a1 autumn2012[1]

Fashion insightChanges in the way consumers shop

Super leagueCompetition hots up in store for the big grocers

There’s no place like homeWhy the UK is attracting international brands

Recipe for successPho’s Stephen Wall brings authentic cuisine to the UK

autumn 2012

001_A1_September 2012v3.indd 1 29/08/2012 10:19

Many of the changes in customer behaviour witnessed in the past decade have been accelerated by the hectic pace of life. And this means that leisure time is particularly cherished by ever more discerning consumers.

This could be perceived as a threat to retail, but there is also a clear opportunity for those who can ally themselves to the right leisure brands that generate footfall. Our interview with Stephen Wall, the co-founder of innovative restaurant concept Pho (page 6), shows why we are so keen to engage with those who are driving the growth in spend in this sector.

The care and attention that is being put into our new developments, both in terms of the consumer insight we generate and retail mix we create as a result, is focused on creating a destination brand. For instance, it is the Trinity Leeds brand that will connect with the people that will be its customers.

Centre operators have a responsibility to optimise the retail mix and create an attractive ambience. The next stage in the evolution of the relationship between retailers and landlords has to be increased fl exibility to allow the landlord to manage the retail mix for the benefi t of all in a scheme.

A good piece of news is that the 2012 Olympics has reinforced London’s position as one of the world’s greatest cities. It’s helped to attract brands to the capital, and once here they are then looking at UK expansion (page 24).

Retailers have a choice about where they open new stores, and whether they open new stores at all. If you imagine a world where there are no shops and everything is sold online, you would only choose to put shops in places where people congregate, where they socialise, go to dine or to the cinema or theatre. We all need to be mindful of this as we think about how the future of the sector is shaping up.

All can benefi t from the right mix

de s k t opde s k t op

Foreword

Richard Akers, executive director, Land Securities

autumn 20122

22

14

16

There is a clear opportunity for those who can ally themselves to the right leisure brands that generate footfall

24


6 Pho co-founder Stephen Wall on his authentic Vietnamese food off er

autumn 2012 3

Contents 4 News All the latest deals, initiatives

and retail developments from Land Securities’ shopping schemes

6 Interview Co-founder Stephen Wall on the unique appeal of his Vietnamese-inspired Pho

10 Fashion Insight into the dynamics of the clothing and footwear sector

14 Partnership Wi-fi is becoming a necessity for consumers when shopping in centres and stores

16 Dining The revolution of street food is bringing new dining opportunities to the UK’s retail destinations

18 Product Why own-label and private-label goods give store groups the competitive edge

20 Multichannel How Google’s Product Search can help support consumers’ shopping experience

22 Partnership Retailer engagement strategy ensures new centres fulfi l their potential

24 International Why the UK is the top location for retailers looking to expand overseas

26 Grocers Supermarkets are improving their in-store design

28 Development Land Securities shows how with the right off er edge-of-town and out-of-town locations will prosper

30 Leisure The development of The Cornerhouse in Nottingham makes it a compelling leisure destination

32 Retail view A1 asks a panel of six industry fi gures how they feel about the prospects for the year ahead

34 Portfolio An overview of Land Securities’ shopping centres, outlets, retail parks and leisure centres

30

News

PartnershiP

retail

Fashion insightChanges in the way consumers shop

Super leagueCompetition hots up in store for the big grocers

There’s no place like homeWhy the UK is attracting international brands

Recipe for successPho’s Stephen Wall brings authentic cuisine to the UK

autumn 2012

001_A1_September 2012v3.indd 1 29/08/2012 10:19

Produced by

autumn 20124

Primark is to open a 60,000 sq ft store at The Bridges in Sunderland by Christmas 2012, after Land Securities secured full planning permission for a £15m expansion of the scheme and handed over to Primark on July 31.

The plans received widespread approval, following a public exhibition, with 84% of respondents providing feedback to the consultation saying the expansion would improve the local area, and 78% saying it would attract more shoppers to Sunderland. Primark joins Superdry, Caffè Nero, Lush and upsized stores

for Topshop/Topman, JD Sports and Internationale.Portfolio director Gerald Jennings said: “Our ambition

is to continue to strengthen The Bridges’ reputation as one of the best shopping and fashion destinations in the Northeast for the 21 million customers who visit each year.”

The deal is the latest in a series that Primark has struck with Land Securities to open major new stores, including at The Centre in Livingston in 2011, its new 85,000 sq ft store on Oxford Street and the 106,500 sq ft store that is to open at Trinity Leeds next year.

Department store retailer John Lewis has confirmed that the first of its flexible format department stores will open in October in Exeter.

The new format at Land Securities and The Crown Estate’s Sidwell Street site has been created to allow the retailer to open stores of a size in between its current department stores and its smaller At Home format.

The Exeter store will offer the full assortment including fashion, beauty, electronics and nursery.

The store will create 300 jobs in the city with 65,000 sq ft of selling space across five floors.

Land Securities development director Nick Davis said the new store will “significantly strengthen the city’s retail offer, improve people’s shopping experience and add vibrancy to the high street. Our strong partnership with John Lewis and Exeter City Council will benefit residents and visitors to the city and will lead to further inward investment into the city centre.”

Primark expansion progresses in Sunderland

October opening for John Lewis Exeter store

the new John lewis store in exeter will create 300 jobs

Special Projects Editor Joanna Perry

Writers David Brooks, Glynn Davis, Mark Faithfull, nicola harrison, George MacDonald, John ryan

Supplements Production Editor tracey Gardner

Design forty6 design ltd www.forty6design.com

Publisher tracey Davies

For Land Securities

Claire Reynolds [email protected] +44 (0)20 7747 2390

Victoria [email protected] +44 (0)20 7024 5046

© 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 or land securities.

a1 is printed by headley Brothers ltd.

ashford, Kent

Other newssecond green guide launchedRetailers and store designers have a new guide to help them achieve energy savings in their shop fit-outs in the shape of Land Securities’ Low Carbon Fit Out Guide. The document was launched in June 2012 and updates the well-received first version that was published in 2010. Changes include a more user-friendly format and advice on the recent and future changes to relevant legislation.

Business fund supports GlasgowLand Securities is one of the supporters of the ARISE Glasgow community project fund that supports local initiatives by the businesses of the Buchanan Quarter. The fund offers up to £1,000 per application and can be applied for by education, employment, environment and sporting projects. The funding will be allocated by an independent selection committee made up of local business, academic and political leaders.

Victoria plans take shapePlans to redevelop Kingsgate House in the heart of Victoria with office, residential and retail space are now under way. The proposed 341,000 sq ft development will create two buildings – Kings Gate and 70 Victoria Street – as well as public space. The redevelopment of this strategic asset marks the latest step in the company’s ambitious plans to create a Victoria for the future. Other milestones include the refurbishment of 123 Victoria Street, an icon of 1960s design and part of the fabric of Victoria, due for completion in late summer 2012.

The winner of the first Trinity Leeds Short Film Award is to be screened in an Everyman Cinema in London following the prize announcement.

Everyman Cinema – which will open its first cinema outside London in Trinity Leeds in March 2013 – has supported the 2.8 Days Later film challenge, which was delivered by Land Securities and film production company Left Eye Blind.

The challenge involved 150 filmmakers from across Leeds creating 27 three-minute short films, which were publicly screened before a prize-giving at The Carriageworks in Leeds earlier this year.

The winner of the top prize, ‘Immersed’, was picked

by a judging panel that included Sheffield-based Barry Ryan of studio Warp Films, Leeds-based film producer Howard Dawson and Everyman Group chief executive Andrew Myers. Filmmakers who took part said the experience had given them new skills, as well as highlighting how much work goes into different aspects of the process.

Trinity Leeds chose to support the initiative – which involved the young filmmakers spending just under three days writing, shooting and finishing their shorts in November 2011 – because of the important role that cinema will play at the centre and the city’s filmmaking heritage.

2.8 Days Later film winner announcedMarKetinG

DeVeloPMent

autumn 2012 5

US fashion chain Urban Outfitters is to create one of its largest stores in the UK at the new Trinity Leeds development.

The 12,000 sq ft flagship store is laid out over three floors in an iconic building, and will have its next-generation fit-out design.

Six months before the scheme’s launch date in March 2013, Trinity Leeds is making strong leasing progress, with 80% pre-let or in solicitors’ hands.

Urban Outfitters joins a growing list of fashion retailers – including Hollister, Superdry, Topshop/Topman, River Island, H&M and Mango – which will be opening in the centre in March 2013. Other retailers to take space in recent months include Footlocker, Fossil, Vodafone, Watch Station and Internacionale.

They will join the many high street stalwarts already committed to the scheme, which include Marks & Spencer, Next and Primark.

Urban outfitters will introduce a next-generation fit-out for its flagship store opening at trinity leeds next year

Urban Outfitters signs up at Trinity Leeds

Interview

autumn 20126

CafePho co-founder Stephen Wall is one of a new breed of restaurant owners mixing authentic street

food with a premium casual dining experience. By Joanna Perry

“It’s the calm before the storm,” jokes Pho co-founder Stephen Wall, as we take in the surroundings of his Spitalfields restaurant at 10am on a Friday morning, with staff busying themselves in preparation for the lunchtime rush.

