure considerations. A Tesco spokesperson explains: “The focus on developing our national and regional warehouse network has been supported by investment in our transport operations.We now run one of the largest double- deck delivery fleets,moving products into regions as well as direct to our biggest stores. This has reduced our road miles by more than 110 million Tesco has invested in its transport operations with a facility at the Daventry International Rail Freight Terminal Retailers really need to plan ahead and consider the whole life span of a building Mark Webster, Cushman & Wakefield n Value retailer Poundland plans to use its new 200,000 sq ft distribution centre to service Europe when it opens stores on the continent. The distribution centre, in Hoddesdon, Hertfordshire, fulfils stock for Poundland’s southern stores. n House of Fraser is “investing heavily” in online operations and has switched one of its distribution centres to online-only fulfilment as multichannel grows. House of Fraser opened a second distribution centre in Wellingborough, Northamptonshire last summer, and its original warehouse in Milton Keynes has been given over to ecommerce orders to support the channel’s growth. n Earlier this year, SuperGroup moved to a new distribution centre in Brockworth, Gloucester to make its operation more efficient. The distribution centre has the capacity to support the retailer’s expansion. SuperGroup invested £1.5m in moving its retail operation to the larger, 250,000 sq ft distribution centre, which is managed by supply chain solutions provider Wincanton. n Fortnum & Mason is investing in a new distribution centre in Cambridgeshire. n Ocado is achieving greater efficiency at its Hatfield distribution centre, and will benefit from the economies of scale gained from its second distribution site, due to open in Warwickshire in 2013. n Over the past year, Harrods spent £107.8m refurbishing its store and opening a new distribution centre in Reading. n Alliance Boots’ Burton on Trent distribution centre, which opened at the beginning of the year, is expected to bolster growing online sales. Investing in the future miles,saving 142,000 tonnes of carbon dioxide.In parallel, we have developed a rail operation that moves up to 1,500 rail containers a week across the UK using five dedicated trains, with plans to increase this number.” This rail resurgence represents one of the most interesting developments in recent years, and it’s safe to assume more similar thinking can be expected from other retailers before too long. Warehousing is a complex issue at the moment. Compared with the straightforward days before the crash, now logistics is a real balancing act. On one hand, growth is being stifled by a massively reduced property supply, and, or possibly as a result, retailers are having to find ways to make less space go further. But, even if retailers succeed with the ‘less is more’ approach and improvements to transport and logistics, buildings will become old fashioned and run down, and the supply problem will only get worse if the pipeline problem remains. Webster believes that there’s only one real solution long term. “More space needs to be built,” he says.“Somebody needs to start building speculatively. There is so much demand that buildings don’t remain empty for long.” n TRUSTEDby some of the world’s leading retailers for 25 years. UK | Europe | China | Middle East
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  26. 26. LIVERPOOL For all enquiries contact Claire Hepburn SUPERPORT Manager +44 (0)151 237 3956 • CARBON EFFICIENT • COST EFFECTIVE • LOGISTICAL SENSE At the beating heart of UK logistics LIVERPOOL For all enquiries contact Claire Hepburn SUPERPORT Manager +44 (0)151 237 3956 • CARBON EFFICIENT • COST EFFECTIVE • LOGISTICAL SENSE At the beating heart of UK logistics
  27. 27. Liverpool City Region SUPERPORT Major Developments The greatest challenge facing the logistics industry today is how to reduce cost and carbon from the movement of goods whilst improving client services. Moving goods by ship, rail and air directly to central, densely populated areas provides the best way of meeting these challenges. SUPERPORT is situated in the largest, most densely populated, centrally located region of the UK. Its extensive port, canal, airport, motorway and strategic rail freight interchange facilities deliver the logistics infrastructure business needs. A further £1billion investment is scheduled over the next 3 years to significantly enhance these facilities and their capacity. With a large, appropriately