Tables are already laid, the stocks for the restaurant chain’s signature noodle soups are on the stove, and a waitress is busy preparing fruit for the fresh juices served. The buzz in the restaurant matches the Hanoi-like atmosphere of the rain storm brewing outside.

The Vietnamese-inspired restaurant has been open only a couple of months, and is the latest in the expanding chain that was founded in 2005 at a site in nearby Clerkenwell. Set up by Wall and his wife and business partner Jules, the business now operates seven restaurants in total – six in London and one in Brighton – and growth plans are under way, with venture capital funding secured from ISIS Equity Partners to take the business to its next stage of development.

The story of how the idea for the business came to the couple is now well-known. While on a career break from jobs in marketing, and backpacking through Asia in 2005, they were struck by the food on offer; and couldn’t believe that no one was specialising in Vietnamese food in the UK.

Following in the footsteps of other established restaurants such as Wagamama, which specialises in Japanese ramen noodle dishes, the chain has brought pho – a type of noodle soup – to the masses in London and now beyond.

Customers countGoing through the clippings from other interviews it looks like Wall has had quite a bit of press in the past, but things had gone a little quiet in the year until the ISIS announce-ment in early August.

Partly this quiet period was down to a focus on securing new investment funding. But Wall also explains that in the early days of the business it very much sought press coverage. His wife and he were keen to get the brand message across on their own terms, instead of, as he puts it “having to rely on critics coming to our new restaurants when they open”.

Rather than uncovering a particular dislike of restaurant critics, what this shows (and he goes on to demonstrate time and again throughout the interview) is that Wall is obsessed with his customers. And irrespective of what the critics think, if his customers keep coming back then he is happy.

Wall doesn’t just want full restaurants, but restaurants that are full of repeat customers. “We massively care whether it is the same people coming back. Our St John Street restaurant in Clerkenwell is seven years old, and that has been built on repeat custom.”

In fact the first restaurant bought the couple two regular customers who later became investors in the business – gastro-pub entrepreneurs Tom and Ed Martin – who bought a 50% stake in the business in April 2007.

Though neither Wall or his wife came from a restaurant trade background, they have taken their understanding of marketing and branding, combined with a desire to delight their customers, and matched it with a dogged determination to learn the hard way.

So in the business’ “first phase” as Wall calls it, when they had their initial restaurant up and running, the couple worked “every single shift for 18 months to two years”. In fact Wall can remember that one of the odd nights he didn’t work was on his 37th birthday, when after signing a deal for funding with Tom and Ed Martin he went into the restaurant to celebrate and was served

culture

Pho: What you need to knoW

the chain is named after the

national dish of Vietnam, a

noodle soup. Pronounced ‘fuh’,

pho is described as the ultimate

street food, and in its country

of origin is eaten for breakfast,

lunch and dinner.

It’s served with a side plate of

herbs and chillies to allow diners

to season as they wish. Marketed

as being tasty, nutritious and

healthy – it’s low in fat and full of

fresh ingredients – it has a subtle

and distinctive taste that comes

from the hours taken to prepare

the stocks used.

autumn 2012 7

autumn 2012 7

Interview

autumn 20128

noodles by his wife, who was more than seven months pregnant at the time.

Asian inspirationThere is a renowned area of London close to several of Wall’s restaurants where a number of Vietnamese restau-rants have been established for years: Dalston’s Kingsland Road. But Wall is clear that his restaurants offer something different, and with a relentless focus on the menu and ingredient quality he says his chefs are able to provide food that is beyond the standard available there.

“About 40% of our total menu is pho, so we can invest more money in ingredients. The food we deliver is probably even more authentic than you can get on the Kingsland Road,” he says, pointing out one of his most experienced chefs in the kitchen, who has come to oversee the new restaurant and is Vietnamese. “Traditional Vietnamese restaurants often serve Chinese food too, and you can’t ensure the quality of what you’re serving when there are more than 200 items on a menu,” he adds.

In fact, rather than assessing himself against the Kingsland Road, he benchmarks the menu against the best of what’s being served on the streets of Hanoi: “The food we serve is absolutely authentic. The only compromise we’ve made is that the quality of the meat we serve is better than you get in Vietnam. We use chicken breasts, for instance, whereas they will slice up whole chickens and it’s pot luck what ends up in your bowl.

“Everything in the restaurant apart from the three bottles of sauces you see on the tables is made in the restaurant,” he continues. “I imported some rice wine about six months ago. We are the first restaurant in Europe to bring this in.”

The menu is evolving slowly, for instance, with a refreshed salad range that Wall jokes “even men will eat”, but he says further change in the near term will likely be no more than introducing another handful of starters over the next year or so.

His wife and he still go back to Vietnam every 18 months to two years, both to get inspiration from eating on the streets for how they can improve their menu, as well as for the decor in their restaurants.

This means each site has a unique look and feel, based on the latest things they have seen, making the most of the unique buildings and sites they have chosen. The individu-ality of each site is something they are keen to continue as the business grows.

The new investment funding they have secured will not reduce their input into every aspect of the business. “Though the business will still be run by Jules and myself – we will be able to take things to the next stage,” explains Wall.

Brand buildingWith a strong desire to retain the customer experience in their future restaurants the couple are being extremely careful with their expansion plans. “We can really focus on the customer experience as we grow. We don’t want to

become a slave to the P&L [profit and loss], as we are reputation building. We are still very young at seven sites, and if anything I want to invest more money into improving the product, not less,” he says.

Wall continues: “The P&L is very important, but it is really about the customer. Are our restaurants full and what do the customers think? If we get that right, and with good management of KPIs, then that leads to a good bottom line.”

This strategy has appeared to pay off so far. In 2010 the business turned over more than £6m, with a gross profit margin of 76%. So, future growth must not jeopardise the success achieved so far.

Pho’s hIstory

June 2005 the first Pho opens

on st John street in London’s

Clerkenwell.

April 2007 ed and tom Martin

take a 50% stake in the business.

Spring 2008 second site opens

in Great titchfield street in

central London.

October 2008 shepherd’s Bush

restaurant opens.

May 2010 the chain’s largest site

to date opens in Brighton.

September 2010 the fifth site

in the chain opens in a listed

building in soho.

September 2011 Pho opens

near the olympic site in

London’s stratford.

July 2012 the seventh site

opens opposite spitalfields

Market in London.

July 2012 the business secures

venture capital funding from IsIs

for its next stage of expansion.

autumn 2012 9

“We could open 15 to 20 additional sites in the next few years, but we will be very particular in terms of site choice. We are looking for further high street sites and would love to open in Covent Garden among other central London locations,” says Wall. Site choice is down to exact location, including the actual building, and his business is too small to be able to aff ord to get a single decision wrong.

“If you choose the wrong site in the restaurant trade then you know about it, it sets you back a year in the business,” he adds.

One restaurant has opened at Westfi eld Stratford City, and the business is in talks to open at Land Securities’ Trinity Leeds development, which would be its fi rst major

foray outside London after the opening of the Brighton restaurant. “A lot of people want us [in their schemes] but we will only go into what I describe as fi ve-star schemes, such as Trinity Leeds.

“We could have opened in provin-cial schemes and we would have made a lot of money for a couple of years, and then the brand would have fallen off the cliff ,” he reasons.

Pho’s target demographic of 25-to-35-year-old professionals who live and work in urban surroundings fi ts well with the catchment for Trinity Leeds. Wall says he is also attracted to the scheme because it is a completely

new concept outside of London, with cutting-edge design, a focus on the best in dining and a number of other high-quality operators. “That’s what we want to be part of, as it will draw the crowds.”

While still relatively small, he says scheme owners such as Land Securities are attracted because he can off er something new, while already having a clear operating model: “For Land Securities we are an emerging brand, and outside London few people know us; but we do have seven years’ experience.”

Those seven years in the business has taught the Walls to be focused on customer service, great product and great people. As a growing business they can no longer do every-thing themselves and are at the point where they need staff who can act as custodians of the brand they have so carefully nurtured.

“We are trying to instil the DNA of our business into our staff . Ewan [one of his senior managers] thinks exactly like we do. I don’t ever want robotic staff who just go through the motions.”

This means the couple draft in what Wall calls “the A-team” to spend a good month or so in a new restaurant when it opens, to make sure it gets off on the right footing.

In particular, getting a new opening right means impressing customers who are fi rst to try out a new site, as they are important in spreading the word, and tend to be loyal too. “It’s the early adopters who are so crucial. They are on Twitter and Facebook, and are tech-savvy in recom-mending you. They tend to have more disposable income than the average customer too.”

The fi nal question I ask is about his future aspirations. On this he is clear: “It comes back to the brand. Even if we have fi ve times more sites it is still having the same brand values intact. Too many restaurants change when they grow, and start to cut corners on staff and the quality of the food. We’ve got to learn from the lessons seen elsewhere.”

He concludes: “Whether we have one or 101 restaurants – each should be as good quality as the fi rst.” ●

“A lot of people want us [in their schemes] but we will only go into what I describe as fi ve-star schemes, such as Trinity Leeds.

cial schemes and we would have made a lot of money for a couple of years, and then the brand would have fallen off the cliff ,” he reasons.

25-to-35-year-old professionals who live and work in urban surroundings fi ts well with the catchment for Trinity Leeds. Wall says he is also attracted to the scheme because it is a completely

new concept outside of London, with cutting-edge design,

Sizing up the market Report

autumn 201210

Fashion shopping will, of course, never go out of style, but the dynamics of the way consumers shop are changing in the UK.

While some fashion players continue to thrive, particularly off the back of strong multichannel propositions, and

international brands remain very interested in the UK market, there is a change in the mix of what is being purchased, and a new mindset that considers value rather than just price.

For example, though many are purchasing less in volume terms, this is being partly off set by consumers who are prepared to spend a little more on the pieces of clothing they do buy. Plenty of opportunity remains, but retailers must adapt to the ‘new normal’ of lower volumes and a polarised market where diff erentiation is crucial or they face being left on the shelf.

In order to gain further insight into the challenges and changes confronting its clients, Land Securities commis-sion quarterly research, working with retail consultancy Conlumino to provide up-to-date insight into key sectors. The latest white paper focuses on the fashion industry and includes bespoke research on the market from Conlumino, insights from agent Jones Lang LaSalle, as well as trends identifi ed in Land Securities’ own sales and footfall data.

The internal research programme reveals a market increasingly polarising between value and premium, and distinct diff erences in spending patterns across fashion categories. This is made more complex and exciting by the growth of multichannel shopping. The changes occurring will shape the future of shopping locations as well as retailers.

Big changes are under way in clothing retail as the UK’s consumption pattern changes amid recession and pressure on household income. By George MacDonald

segments where Consumers intend to make finanCial CutbaCks

vOLUME CHANGES

Since the downturn really took hold at the turn of the decade, clothing volumes began to drop back after climbing for many years helped by defl ation and low prices.

There is little sign of change in the downbeat trend. Consumers remain concerned about their personal fi nan-cial situation and, when polled in May, almost 40% of them feared their circumstances will get worse.

Unsurprisingly, that means many people intend to cut back on spending – almost 64% – and, as

a discretionary purchase, fashion is top of the agenda for cutbacks.

Land Securities head of business-to-business marketing, Retail, Sean Curtis observes: “It is very clear from the research that clothing sales is an area

which all segments of consumers are considering cutting back on – even childrenswear. Following the

reduced spending on big-ticket items at the beginning of the recession, consumers attention has now shifted to the lower cost but, previously, high volume purchases of clothing as an area in which to make savings.”

Almost 38% of consumers who intend to make fi nan-cial cutbacks said they planned to reduce the amount

they spend on clothing – far higher than beauty at 29%, for instance, or electricals at just less than 33%, although footwear was also lower at 29.5%.

Conlumino managing director Neil Saunders says the volume shift means some retailers will need to

change their mindset to remain successful: “The old approach, ‘stick it out and it will sell’, doesn’t work. In the

early 2000s people were just buying a lot of stuff . It was harder to fail. The lesson now is you have to be more focused – people may buy one top instead of fi ve.”

fashion

38%

footwear

29.5% beauty

29%

eleCtriCals

33%

Sizing up the marketSince the downturn really took hold at the turn of the decade, clothing volumes began to drop back after climbing for many years helped by defl ation and low prices.

There is little sign of change in the downbeat trend. Consumers remain concerned about their personal fi nan-cial situation and, when polled in May, almost 40% of them feared their circumstances will get worse.

Unsurprisingly, that means many people intend to cut back on spending – almost 64% – and, as

a discretionary purchase, fashion is top of the agenda

Land Securities head of business-to-business marketing, Retail, Sean Curtis observes: “It is very clear from the research that clothing sales is an area

which all segments of consumers are considering cutting back on – even childrenswear. Following the

reduced spending on big-ticket items at the beginning of the recession, consumers attention has now shifted to the lower cost but, previously, high volume purchases of clothing as an area in which to make savings.”

Almost 38% of consumers who intend to make fi nan-cial cutbacks said they planned to reduce the amount

they spend on clothing – far higher than beauty at 29%, for instance, or electricals at just less than 33%, although footwear was also lower at 29.5%.

Conlumino managing director Neil Saunders says the volume shift means some retailers will need to

change their mindset to remain successful: “The old approach, ‘stick it out and it will sell’, doesn’t work. In the

early 2000s people were just buying a lot of stuff . It was harder to fail. The lesson now is you have to be more focused – people may buy one top instead of fi ve.”

Sizing up the market

autumn 2012 11

Muted volumes mean changes to consumers’ spending habits too, which is pulling fashion retail in two direc-tions – value and premium. The white paper reveals that the shape of the sector is more polarised than ever before.

Value retailers control 22.4% of the clothing market while ‘high street premium players’ account for 7.3%.

The two can happily co-exist: shoppers’ determination to spend less keeps the value groups’ tills ringing. However, when fewer items are being purchased it means that when consumers do decide to buy a new item they will frequently go for quality.

Despite the rise of bargain-hunting, low prices on their own are not enough, says Saunders. Consumers make more subtle judgements about what represents value.

That dynamic explains why Primark, which success-fully combines value and fashionability, has continued to grow successfully but other low-price retailers have struggled or, in some cases, collapsed.

And the volume shift in the market is likely to limit the potential of some low-price specialists in the present climate, Saunders believes.

He says: “At the value end there’s only room for a few players and one is Primark. The volume is not

there to support all these value players.“It was fi ne when there was growth in the market

but there are high barriers to entry now. You need colossal volume – you can’t dabble.”

While low prices were mentioned by 61.7% of consumers asked about what drives their choice of stores, high quality was the second

biggest factor and cited by 47.4%. That illustrates why, even in austere economic times, retailers that can justify a premium on their apparel are still doing well.

Saunders explains: “There’s an attitude of ‘buying right’. People want something that lasts.

“A lot more people are reusing things. Rather than buying a lot of stuff every season they’re

buying one item that complements [something they already have].

“That doesn’t mean the fast fashion fi x has gone but, especially at the older end of the market, they’re taking care about buying and willing to invest in great quality.”

Shoppers’ behaviour threatens to make life even more diffi cult for middle-market retailers. The white paper warns: “One of the key problems is that they can often appear to be neither fi sh nor fowl, with neither particu-larly high prices nor great quality or inspirational ranges.”

There are many ways that retailers can add value to their fashion off er. From designer collaborations, as have been deployed by retailers including H&M and Topshop, to including extra detail on a product to justify trading up to the consumer.

The store experience is a contributing factor too. As well as helping to create an engaging off er, multichannel in-store experiences – such as those being developed by chains such as Aurora Fashions and Republic – also help close sales.

What shoppers do not want, warns Saunders, is “ubiquity” – again something that some middle-market retailers may be susceptible to: “There might be rails full of a jacket for £100 and that diminishes the sense of exclusivity. It would be better to have fewer out and keep more in the back room.”

pOLARISATION

what drives store ChoiCe(All numbers are percentages of consumers mentioning)

LOw pRICES

SpECIAL OffERS

SERvICE

INSpIRING pROdUCTS

HIGH qUALITy

AvAILAbILITy

ONLINE OffER

UNIqUE pROdUCTS

wIdE RANGE

CONvENIENCE

pARkING NEAR

IN-STORE SERvICES

0% 10%

20%

30%

40%

50%

60%

70%

61.7%

47.4%

45.6%

45.5%

40.9%

36.5%

25.6%

24.4%

16%

16%

12.8%

3.3%

Sizing up the marketMuted volumes mean changes to consumers’ spending habits too, which is pulling fashion retail in two direc-tions – value and premium. The white paper reveals that the shape of the sector is more polarised than ever before.

Value retailers control 22.4% of the clothing market while ‘high street premium players’ account for 7.3%.

The two can happily co-exist: shoppers’ determination to spend less keeps the value groups’ tills ringing. However, when fewer items are being purchased it means that when consumers do decide to buy a new item they will frequently go for quality.

Despite the rise of bargain-hunting, low prices on their own are not enough, says Saunders. Consumers make more subtle judgements about what represents value.

That dynamic explains why Primark, which success-fully combines value and fashionability, has continued to grow successfully but other low-price retailers have struggled or, in some cases, collapsed.

And the volume shift in the market is likely to limit the potential of some low-price specialists in the present climate, Saunders believes.

He says: “At the value end there’s only room for a few players and one is Primark. The volume is not

there to support all these value players.“It was fi ne when there was growth in the market

but there are high barriers to entry now. You need colossal volume – you can’t dabble.”

of consumers asked about what drives their choice of stores, high quality was the second

biggest factor and cited by 47.4%. That illustrates why, even in austere economic times, retailers that can justify a premium on their apparel are still doing well.