skilled and available workforce, outstanding development sites, and a highly competitive cost environment, SUPERPORT delivers the UK & Ireland’s most cost effective, carbon efficient logistics solution. For all enquiries please contact Claire Hepburn by emailing or calling on 0151 237 3956. EUROPEAN UNION Investing in Your Future European Regional Development Fund 2007-13 • Peel Ports new £300m deep water container terminal • Capacity for two 13,500teu vessels to berth simultaneously • Up to 5m sq ft of port and ship canal warehousing • Manchester Ship Canal - green corridor to inland population centres • One of Europe’s largest business parks covering 544 hectares • HQ, manufacturing and distribution space from 76,962 sq ft to 426,305 sq ft • Rail freight terminal facility • Key sites include Alchemy, Academy and Potter Group Logistics WestCoastMainline Warehouse Sites and Premises Mersey Gateway Bridge Manchester Ship Canal MANCHESTER SHIP CANAL MANCHESTER SHIP CANAL Liverpool John Lennon RIVER M ERSEY 3MG Airport Manchester International Airport DAILY CONNECTIONS TO BELFAST AND DUBLIN LIVERPOOLLIVERPOOL MANCHESTERMANCHESTER PORT OF LIVERPOOL PORT OF LIVERPOOL 2 3 1 Liverpool 21 • One of the UK's largest inter-modal logistics parks • Potential for up to 3.5m sq ft of warehousing • Direct access to West Coast Main Line handling 120,000 containers pa • Partnership between Halton Council and The Stobart Group Mersey Multi Modal Gateway (3MG)2 Knowsley Industrial and Business Park3 Liverpool City Region SUPERPORT Major Developments The greatest challenge facing the logistics industry today is how to reduce cost and carbon from the movement of goods whilst improving client services. Moving goods by ship, rail and air directly to central, densely populated areas provides the best way of meeting these challenges. SUPERPORT is situated in the largest, most densely populated, centrally located region of the UK. Its extensive port, canal, airport, motorway and strategic rail freight interchange facilities deliver the logistics infrastructure business needs. A further £1billion investment is scheduled over the next 3 years to significantly enhance these facilities and their capacity. With a large, appropriately skilled and available workforce, outstanding development sites, and a highly competitive cost environment, SUPERPORT delivers the UK & Ireland’s most cost effective, carbon efficient logistics solution. For all enquiries please contact Claire Hepburn by emailing or calling on 0151 237 3956. EUROPEAN UNION Investing in Your Future European Regional Development Fund 2007-13 • Peel Ports new £300m deep water container terminal • Capacity for two 13,500teu vessels to berth simultaneously • Up to 5m sq ft of port and ship canal warehousing • Manchester Ship Canal - green corridor to inland population centres • One of Europe’s largest business parks covering 544 hectares • HQ, manufacturing and distribution space from 76,962 sq ft to 426,305 sq ft • Rail freight terminal facility • Key sites include Alchemy, Academy and Potter Group Logistics WestCoastMainline Warehouse Sites and Premises Mersey Gateway Bridge Manchester Ship Canal MANCHESTER SHIP CANAL MANCHESTER SHIP CANAL Liverpool John Lennon RIVER M ERSEY 3MG Airport Manchester International Airport DAILY CONNECTIONS TO BELFAST AND DUBLIN LIVERPOOLLIVERPOOL MANCHESTERMANCHESTER PORT OF LIVERPOOL PORT OF LIVERPOOL 2 3 1 Liverpool 21 • One of the UK's largest inter-modal logistics parks • Potential for up to 3.5m sq ft of warehousing • Direct access to West Coast Main Line handling 120,000 containers pa • Partnership between Halton Council and The Stobart Group Mersey Multi Modal Gateway (3MG)2 Knowsley Industrial and Business Park3
  28. 28. P erennial questions about the size of retailers’ store estates have become even more persistent as the industry has been responding to the impact of the UK’s recession. Curbing expansion, or even downsizing, has been a priority for some, and Marks & Spencer is one of the more high- profile retailers announcing a scaling back of UK store expansion plans this year. Arcadia, meanwhile, has made no secret of the fact that it may not be renewing swathes of the leases due to expire in the next five years, leaving it with a smaller store portfolio than it has at the moment. In fact, in September, figures from property agent CBRE’s Chain Expansion report, showed that the number of shops operated by multiple retailers fell for the first time in 14 years during the first half of 2012. In addition, the importance of offering a multichannel service to