Saunders explains: “There’s an attitude of ‘buying right’. People want something that lasts.

than buying a lot of stuff every season they’re buying one item that complements [something they already have].

“That doesn’t mean the fast fashion fi x has gone but, especially at the older end of the market, they’re taking care about buying and willing to invest in great quality.”

pOLARISATION

Report

autumn 201212

MULTICHANNEL

Omnichannel is the retail buzzword of the moment. As shoppers increas-ingly use a range of routes to browse and purchase, from store to computer to mobile device, retailers must engage on consumers’ terms.

The research sets out a challenging scenario in light of online growth. While the clothing market overall is expected to increase by 15.3% by 2015, that figure falls to just 5% if online growth and inflation are stripped out.

However, multichannel retail complicates this model as an increasing number of retailers begin to leverage their store chains to offer click-and-collect and order online in-store services, and so many more sales cannot simply be categorised as online or offline.

The right locations and the right mix of retailers will be ever more key to a trading location’s success. Curtis says: “Online is going to continue to be a factor and [from a landlord’s perspective] creating centres that embrace technology to deliver profitable stores is going to be key.”

CATEGORIES

There are issues affecting the constituent categories of fashion. Trading up has been especially noticeable in womenswear, a category that has been fairly sluggish during the downturn because of women’s decision to cut back; and the extent to which they could do that, given the keen buying in the years before the downturn.

The research identifies an opportunity among women aged 45 and over, who are under-served at present.

In comparison, menswear volumes have been more stable as more purchases are needs-based. The premium parts of the menswear market have also seen strong growth as branding and brands are more important to male shoppers.

The improvement in the quality of kidswear by supermarkets and value retailers, matched with a consumer willingness to cut back, has seen a big shift to value in the kidswear market.

“The focus on price and, to a degree, convenience has created ideal conditions for the grocers and value players, which have continued to extend their share of the kids market, often at the expense of the middle market, which has both lost share and responded by reducing price points,” the study concludes.

Clothing inCrease

(inCluding online growth and inflation)

15.3%

Clothing inCrease

(exCluding online growth and inflation)

5%

the growth of the Clothing market by 2015

TRAdING Up TRENd

THE ExpERIENCE IS CRITICAL TO

Add vALUE

key issues in womenswear

dESIGNER COLLAbORATIONS CREATE URGENCy

ANd INTEREST

MIddLE ANd OLdER AGE

SEGMENT IS AN OppORTUNITy

MORE INTEREST IN HIGH STREET

pREMIUM

INTERNET bENEfITING

fROM STRONG GROwTH

key issues in menswear

MIddLE MARkET MOST SqUEEzEd fROM CUTTING

bACk

fORMAL fASHION TRENdS AIdING

GROwTH

where Consumers have shopped (All numbers are percentages for last six months)

70%

60%

50%

40%

30%

20%

10%

0%

PhysicalHIGH STREET

OnlinedESkTOp

PhysicalSHOppING

MALL

PhysicalGROCERS

catalOgue OnlineMObILE

60.9%

47.6%

41.5%

34.5%

8.6%7.2%

autumn 2012 13

vIbRANT SHOppING dESTINATIONS

Curtis believes that just as the fashion market is polarising so are shopping locations – with consumers showing a strong preference for those that really support shopping as a social activity and off er good value for the time visitors ‘invest’ in spending there.

Consumers – particularly those with disposable income – tend to be time-poor, and it is as crucial to attract them to spend time in stores as it is their money. This requires destinations to have a retail and leisure mix closely targeted to the needs and wants of their consumers.

And in order to maintain appeal and encourage loyalty to a destination there is an expectation that this mix will be kept fresh and the centre will work to optimise the experience, rather than relying purely on the ambience within individual stores.

Saunders says it is vital now that consumers feel they are being given “value for time” as well as for money. There are many ways that can be done, whether it is good in-store cafes, an appealing environment or a leisure off er that complements traditional retail.

“In some older shopping centres, and some secondary and tertiary locations, that’s not quite so good,” he observes. “For women, shopping is still very much a social activity,” he reminds retailers. Cafes, bars and places to eat are now core components.

He says town centre managers must also be alert to the need to build a compelling retail off er, and believes that can be done – in fact retailers frequently do it themselves by grouping together when it is to their mutual benefi t.

“What you see in some market towns is a cluster of premium retailers, which on their own might be relatively one-dimensional,” says Saunders.

NEw ENTRANTS

Despite the changes currently under way in the UK fashion market, it continues to be one of the strongest in the world and remains attractive to foreign entrants.

The spotlight thrown on the UK, and London in particular, by the 2012 Olympic Games has attracted many international brands (see page 24). That is good news and shows the vibrancy of the UK fashion retail scene, says Curtis.

However, these premium brands are often picky about where they locate. Shopping centres and their host towns and cities must stand out on a new level. “In the current climate, many new entrants are considering European locations against each other, so we’re not necessarily competing with other cities in the UK, but places in Europe. We have to work harder to attract those retailers with information that lets them appraise the cities accord-ingly,” Curtis says.

International brands entering and expanding in the UK are often premium, and they demand exciting locations, which can attract a demographic that refl ects their positioning. They are also prepared to invest heavily in the fi t-out of their stores as they position their brand in the new market.

There is also something of a critical mass eff ect, where the opening of stores by international brands attracts others as it clearly marks out the destination as somewhere that UK consumers can get something diff erent from the average high street.

Considerations for shopping plaCes

CHOICE Of STORES

bRANd pRESENCE

LEISURE INTEGRATION

vALUE vERSUS pREMIUM

INNOvATION ANd NEwNESS

MARkETING ANd pROMOTION

International brands entering and expanding in the UK are often

US-based forever 21 (above) and Hollister (left) are two examples of international retailers expanding in select locations in the Uk

Connected reality

autumn 201214

A s consumer adoption rates for smartphones and tablets continue to rise, so does the trend for customers to use them to supplement their shopping experience.

Retailers, including John Lewis, Tesco, O2, Maplin and Mamas & Papas, are reacting to this change by off ering free wi-fi connectivity in their stores. They believe there is benefi t to be had by making it simple for customers to access the internet while shopping.

At fi rst the industry may have been a little wary of consumers having instant access to information on their competitors’ products and prices, however, there is now a much clearer realisation of the benefi ts of off ering fast internet connections for customers. Mamas & Papas, for instance, has made a commitment to wi-fi because it wants shoppers to be able to easily access the customer reviews of products on its website.

Meanwhile, Tesco is rolling out wi-fi across its store estate – from the current 250 Extra outlets into its superstores. By

the end of the year it will be available in 700 of its stores across the UK. Mark Cody, senior marketing manager for mobile at Tesco.com, says: “It enables customers to do things in store rather than having to go home. The volume of customers signing up is really encouraging.”

Engaging in one-to-one communication is a key part of Tesco’s strategy, according to Cody: “You could push an off er to customers when they are in store and maybe remind them of a click-and-collect order that is ready for them to collect.”

Daniel Lucht, research director at Research Farm, suggests the grocer is in a strong position as it is linking wi-fi access to its Clubcard loyalty programme. It can potentially connect the historical shopping patterns of an individual with their current behaviour in store and personalise the interaction.

Electronics retailer Maplin also plans to promote a tailored range of products via the branded wi-fi landing page that will be based on shoppers’ browsing histories.

Land Securities is among the converted and is involved in pioneering work with The Cloud to install wi-fi in all its UK


www.cabotcircus.com

Just check your WiFi is on, then select ‘WiFi Zone - The Cloud’ from the available network list, open the browser and follow the on-screen instructions to register or log on.

WiFiFree

Get free WiFi throughout Cabot Circus and browse the net and our stores.

15993 CV CC A1 Posters - WiFi poster.indd 1 03/01/2012 15:48

www.cabotcircus.com


WiFiFree



Wi-fi connectivity in centres and stores is quickly moving from a nice-to-have to a necessity, learns Glynn Davis

Partnership

autumn 2012 15

our shoppers. We should be seen to be enabling shoppers in the physical environment and wi-fi is critical to us doing this as it bridges the gap between online and in store.”

The situation has been accentuated as shopping centres improve their food and beverage off er. The upside has been to increase dwell time, which has further driven the desire of shoppers to check their emails and engage in social media activities when sat in the centres’ cafes and restaurants.

Free wi-fi is the obvious solution and early evidence at Cabot Circus shows it is proving benefi cial. Rosie Collins, store manager at The Body Shop, has certainly been enjoying its advantages: “It is positive news that Cabot Circus was the fi rst shopping centre in the region to provide free wi-fi for shoppers. It means our customers can easily surf the web, use social media, and even carry on working while in the centre – thereby enhancing their overall experience.”

Russell suggests it is early movers such as Land Securities and Tesco that will reap the benefi ts of implementing wi-fi : “There is an increasing expectation that people will have access to good data connections and it is, therefore, those retailers and shopping centres that embrace this bringing together both offl ine and online that will benefi t.”

Having wi-fi in stores and shopping centres also provides operational benefi ts. Russell cites the possibility of using the connectivity for implementing mobile tills and taking EPoS data back from the stores to head offi ce for analysing.

This has been part of the strategy at Aurora Fashions, which is gaining operational benefi t ahead of a likely launch of wi-fi for customer use. Wi-fi has provided Aurora with the infrastructure to roll out iPads, which are used as an alterna-tive to fi xed tills and as a device from which customers can undertake staff -assisted orders for out-of-stock goods that can be delivered to the store or to customers’ homes.

By the end of the year these devices will be in a third of the group’s stores – this encompasses the Oasis, Coast, and Warehouse brands. Ish Patel, group omnichannel director at Aurora Fashions, states: “Store employees have got [internet] access in the back offi ce but they also now need it in the front of store because we need teams equipped to give the [best] levels of service.”

What will also benefi t retailers using wi-fi in store will be the emergence of mobile payments. Lucht suggests that providing payment solutions via wi-fi connectivity will help negate the need for costly near fi eld communication payment implementations and disruptive till re-fi tting.

It is clear that wi-fi connectivity can off er real tangible benefi ts for consumers, retailers and shopping centre operators. King concludes: “We see an interesting behavioural change playing out in the digital space right now. The internet is changing the way we live; it’s reshaping the way we communicate, how we interact, the services we use and, of course, how and where we shop. And the game-changer here is the smartphone.

“Bringing wi-fi to our centres will align in-centre and out-of-centre experiences, creating an enhanced user experience for our shoppers, regardless of whether in the centre, in the car, or at home – that’s the point, to provide a consistent service off ering across all channels.” ●

It’s about creating a great environment for people to spend time and shop

Vince Russell, The Cloud

properties. It was rolled out to Bristol’s Cabot Circus in January and will be in all Land Securities’ centres by the end of 2012 in what is a fi rst for a UK landlord.

Land Securities digital marketing manager Todd King explains that this is one of many projects being explored, which aim to provide an omnichannel platform for retailers in its schemes: “Our digital strategy is delivering a number of market leading initatives; from mobile-optimised websites and Google Product Search to wi-fi roll-out. We’re creating the platforms on which more innovations can be built.”

There is a growing realisation that mobile connectivity needs to be embraced and used as a tool to enhance the customers’ experience in shopping centres. This enables consumers to search for retailers, look for specifi c product details, compare prices, buy goods for home delivery or click-and-collect, and share shopping experiences with friends via social platforms.

Sky’s the limitThe Cloud managing director Vince Russell says: “It’s about creating a great environment for people to spend time and shop. Today if you are sitting there [in a shopping centre] and you can’t get decent internet access then you’ll probably wander off .”

King says: “It’s an absolute given for our digital strategy to endeavour to provide a completely seamless service off ering. It makes sense for us as landlords, the retailers and, of course,

de s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t opde s k t op

www.cabotcircus.com


WiFiFree



Street Report

autumn 201216

In early 2009 when an old van was converted into a travelling kitchen and it pitched up in various London car parks selling high-quality burgers under the name of ‘Meatwagon’, it lit the touchpaper for the UK’s street food revolution.

Today there are a growing number of chefs and amateur cooks – along with some well-recognised restaurant brands – who have followed in its wake and are using their trucks to sell an ever-broader range of innovative and exciting foods for a young and hungry clientele to eat on the hoof.

This appetite for converting trucks and vans into kitchens and appearing in diff erent locations throughout the week follows the trend fi rst seen in the US where street food has become a feature in many cities.

Trinity Leeds, Land Securities’ next big retail destination, demonstrates the importance of this growing trend and the resilience of the food and beverage sector. One of the scheme’s brand pillars is around food, and the development team have been keen to explore ideas for food that are more about creating talkability and a social scene than just buying products. Looking at the revolution of street food, and forging a partnership with the British Street Food Awards has allowed the team to gain a greater insight into how this vibrant street scene is aff ecting the way consumers are buying and spending time with food.

This insight combined with his own experience of the high-octane fl avours delivered from the mobile kitchens on the west coast of the US led Andrew Turf, food and beverage leasing manager at Land Securities, to seize on the opportunity to bring some of this excitement into its shopping centres.

“I’m from Chicago and had previously worked in Los Angeles where I experienced the street food culture and vibe. It started there with the

likes of Kobe beef burgers. I wanted to bring it to our [shopping centre] sites in the UK where we’ve seen street food grow like crazy in recent years,” he says.

Marrying street food vendors with large shopping centre sites certainly moves the food experience in many centres a signifi cant step further on. To help Turf realise his objective of hosting a street food festival, Richard Johnson, organiser of the British Street Food Awards, worked with him to bring 11 street food trucks to the Quakers Friars outdoor space at Bristol’s Cabot Circus shopping centre from May 18 to 20, 2012.

Johnson suggests that street food makes exciting dining aff ordable and Turf agrees wholeheartedly, saying it creates a buzz wherever it goes: “It’s not just diff erent, it is also aff ordable, interesting, eclectic, and is more vibrant – attracting 18-to-34-year-olds who bring more energy with them.”

The potential to bring in diff erent food trucks to specifi c centres on a Friday and Saturday to provide a diff ering proposition to that available from the regular in-centre restaurants can enhance the overall off er. And the more success the street food operators have then the more exposure the retailers and other tenants will ultimately enjoy.

The food on off er from the trucks that pitched up at Quakers Friars in May were a broad mix of operators, including The Hungry Gecko –

vegetarian Asian street food from MasterChef 2011 fi nalist Jackie Kearney; Big Apple Hot Dogs –

autumn 2012

cooks – along with some well-recognised restaurant brands – who have followed in its wake and are using their trucks to sell an ever-broader range of innovative and exciting foods for a young and hungry

This appetite for converting trucks and vans into kitchens and appearing in diff erent locations throughout the week follows the trend fi rst seen in the US where street food has become a feature

Trinity Leeds, Land Securities’ next big retail destination, demonstrates the importance of this growing trend and the resilience of the food and beverage sector. One of the scheme’s brand pillars is around food, and the development team have been keen to explore ideas for food that are more about creating talkability and a social scene than just buying products. Looking at the revolution of street food, and forging a partnership with the British Street Food Awards has allowed the team to gain a greater insight into how this vibrant street scene is aff ecting the way consumers are buying and spending time with food.

This insight combined with his own experience of the high-octane fl avours delivered from the mobile kitchens on the west coast of the US led Andrew Turf, food and beverage leasing manager at Land Securities, to seize on the opportunity to bring some of this excitement into

“I’m from Chicago and had previously worked in Los Angeles where I experienced the street food culture and vibe. It started there with the


Marrying street food vendors with large shopping centre sites certainly moves the food experience in many centres a signifi cant step further on. To help Turf realise his objective of hosting a street food festival, Richard Johnson, organiser of the British Street Food Awards, worked with him to bring 11 street food trucks to the Quakers Friars outdoor space at Bristol’s Cabot Circus shopping centre from May 18 to 20, 2012.

Johnson suggests that street food makes exciting dining aff ordable and Turf agrees wholeheartedly, saying it creates a buzz wherever it goes: “It’s not just diff erent, it is also aff ordable, interesting, eclectic, and is more vibrant – attracting 18-to-34-year-olds who bring more energy with them.”

The potential to bring in diff erent food trucks to specifi c centres on a Friday and Saturday to provide a diff ering proposition to that available from the regular in-centre restaurants can enhance the overall off er. And the more success the street food operators have then the more exposure the retailers and other tenants will ultimately enjoy.


vegetarian Asian street food from fi nalist Jackie Kearney; Big Apple Hot Dogs –

Street food has taken the UK by storm over the past couple of years. Glynn Davis discovers how it is bringing new energy to the UK’s largest retail destinations

style


Marrying street food vendors with large shopping centre sites certainly moves the food experience in many centres a signifi cant step further on. To help Turf realise his objective of hosting a street food festival, Richard Johnson, organiser of the British Street Food Awards, worked with him to bring 11 street food trucks to the Quakers Friars outdoor space at Bristol’s Cabot Circus shopping centre from

Johnson suggests that street food makes exciting dining aff ordable and Turf agrees wholeheartedly, saying it creates a buzz wherever it goes: “It’s not just diff erent, it is also aff ordable, interesting, eclectic, and is more vibrant – attracting 18-to-34-year-olds who

The potential to bring in diff erent food trucks to specifi c centres on a Friday and Saturday to provide a diff ering proposition to that available from the regular in-centre restaurants can enhance the overall off er. And the more success the street food operators have then the more exposure the retailers and other


vegetarian Asian street food from MasterChef 2011 MasterChef 2011 MasterCheffi nalist Jackie Kearney; Big Apple Hot Dogs –

autumn 2012 17

Hamburger restaurant Byron is another. It has created a smart, shiny metallic van and is putting in the miles to attend various music festivals around the country, as well as setting up shop in numerous locations around London, and was also among the posse at the Quakers Friars street food festival.