customers is also affecting store formats, and therefore space requirements. However, there are retailers still looking for that perfect property spot, and many have taken advantage of the downturn to up their own expansion. Quality matters, notjustquantity It has been a tough year for retail property directors as the economic downturn and the rapid development of multichannel commerce have forced many to re-evaluate their store portfolios. But as Ben Cooper finds out, it’s not only a case of downsizing One sector where this is particularly notice- able is the value market. Poundland property director Craig Bales is quick to admit that the current climate is a golden opportunity for the value retailer. Not only is the squeeze on consumer spend causing a flight towards discount shopping, but landlords grappling with sluggish demand and rising void rates are offering the kinds of deals that have allowed Poundland to open stores at rapid rate. Poundland is one of the few retailers really pressing hard with expansion amid all the challenges of the market, and its rivals B&M Bargains, Home Bargains and 99p Stores are doing the same. By the end of this financial year, Poundland will have added 68 new stores, an extra 400,000 sq ft, to its portfolio. That will take the overall portfolio from the 389 stores it had at the beginning of the year to 457, an increase of 17%, and a similar expansion to that under- gone by the retailer in 2011/12. And Bales expects growth on the same scale next year. He says: “There’s a clear opportunity for us to expand at the moment. In the current conditions consumers are challenged and we’re providing an opportunity for them, hence the growth of the whole sector.” Homewares retailer Dunelm Mill is expanding, opening 14 stores last year | November 2012 | RWP 29
  29. 29. 30 RWP | November 2012 | Meanwhile, homewares retailer Dunelm Mill is also still in expansion mode, but has been carefully calculating its requirements. According to its latest market scan, the retailer will require about 200 stores to cover the UK, says chief executive Nick Wharton. The retailer opened 14 last year, with a likely 12 by the end of this year. Fellow home products retailer Lakeland is also looking at expansion. “We are currently trading out of only 60 locations, and our expec- tation is we will continue to expand,” says Lakeland marketing director Tony Preedy. New stores this year have included its new-look formats in Brighton,Bluewater and Enniskillen. Multichannel conundrum The increasing importance of multichannel retailing is another crucial factor influencing property directors’plans at present, as it poses a conundrum. On the one hand, more shoppers buying goods online means fewer sales over the counter and therefore a falling demand for physical space. However, a study by UK property agency CBRE this year of the likely effects of multichannel on retailers’ property strategies, found that 60% of retailers But even despite such growth,Bales expresses a note of caution, not just about Poundland’s own fortunes but for the whole value sector. It might be undergoing a growth spurt, but the value sector must, he says, know its own limits. “There’s been a race for space, but it’s not sustainable,”he says.“We can’t keep going on at the same rate. We can’t all have 800 stores. It’s effectively a new market and there are a lot of players in it, but there’s going to be some consolidation.” Retailers are expanding at the other end of the value scale too though. For example, niche upmarket grocer Booths, based in the north of England, is looking at cautious expansion of its portfolio, currently comprising 29 stores. But as Booths property director Graham Booth explains, it is being very selective about its store decisions. “Despite the difficult economic backdrop Booths has continued to pursue opportunities to replace ageing stores and build new ones in areas of the north where its style of retailing is most likely to be appreciated,” says Booth. “Booths has a unique retailing proposition for which there is a sufficient level of demand in new districts within the north. We take a long-term view of property development and seek to open at least four stores over the next five years”. Multichannel retailers have to think about driving footfall from store to web and web to store – there has to be synergy Tony Devlin, CBRE Lakeland expects to expand on its 60 locations Booths plans at least four new stores in the next five years
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  31. 31. There’s been a race for space, but it’s not sustainable. We can’t keep going on at the same rate Craig Bales, Poundland 32 RWP | November 2012 | surveyed – with a total 32,000 stores between them – said they would have more shop space in two years’ time as a result of multichannel retail, while only 28% said they would have fewer domestic stores in 2014 than now. Most retailers predicted their online sales to double over the next two years and 63% said they would like to have a fully integrated multichannel offer up and running by the end of 2014. In addition, two-thirds planned to use their stores as delivery points for goods bought online and 80% planned to install kiosks as shopping points. Therefore, a new type of demand is emerging – not for legions of new stores, but for carefully selected units suitable for the shop of the future. Patrick Keenan, director of property consultancy Lunson Mitchenall, cites the successful multichannel players as being some of the big drivers for space in the current market, and in the future. “Clever retailers make best use of internet shopping offers to generate customer interest and brand loyalty, and bolt-on in-store performance through returns and so on,” he says. “Despite talk of retailers downsizing,in many cases the opposite seems to be occurring, and retailers are actively looking at increasing both overall size of store portfolio and/or individual size of stores.” For some retailers the key is ensuring the fewer stores they keep are as impressive as possible, says CBRE head of high street retail Tony Devlin. The success of the whole brand, he says, depends on it. He explains: “A store is the shopfront to the whole business. The store has to be the ‘best in class’. Multichannel retailers have to think about driving footfall from store to web and web to store – there has to be a lot of synergy there.” Lakeland, for example, is experimenting with a new format and design “to bring the product displays more to life”, says Preedy. “Stores have an important role to play in creating the brand and an image in the Chasing space n Kitchens specialist Harvey Jones has revealed plans for 70 shops across the UK. The 26-store retailer is eyeing 1,000 sq ft premises in well-heeled spa towns including Cheltenham, where it will open a store in December. n Kiddicare opened a new store in Nottingham in September, the first of 10 planned new superstores. n Men’s tailor Dalvey plans to expand its portfolio after enlisting retail property adviser Harper Dennis Hobbs to help it find properties across the UK. Harper Dennis Hobbs is looking for stores of between 1,000 sq ft and 2,000 sq ft in high-footfall areas including London’s West End and the City. Other potential locations include Birmingham, Cardiff, Edinburgh and Leeds. n Value retailer Poundstretcher earlier this year revealed an ambitious expansion strategy as it aims for a total of 900 UK stores. to work particularly hard these days to entice customers. “Being a one-stop shop and broad-range category proposition, that does need space to bring it to life,” says Wharton. “Our average store is 30,000 sq ft with 20,000 SKUs.” Value sector activity Returning to the value sector, Devlin points out that some of the retailers with the biggest appetite for physical space are those without the multichannel platform, because they don’t have to factor in this necessity. “Some of the discount players such as B&M, Home Bargains and Poundland are very active partly because they don’t have an ecommerce platform,” he says. “It’s not something that has to affect their decision-making process.” Another value retailer that has been signing major new stores is Primark. The most recent of these include a 90,000 sq ft unit at the Hermes-owned Centre:MK in Milton Keynes as well as one on Oxford Street. Centre:MK asset manager Gavin Murray says the deal is a clear sign that the opportunities exist for value players, as long as the space is exactly right. “It’s the natural evolution of retail,” he says. “This is the only type of site that Primark would have taken because it needs to be connected to other good retail space and it needs large units.” So the demand is still there, but, as Murray says, “retailers are looking for fewer but better stores”. The days of exuberant growth are certainly gone, but there are still many retailers looking for the perfect space. The difference, it seems, is that where quantity was the name of the game five years ago, whether you are a multichannel player or not, the next stage is most definitely all about quality. n mind of consumers, and then the web can capitalise on that.” Wharton also carefully considers the impact of online on the Dunelm store portfolio. The retailer’s property projections are under constant review, he says, so that if the impact of multichannel on property requirements shifts, the retailer is ready to adapt. However, for now there is no inclina- tion towards downsizing in format terms at Dunelm. But ultimately, the store needs Poundland is pressing on with expansion