Although the festival was a fi rst for Land Securities, Turf says it undoubtedly points the way towards the future for food within destination shopping centres: “It can help provide the soul for a shopping centre. The more diff erent compo-nents you have with relevance for your consumers the more soulful the centres can become and it turns them into a desti-nation. Street food has required a diff erent mentality from Land Securities, but Quakers Friars shows the willingness to embrace a modern culture.”

Expansion on the street food theme will put the company in a good position to sate the growing appetite of people

to try something diff erent, according to Turf: “Street food brings diff erentiation as well as a whole level of

creativity that draws attention to the centre. It enhances Cabot Circus’s reputation as a foodie heaven, whether it’s here today, gone tomorrow moments or well-loved restaurants.”

While Land Securities and others continue to re-jig their exposure to food within their develop-ments, Johnson says it is inevitable that street food will also evolve.

There are already some operators who have moved on from food trucks and into high street premises including the trail-blazing Meatwagon. It initially added a pop-up Meateasy and now operates the hugely successful Meat Liquor and Meat Market restaurants in central London.

But street food operators will not all metamor-phose into bricks and mortar, says Johnson: “Some

will get into bricks and mortar but they are being replaced by 10 more [new trucks] when they go. There is no reason why street food will die. It’s not faddy. It’s not about liquid nitrogen or edible fl owers. It is about eating outside and is a sensible solution to dining in new and diff erent ways.” ●

It is about eating outside and is a sensible solution to dining in new and different ways

Richard Johnson, British Street Food Awards

smart, shiny metallic van and is putting in the miles to attend various music festivals around the country, as well as setting up shop in numerous locations around London, and was also among the posse at the Quakers Friars street food festival.

Although the festival was a fi rst for Land Securities, Turf says it undoubtedly points the way towards the future for food within destination shopping centres: “It can help provide the soul for a shopping centre. The more diff erent compo-nents you have with relevance for your consumers the more soulful the centres can become and it turns them into a desti-nation. Street food has required a diff erent mentality from Land Securities, but Quakers Friars shows the willingness to embrace a modern culture.”

Expansion on the street food theme will put the company in a good position to sate the growing appetite of people

to try something diff erent, according to Turf: “Street food brings diff erentiation as well as a whole level of

creativity that draws attention to the centre. It enhances Cabot Circus’s reputation as a foodie heaven, whether it’s here today, gone tomorrow moments or well-loved restaurants.”

While Land Securities and others continue to re-jig their exposure to food within their develop-ments, Johnson says it is inevitable that street food will also evolve.

There are already some operators who have moved on from food trucks and into high street premises including the trail-blazing Meatwagon. It initially added a pop-up Meateasy and now operates the hugely successful Meat Liquor and Meat Market restaurants in central London.

But street food operators will not all metamor-phose into bricks and mortar, says Johnson: “Some

will get into bricks and mortar but they are being replaced by 10 more [new trucks] when they go. There is no reason why street food will die. It’s not faddy. It’s not about liquid nitrogen or edible fl owers. It is about eating outside and is a sensible solution to dining in new and diff erent ways.”

which is at the forefront of the revolution that could see hot dogs go down the route of burgers and become the country’s next food craze; Daisy Green’s frozen yoghurts; and Jalopy Pizza – wood-fi red pizzas sold from a classic Peugeot J7 van.

They all bring a sense of theatre, for example, What The Dickens serves British dishes and revived vintage recipes, such as kedgeree, dressed as gentlemen wearing top hats and sometimes playing ukuleles. There is great excitement in the way Cafe Môr delivers its seafood menu: “They are winners of a street food award last year and sell what’s not expected as a street food – including seashore wraps – from a convertible beach hut,” says Johnson.

Such imaginative cuisine goes with the territory and your customers will tell you if they like it or not. Johnson says: “People can aff ord to take risks as they have low overheads so you can see if a Chinese hot dog works. You can simply throw together various ideas. I’ve recently eaten an Indian burrito, for instance.”

However, it is not just newcomers who are customising vans and hitting the roads. Street food is also an opportu-nity for established specialist food brands to showcase their products to a broader audience. Hence, the likes of Wahaca, with its cyan and magenta-coloured Mexican food truck, are joining the growing throng and hitting the road.

Report

autumn 201218

In a challenging market where many are competing ferociously on price, store groups are increasingly looking to their product offer to give them a point of difference.

Own-label and private-label ranges enable them to offer exclusive products as well as

being more profitable than selling branded goods.In fact, as well as making economic sense due to more

attractive margins, the strategy allows retailers to target a different shopper base, says Kantar Retail director of retail insights Bryan Roberts. But which ranges are working well?

Roberts cites Asda as an example of a retailer that has “shifted the needle on quality” through own brand to widen its customer base. The grocer has partnered with Leiths Cookery School to produce a range of quality food products, for instance.

Conversely, upmarket grocer Waitrose’s launch of its value line has proved a hit with cash-strapped shoppers still seeking affordable quality.

Another trailblazer in the field is DIY giant Kingfisher. In a sector that tends to lack product innovation from

the big brands, the B&Q owner opted to take the initiative by developing its own range of products. The retailer was so keen on pushing unique and useful DIY solutions that it set up a dedicated innovation centre last year. Located at its French headquarters in Lille, the retailer works with suppliers, universities and other specialists to develop a pipeline of exclusive products to drive newness and margin in stores.

Kingfisher own-brand products, many of which are sold across the group, include a ready-to-install tile without the need for glue as well as a shower that can be installed in two hours. Another innovation, a toilet with a sink in the top, re-uses the water used to wash hands to flush the toilet.

One retailer at the forefront of innovation with exclusive private-label products is Debenhams through its Designers at Debenhams ranges. Collaborating with designers such as

name?UK retailers are positioning themselves at the heart of product innovation with their own-label and private-label ranges, finds Nicola Harrison

What’s in a

Henry Holland, it continues to prove a hit with shoppers. Debenhams chief executive Michael Sharp said at the retailer’s interim results this year that two-thirds of its customers cite Designers at Debenhams as the reason they shop at the department store. “We have to offer more differentiated product by growing our own brand,” he said.

Debenhams aims to increase revenue from Designers at Debenhams to £750m in the next three years, and is considering expanding it from fashion and homewares into other categories such as accessories and footwear. It accounted for £524m in its last financial year.

Now more than everRival John Lewis has also been working hard to offer exclusive product. In March this year, John Lewis Partnership chairman Charlie Mayfield identified own brand as a key strength of the group, which also operates Waitrose, and said the business had upped the pace of product innovation. “Developing products you cannot buy anywhere else has never been more important,” he said.

John Lewis is partnering with designer Alice Temperley to create her first high street range. Hitting shops in September, the retailer expects queues around the block when it launches.

Additionally, the department store has just launched its biggest ever own brand, House by John Lewis. The furniture and homewares range will initially comprise 600 SKUs and will be showcased within branded shop-in-shops in stores as well as having a dedicated section on Johnlewis.com.

Pets at Home has put product innovation at the heart of its growth strategy. It runs regular Dragons’ Den-type Innovation Open Days where customers, colleagues and suppliers can pitch ideas to the business.

The retailer created the position of innovation buyer last year to search the globe for unusual products to give

autumn 2012 19

it a point of difference in the increasingly crowded pets market. New products include a thunder shirt, which is a tightly wrapped jersey that helps reduce anxiety in dogs.

Boots has had huge success with its own brand, in partic-ular its No7 beauty products. “Its own brand is one of the key reasons why shoppers go there,” says Roberts. “It’s well regarded and engenders loyalty.”

Boots won plaudits when it launched the first ever clini-cally proven anti-ageing skin product, No7 Protect & Perfect. This year it launched its next instalment, Lift & Luminate Day & Night Serum.

Boots UK chief operating officer Ken Murphy says No7, 17 and sun protection range Soltan “have strong identities and equity in their own right”.

He adds: “We believe that the development of trusted own-label products makes Boots a key destination on the high street in the UK. Our own-brand products play a major role in the lives of our consumers. We offer high quality at affordable prices. Our own brands provide a complementary breadth to our offering.”

The grocers have also long been at the forefront of own-brand innovation. Tesco this year made the dramatic move of rebranding its £1bn Tesco Value opening price point range, replacing it with Everyday Value – a more contempo-rary version intended to represent improved quality compared with its predecessor.

Tesco rebranded its own-label

range earlier this year to

Everyday Value (above, right);

John Lewis launched own

brand House by John Lewis

(above, left); Products from

Boots’ No7 range (below)

Tesco has also launched venture brands including the Chokablok range. The stronger emphasis on own brand forms a key plank in Tesco chief executive Philip Clarke’s ambition to return Tesco to form.

Roberts says the merchandising of such ranges is impor-tant so they stand out on the shelves.

He says Tesco has “pushed very hard with display and marketing” of its Everyday Value range, for instance.

Roberts adds that on the supermarket shelves, the best place to position products is between eyeline and chest level. “We’ve seen retailers beef it up in that hot spot,” he says.