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  34. 34. | November 2012 | RWP 35 Mapping out Mapic TUESDAY NOVEMBER 13 13.00-14.30 Mapic digital lunch (by invitation only) Gray D’Albion Hotel 14.30-17.00 Mapic digital summit: threats and opportunities – what are the new emerging business models? (by invitation only) Gray D’Albion Hotel 19.30 Mapic opening cocktails Majestic Hotel WEDNESDAY NOVEMBER 14 10.00-10.45 Keynote address: inventing the future of retail Robert Tercek, founder, General Creativity Consulting / chairman, Creative Visions Foundation (US) Champs-Elysées Room As recent advances in mobile technology and digital media have made it possible to blend real world retail environments with data, Tercek explores the possibility of combining digital technology with retail in order to re-imagine the shopping experience. 10.30-11.00 A happy marriage: culture and retail in love More Vision Pavilion 11.00-11.30 In-store product pick-up: value add for bricks and mortar? More Vision Pavilion 11.15-12.30 Culture and shopping: can we make it work? Oxford Room Christophe Dalstein, executive director, Europa City SAS – Groupe Auchan (France), Gerard Groener, chief executive, Corio (The Netherlands), Basia Metelska, member of the board and marketing and PR director, Stary Browar (Poland) and Agnès Saal, executive director of the Centre Pompidou (France) discuss ways in which cultural institutions and retail spaces can collaborate. 11.30-12.00 Retail in transit and tourist hubs – top 10 locations More Vision Pavilion Peter Clucas, managing director, Clucas Communications, explores the range of locations for retail operations. 14.15-15.00 Luxury retail: a cut above Champs-Elysées Room Luca Della Torre, retail manager Europe and international co-ordinator, Roberto Cavalli (Italy), speaks with global experts from Cushman & Wakefield 15:00-15.45 Keynote address: the future of the retail real estate market in Russia Maxim Karbasnikoff, head of retail, Cushman & Wakefield (Russia) Champs-Elysées Room Karbasnikoff shares insight on changes in consumption patterns and the main drivers of retail development in Russia. 15:00-16:00 Speed matching: discover five retail concepts: Aerial Adventures – Leisure (UK) America’s Taco Shop – Food (US) Funky Fish – Fashion (Israel) Grom – Food (Italy) Koton – Fashion (Turkey) Oxford Room 15.30-16.00 That magic moment: entice, welcome and persuade through culture More Vision Pavilion 16.00-16.30 Digital platforms: must have and Highlights of this month’s Mapic property conference at the Palais des festivals in Cannes, France
  35. 35. 36 RWP | November 2012 | nice to have for shopping centres More Vision Pavilion 16.00-16.45 Retailers’ expansion in the Russian market: risks and opportunities Champs-Elysées Room 16.00-17.00 Speed matching: discover five shopping centre projects Oxford Room Five shopping centres – Crescend’eau by Allfin NV in Belgium, Fischapark by SES Spar in Austria, Luwan integrated development by CapitaMalls Asia in China, Moskvorechie shopping and entertainment centre by Garant-Invest Group in Russia and Time Square Retail Redevelopment by Vornado Realty Trust in the US –pitch their developments to retailers and investors. 17.00-17.45 All to play for in Russia – growing sales in the children’s market Champs-Elysées Room 19.30 Russian collection dinner (by invitation only) Salon des Ambassadeurs, Palais des Festivals THURSDAY NOVEMBER 15 8.30-11.00 Retail in the city summit – retail: the secret asset of cities Champs-Elysées Room Julie Grail, chief executive for British BIDs, shares insight on why retail should be recognised as a key ingredient of success in cities. 8.30-12.00 Russian breakfast (by invitation only) Majestic Hotel 9.00-10.00 Retailer expansion 2013 – which countries will be hot spots for new stores? Oxford Room The session looks at where retailers will expand in 2013. How many stores will they be opening? How are expansion plans being impacted by the ever-growing importance of multichannel retailing? 10.00-10.30 How do you engage with your customers online and offline? More Vision Pavilion 10.00-10.45 Evaluating the emerging world’s retail hot spots beyond just growth aspects Oxford Room 10.30-11.00 In-store product pick-up: value add for bricks and mortar? More Vision Pavilion 11.00-11.45 The path to discovering Arabian gold to have shopping centres More Vision Pavilion 17.00-17.45 Is Europe losing its investment shine? Champs-Elysées Room 17.00-18.30 Italy: the next opportunity Oxford Room 17.00 New retailer cocktails (by invitation only) Lerins Forum 20.00 Mapic Awards gala dinner Martinez Hotel 23.00 MAPIC Awards party Martinez Hotel FRIDAY NOVEMBER 16 10.30-11.00 A happy marriage: culture and retail in love More Vision Pavilion 11.00-11.30 Digital platforms: must have and nice to have for shopping centres More Vision Pavilion 11.00-11.45 Keynote address: James Brown, director, Jones Lang LaSalle (UK) Champs-Elysées Room 11.30-12.00 That magic moment: entice, welcome and persuade through culture More Vision Pavilion Hélène Wang and Annabelle Diot of Lordculture explore how cultural offerings can entice customers towards shopping malls and transit zones. Oxford Room Is the market saturated or is there room for additional competition? Has the bubble burst in Dubai, and what can Abu Dhabi offer retailers? 12.00-12.45 Poland: is the sky the limit? Oxford Room Paul Kusmierz, president, Master Management Group, shares the pros and cons of investing in Poland and debates which stores are looking to expand in the country. 12.15-13.00 Ecommerce: impact and consequences for the logistics industry Champs-Elysées Room 15.00-15.45 Outlet retailing – secrets for success Champs-Elysées Room Jayne Rafter, publisher and joint managing director of RLI C/O Paramount Publications (UK) and Lestyn Roberts, chief executive of Freeport Retail (UK) discuss the buoyant outlet sector and explores how retailers should be looking to embrace the concept in future expansion strategies. 15.30-16.00 The power of pop-up shops More Vision Pavilion co-founders Els Demey and Jody Duyck explain why the pop-up store is a key strategy for real estate companies and landlords, as well as brands, retailers and city councils. 16.00-16.45 How is Turkey placed in today’s retail real estate global investment world? Champs-Elysées Room 16.30-17.00 Digital platforms: must have and nice *Information up to date at time of going to press
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  38. 38. | November 2012 | RWP 39 View the digital edition online at RetailWeek PROPERTY Some of the key retail property deals that have been completed in the UK in recent months Dealsdigest 1 Type High street Date August 2012 Location 170 and 181 Westbourne Grove, London Tenant Scotch and Soda Size Both 1,000 sq ft Description Cushman & Wakefield has acquired the first two stores in London for Amsterdam-based fashion brand Scotch & Soda. One will trade as Scotch and Soda menswear and the other as Maison Scotch womenswear Landlord agents The landlord of 170 Westbourne Grove was represented by Christopher Chaplin Associ- ates and the landlord of 181 Westbourne Grove was represented by Orme Retail Tenant agent Cushman & Wakefield 2 Type Leisure Date August 2012 Location Ealing Broadway Centre / Telford Southwater / Fulham Broadway Centre / Southampton West Quay. Tenant Wagamama Size 5,300 sq ft / 3,500 sq ft / 2,800 sq ft / 3,500 sq ft Description These are the latest sites acquired as Cushman & Wakefield continues to act for Wagamama in its expansion across London and the UK. Wagamama aims to open another 15 to 20 sites in the next year across the UK Tenant agent Cushman & Wakefield 3 Type High street Date September 2012 Location 2 Grosvenor Street, Mayfair, London Tenant Agent Provocateur Landlord Royal London Asset Management Size 1,500 sq ft Lease length 10 years Description In addition to multiple lettings across Europe, Cushman & Wakefield advised Agent Provocateur on the acquisi- tion in Mayfair, which is expected to open in November 2012 Landlord agent Savills Tenant agent Cushman & Wakefield 4 Type Shopping centre Date August 2012 Location Brent Cross shopping centre Tenant Lola’s Cupcakes Landlord Hammerson and Standard Life Investments Description Lola’s Cupcakes has opened a new concept, Lola’s Cafe, at Brent Cross Landlord agents Cushman & Wakefield and Lunson Mitchenall Tenant agent HDH 5 Type High street Date September 2012 Location 50 and 54/56 Buchanan Street, Glasgow Tenants Office (50 Buchanan Street) / Charles Tyrwhitt (54/56 Buchanan Street) Landlord Redevco Size 3,600 sq ft / 2,705 sq ft Lease length Both 10 years Description Cushman & Wakefield represented Redevco on new sites for Office and Charles Tyrwhitt on Buchanan