However, he cautions that “overdoing” the merchandising could alienate those customers who prefer branded products.

Murphy also believes merchandising own brand is important. As such, Boots has begun “a comprehensive programme” to upgrade the look and feel of the pharmacy area across stores and online, according to Murphy. The revamp aims to make it easier for customers to find products, while giving them access to information, support, and services.

Marks & Spencer has worked hard at merchandising its beauty offer in its new M&S Your Beauty: The Best of Nature & Science department in its High Street Kensington store. The 1,150 sq ft space aims to be more premium and high tech, giving department stores such as John Lewis a run for their money.

The retailer has used cutting edge techniques, including using declassified US military technology, in the department to showcase branded products alongside M&S’s own brand. A virtual makeover counter lets shoppers digitally select different shades of cosmetics to determine the most suitable colours for their skin tone. It also features on the retailer’s website, allowing customers to upload their images to virtu-ally try out different shades.

Own brand has become a key battleground in the fight for share and margin, and retailers that do not innovate run the risk of getting left behind. l

Report

autumn 201220

While online sales continue to show strong growth, the majority of retail sales still involve a customer going into store. Research online, purchase offl ine

(ROPO) is a consumer behaviour trend that’s driving a signifi cant proportion of retail sales – four out of 10 European consumers prefer to ROPO, according to a Google study.

Having already invested in initiatives to support multi-channel shopping – such as free wi-fi in its centres and the mobile optimisation of its websites – Land Securities has started testing Google Product Search functionality on the website of Leeds’ White Rose shopping centre. It’s part of the company’s strategy to ensure it continues to support its retailers in an environment where online is an increasingly important strategy.

Google Product Search provides a function to search for retailers’ goods on the centre’s website, as it pulls together all the relevant products for participating stores that operate in that centre. Using Google’s comprehensive search capability to locate products, the service displays the results on the White Rose site. These results can then be fi ltered by relevancy, latest products and price.

The search function covers goods from Warehouse, Oasis, Debenhams, Topshop, Schuh, Disney Store

and, the most recent addition, Miss Selfridge. More retailers will be added as the service continues to gain traction in the marketplace.

Consumers have the opportunity to continue browsing, comparing products, or transact online on the retailer’s website to click-and-collect or complete the purchase – it’s up to the consumer. Sean Curtis, head of business-to-business marketing, Retail at Land Securities, explains: “The marketing landscape has changed, the consumer wants access to information anywhere they go, anytime they want, and to be able to transact however they wish – digital enables this.”

In this way Land Securities is keeping consumers happy, but also supporting retailers too, acting as a conduit driving traffi c directly to the websites of participating retailers. If the trial is successful, the product search service will be rolled out to the websites of each centre in Land Securities’ portfolio.

It may seem slightly counterintuitive for a shopping centre to be encouraging consumers to look at products online, but the ROPO trend shows that the web supports offl ine transactions as well as being an alternative channel to market.

Curtis says: “The key is using online to push customers back into our centres, as part of a true multichannel focus and becoming part of a revolving loop – engage online, push in-centre, create value, push back offl ine.” ●

Search and selection

IN NUMBERS

9 out of 10purchases take place offl ine

4 out of 10consumers prefer to research

online, purchase offl ine (ROPO)

Source: Forrester and Consumer

Commerce Barometer (TNS /

Google / IAB)

£28.2bnEstimate of annual value of ROPO

to the UK retail, technology,

consumer packaged goods,

entertainment and fi nance sectors

Source: Boston Consulting Group

54%

of consumers do not buy online

because they want to see the

product before they purchase

Source: Google study

16%

of consumers don’t buy online

because they want to take away

purchases immediately

Source: Google study

Search 1

Land Securities has begun trialling Google’s Product Search to explore how it can support multichannel shopping journeys, hears David Brooks

autumn 2012 21

2

3 4

5

HOW IT WORKS

1 Simply enter keywords such as ‘black dress’ or ‘red shoes’

into the product search box on the home page of the

centre’s website.

2 The search engine returns relevant products available from

retailers at the White Rose centre, which provide their

product information to Google.

3 The results – which show images and prices – can be fi ltered

by retailer, release date, relevancy and price.

4 The listing for each item includes more information on the store

at White Rose, and links directly to the retailer’s website.

5 Consumers can choose whether to purchase the product online,

click-and-collect or go to the store in the centre to look for it.

Partnership

autumn 201222

Newly engaged

Years of planning and research goes in to getting the location and design of a new shopping centre just right. And closer to the launch, the marketing campaign will ramp up and be tailored

to appropriate messages for the consumer segments the scheme will serve. After all, it’s beneficial to consumers, retailers and the scheme’s operator for a new shopping centre to hit the mark with the local shopper catchment.

With its new retailer engagement strategy, Land Securities is sharing its insight with retailers that have exchanged on new developments, and is providing early guidance to ensure their store openings and fit outs maximise their potential.

Trinity Leeds, opening in March 2013, has been the first opportunity for Land Securities to use this approach. The scheme’s marketing manager, Claire Reynolds, first conceived the strategy two years ago.

Land Securities always invests in consumer insight around its developments, and the retailer engagement strategy is allowing Reynolds to introduce this to retailers at the point where it can shape their own plans, and also understand the rationale behind the details of the scheme.

“It is introducing the scheme, allowing them to get under the skin of consumers in Leeds and then understanding how and why we have developed the proposition,” she says.

Trinity Leeds consumer insight has shaped everything from the architecture of the scheme, through to the leisure mix and the marketing activity taking place to warm-up consumers in the area. Innovative brand marketing for Trinity Leeds has included social media activity and content co-creation – such as a film competition, 2.8 Days Later, created with independent cinema chain Everyman and independent film company Left Eye Blind – so Land Securities is able to show the consumer relationships it is building in the run-up to launch.

Until the development of the Trinity Leeds scheme, Land Securities mainly worked alongside retailers’ property and store opening and design teams. But mindful of the valuable insight it generates to finalise the development plans and execute its own marketing activity, the company decided to widen the scope of its early engagement activity.

Two kick-off breakfast briefing presentations took place for Trinity Leeds’ retailers, both of which attracted more than 20 retailers keen to hear from Land Securities and to understand each other’s plans for the scheme.

Heads of marketing, merchandising, store design executives and even chief executives were in attendance, as well as store opening and project management executives. Brands to have benefited include Warehouse, Office, Mango, H&M, Fraser Hart, Marks & Spencer, O2 and Everyman Cinema.

These will be followed up with individual meetings and, in October, a second round of presentations will introduce

Early sharing of customer insight and the vision for a new scheme with the retailers taking stores there is proving a huge success for Land Securities

The new model for engagemenT

Retailers sign up for a store in a new Land Securities’ development or centre

1 A year before openingland Securities identifies and

makes contact with retailers’

brand and marketing teams,

as well as their store design

and store opening teams

2 Nine months before openingretailers’ brand and marketing

executives are invited to a

kick-off presentation, where

land Securities shares its

consumer insight to help inform

their marketing activity and

designs for their new stores

3 Seven months before openingretailers are invited to a launch

presentation for the scheme

where more information is shared,

and further networking between

retailers takes place

4 Six months before openingThe recruitment drive for stores in

the centre begins, supported by

land Securities. retailers also start

to be introduced to the centre’s

operational teams

5 The new scheme is launched

autumn 2012 23

the right store for customers in the area, and be closely involved with the opening too.

Reynolds says the new way of working has already meant significant changes to a number of retailers’ plans for the scheme: “M&S began in Leeds in the penny bazaar market. We’ve been working with their team to deliver the next generation flagship of M&S destinations, which reflects their heritage and looks to the future, providing customers with a compelling offer, in this impor-tant store for them.”

Now that Land Securities has forged strong relation-ships with a broader range of executives it will be able to refine the strategy when work begins to engage retailers who are signed up for two further schemes in its pipeline – Oxford and Buchanan Quarter in Glasgow.

Reynolds concludes that the approach to developing the proposition for Trinity Leeds has been best-in-class, something Land Securities is determined to build on with retailer engagement in its subsequent schemes. l

the launch creative to retailers, plans for the recruitment campaign will be shared, and retailers can meet the opera-tional teams who will run the centre.

Reynolds says as well as getting retailers excited about the potential of the scheme, there’s also been a chance for them to network with one another.

Judith Kelly, head of retail delivery for Trinity Leeds, is seeing a cumulative effect, as once retailers begin to talk about ideas for new formats and concepts for stores it helps support the changes other retailers can make to their own design; which raises the overall profile and potential of the centre as well as being great news for the shoppers it will serve.

Feedback from the kick-off events has been positive. One head of marketing says they have never had such involvement at this stage of a new opening, and will use the customer insight to shape the brands stocked in the store. Another merchandising and marketing manager comments that the feedback would help his team create

It is introducing the scheme and then understanding how and why we have developed the proposition

Claire Reynolds, Land Securities

Retailers are branching out of London to other major cities

in the UK, such as Forever 21 opening in Glasgow

autumn 2012 25

stores, depending on where the right real estate has become available,” he says. “I think we’ll see more of that as retailers and brands prioritise the major European cities for growth.”