Street in Glasgow, which forms part of the Princes Square scheme Landlord agent Cushman & Wakefield Tenant agents Charles Tyrwhitt was not repre- sented and Office was represented by CBRE 6 Type Shopping centre Date September 2012 Location St David’s, Cardiff Tenants Hamleys Landlord Capital Shopping Centres and Land Securities Size 13,000 sq ft Description Cushman & Wakefield acted for St David’s, Cardiff on the first Welsh store for Hamleys due to open in November 2012 Landlord agents Cushman & Wakefield and Jones Lang LaSalle 7 Type High street Date September 2012 Location Bond Street, Chelmsford Tenant John Lewis Landlord Aquila Size 119,000 sq ft Description Cushman & Wakefield represented John Lewis on acquiring a site that will anchor the second phase of the Bond Street retail development in Chelmsford with its third flexible format store Landlord agent Douglas Stevens Tenant agents Cushman & Wakefield and Ashworths Chartered Surveyors 8 Type High street Date September 2012 Location 16 High Street, Kirkcaldy Tenant The Great 4 2 Data by:
  39. 39. View the digital edition online at RetailWeek PROPERTY American Diner Landlord The Rasul Group Size 729 sq ft Lease length 10 years Description The unit comprises 729 sq ft of ground floor sales space and has been let for 10 years at a rental of £15,000 per annum Landlord agents Eric Young & Co 9 Type High street Date September 2012 Location 14 Elm Row, Edinburgh Tenants Key Player Landlord The executors of the late DD Coppola Size 1,089 sq ft Lease length 15 years Description The unit comprises 1,089 sq ft of ground floor sales space with an additional 937 sq ft in the basement and has been let for 15 years at a rental of £25,000 per annum Landlord agent Links CPC Tenant agent Eric Young & Co 10 Type Retail warehouse Date August 2012 Location Brislington Retail Park, Bristol Tenants Sports Direct Landlord Aberdeen Asset Management Size 7,500 sq ft Lease length 10 years Description Taking a total area of 7,500 sq ft, the store will join the park’s current tenants, which include Toys R Us, Matalan, T K Maxx and Halfords Landlord agent Savills Tenant agent Mason Partners 11 Type Shopping centre Date September 2012 Location Lion Yard Shopping Centre, Cambridge Tenant Hotter Comfort Concept Landlord Aberdeen Asset Management Size 1,627 sq ft Lease length 10 years Description Hotter Comfort Concept will open next to Clarks. It has taken a 1,627 sq ft unit arranged over basement and ground floor levels Landlord agents Smith Price and Lunson Mitchenall Tenant agent Savills 12 Type Shopping centre Date September 2012 Location Lion Yard Shopping Centre, Cambridge Tenant Timberland Landlord Aberdeen Asset Management Lease length 10 years Description Timberland will sit next to Hotel Chocolat in part of the old Disney store Landlord agents Smith Price and Lunson Mitchenall Tenant agent Jones Lang LaSalle 13 Type Retail warehouse Date October 2012 Location Unit E4, Lakeside Retail Park, Thurrock Tenant Mamas & Papas Landlord Ravenside Investment Size 5,265 sq ft Lease length 15 years Landlord agent Morgan Williams Tenant agent Thompson Heaney 14 Type Shopping centre Date September 2012 Location Christopher Place, St Albans Tenant Laura Ashley Landlord Hermes Property Unit Trust Size 1,200 sq ft Lease length Five years Description Laura Ashley joins other premium retail and restaurant brands Cath Kidston, LK Bennett, Carluccio’s, and The White Company at Christopher Place. The signing means all retail units at the centre are now fully let Landlord agent MMX Retail Tenant agent In-house real estate manager 15 Type Shopping centre Date September 21, 2012 Location thecentre:mk, Milton Keynes Tenants White Stuff Landlord Hermes and Prupim Size 2,400 sq ft Description The unit is the first taken by the brand in a UK shopping centre and is opposite House of Fraser in the Premium Quarter Landlord agents GCW / CBRE Tenant agent Orme Retail 16 Type Retail warehouse Location Stour Retail Park, Canterbury Tenant Home Bargains 40 RWP | November 2012 | 15 19 Data supplied by:
  40. 40. Tuesday 18th December Radisson Portman Square, London W1 7pm to 2am • Three course dinner Live Band • Guest Speaker Casino • Black Tie Price £95.00 pp plus VAT (£114.00 inc VAT) Tables of 10 £950.00 per table plus VAT (£1,140.00 inc VAT) We have numerous sponsorship opportunities available. Please contact Louise Oliver for more information on: 01799 544902 or by Email: Limited tickets available. Please book early! Bookings confirmed on receipt of payment. No refunds available. Call 01799 544902 to book your places Supporting