North American retailers are the most global with 73% present in all three regions (Europe, Middle East and Africa; Asia Pacific; The Americas) and the UK is especially targeted. The reasons are often strategic. Language and cultural charac-teristics are less daunting for US retailers than mainland Europe, the market is transparent and the fiercely competitive nature of the market makes it a robust testing ground. If a US retailer can create a successful model in the UK, they have confidence they can succeed more widely in Europe.

International brands also bring fresh stimulus to a retail destination and consumer excitement, with awareness of global brands such as Forever 21 far higher. Taylor says: “It adds a point of differentiation to the tenant mix and with the strength of brands such as Apple, Hollister and Urban Outfitters attracts additional footfall and spend.”

As a result London’s West End – the most international of all Europe’s major retail locations – expects to see turnover from shops on and around Oxford Street, Regent Street and Bond Street surpass £10bn by 2020, up from about £7.5bn this year, according to the New West End Company.

That has also been evidenced by the excitement that preceded the opening of the new Forever 21 stores, the Victoria’s Secret store in London and the much anticipated J Crew, which is still looking for a London flagship. Despite their eagerness to enter new markets, retailers have also become more patient about waiting to find the right location – hence, for example, the long wait by both Uniqlo and Forever 21 to open stores after announcing their UK intentions.

With little new development for international retailers targeting the UK, Trinity Leeds is in a unique position six months ahead of opening with the scheme more than 80% pre-let and in solicitors’ hands and welcoming international brands such as Fossil and Swarovski – both new to Leeds – plus more global names such as Mango, Hollister and H&M.

John Grimes, Land Securities’ leasing director for Trinity Leeds, reflects: “There is an ongoing demand for quality space from UK and international retailers who want to be located in top cities like Leeds. Trinity Leeds is a stunning project, which people can now see and experience as the building is really taking shape. It’s becoming a real pull for international brands like Fossil and Pandora as it will be a retail beacon for the North.” l

New Names to watch out for

the uK has welcomed a host

of new retailers recently, with

Victoria’s secret the latest to

arrive. whole foods market has

also confirmed expansion of

its portfolio, while hollister will

open at trinity Leeds and

J crew continues to scout for

a London flagship despite a

re-focus towards asia. crate

& Barrel continues to weigh

up options for the uK.

french fashion retailer the

Kooples has opened stores

in the uK, coach opened

a flagship on Bond street

and forever 21 continues to

expand, having established in

London and Birmingham, with

a new store planned for

Glasgow. Designer tom ford

is to open in Knightsbridge,

urban outfitters is to open

a store at trinity Leeds and

chanel has opened its first

standalone beauty store

in covent Garden.

Newspaper, books and

convenience retailer relay

opened at the new wing of

King’s cross earlier this year

and hopes to announce a

second opening in 2012,

while German footwear retailer

Deichmann continues to

expand in the uK. Japanese

running and sportswear brand

asics has opened its largest

store to date at the west end

of oxford street.

InternationalThe UK remains the top lure for international brands looking to expand beyond their borders. By Mark Faithfullappeal

Report

The many international retailers testing and expanding their formats in the UK demonstrates the vibrancy and strength of the retail market here. London, of course, tends to be the top location for those looking to

get maximum marketing leverage out of a flagship store, but in the past few years cities and big retail centres outside the capital have been added to the road map for a national presence.

As a result the likes of Gilly Hicks at St David’s in Cardiff, plus Hollister at the upcoming Trinity Leeds are just two examples of iconic US retailers confident of branching out beyond London, although the UK capital – which according to a recent survey by CBRE attracted 55.6% of all internation-ally active retail brands last year – remains the destination of choice. The property agent’s survey put London as number one for global retail appeal.

While London benefited from a mini-boom in 2011 as tourist spending boosted a relatively robust local economy, the UK also retained top position as the most penetrated global country with 56.7% of retailers in the survey present. For instance in Glasgow, Land Securities’ 155,000 sq ft, £70m investment in the redevelopment of 185-221 Buchanan Street will include US fashion powerhouses Forever 21 and Skechers.

“Retailers are seeking to de-risk their expansion activities, generally choosing markets like the UK that are regarded as safe havens,” says Peter Gold, head of EMEA cross border retail at CBRE. “London is generally the first port of call for global retailers, but once they have established a presence in the capital, they are willing to extend their reach into other major UK cities, as well as major regional shopping centres.”

London, Manchester and Birmingham are all in CBRE’s list of European cities attracting most international retailers.

UK consumers are often already familiar with international brands; which particularly aids expansion beyond London. Justin Taylor, chief executive, retail and leisure at Cushman & Wakefield, adds: “London offers a springboard to expand into other large markets in the UK such as Cardiff, Birmingham and Leeds as well as other key European capital cities.”

Right place, right timeAndrew Bathurst, director at agency Harper Dennis Hobbs, notes that the push to prime locations in prime cities is even more apparent. “Forever 21 has looked at Europe as a single market and has been opportunistic about where it locates

Report

autumn 201226

Store wars

Tesco – home and away

Relying on overseas revenues, Tesco has been looking to grow its key eastern European markets. The result is a new standalone format for its F&F clothing brand. Opening last year in Prague, it has now been refined in a larger form in Brno, the second city of the Czech Republic. It also opened in Warsaw, Poland and is poised to roll out a network of F&F standalones in the region. The stores do not feel like supermarkets – appearing to have more in common with H&M.

In the UK, Tesco’s Hertford store demonstrates what was just a few months ago perceived to be the retailer’s interior future. At the time, much was made of the wood cladding on the fixtures and around the perimeter, as well as the amicable sign stating ‘Hello’ at the store entrance. Now things have moved on and the Thetford and Bishop’s Stortford stores show the retailer’s latest thinking. Lower fresh food equipment heights allow better views across the interior and graphics reflect product provenance. Beauty departments in both locations are part of a move towards capturing a bigger share of the health and beauty market.

morrisons’ convenienT move

As a latecomer to the convenience market, Morrisons has needed to hit the ground running. Making this a reality has meant in-depth design work with consultancy Fitch and the creation of, in effect, three different takes on the convenience format, in order to be able to customise the offer as required at local level.

Dubbed M Local, what all three store types have in common is a refreshed colour palette, greater amounts of natural daylight, exposed brickwork and wood where it is deemed appropriate (in areas such as the bakery).

Lucy Unger, managing director at Fitch, says M Local has also been designed to move away from the “canyon-like aisles” that characterise most c-stores with lower equipment heights in the middle of the shop that rise towards the perimeter. In practice, this means that shoppers of the stores in Ilkley, Manchester and Wilmslow, among others, are able to see through the space and navigate the store more effectively.

autumn 2012 27

Competition has rarely been fiercer for the hearts, minds and wallets of supermarket shoppers. The consoli-dation that has seen retailers such as Somerfield and Kwik Save disappear from high streets has only served to

reinforce the UK’s grocery super league.And although the pace of new space opening has

slowed generally, the major players continue to hone their estates, updating existing formats and examining new ways in which shoppers can be attracted through their doors.

At the heart of this has been a move towards making store environments more experiential. There has been a sense that the interiors of many supermarkets have become little more than processing plants in which goods enter a store at one end and wars

With competition hotter than ever, grocery retailers are creating ‘warmer’ store environments and testing new in-store strategies as they bid to ensure they remain in demand. John Ryan reports

sainsbury’s sTays relevanT

One of the holy grails of supermarket retailing is making stores, of whatever size, appropriate to their locality. This process is evident in Sainsbury’s stores in Earls-field in southwest London, Hertford and Pontypridd in South Wales. Each store takes elements of the town it is situated in. Sainsbury’s head of store design Damien Culkin says: “What we’ve probably done [in the three stores] is told a better context story. In Hertford, for example, we commissioned some illustrations that tell the story of what went before, as much as being site specific.”

The Hertford store, located in the former McMullens brewery, references the building’s history and shoppers can visit the heritage centre that links with it. The Pontypridd store has created graphics and in-store features to demonstrate the building’s history as a former manufacturer of industrial chains.

In contrast, Earlsfield is a convenience store and has large white tiled areas as the display backdrop for fresh foods, while wicker baskets, fruit box-style crates and wooden perimeter cladding, which all create a more homely ambience.

GeorGe opTs for shop-in-shop

Asda clothing brand George has been established since 1990 and in that time it has tried standalone shops, which were unsuccessful, and in-store spaces, which have tended to use standard supermarket presentation.

Now things are changing and in Bolton earlier this year, the grocer revealed a revamped shop-in-shop George that moves the collection, effectively, out of the supermarket and into the realms of the high street fashion consumer.

Whether it’s light boxes and video screens, wood vinyl floors or a cash desk that features modish pendant lighting and a white, stippled back wall, this is a world away from the normal modus operandi employed by those selling clothing in supermarkets.

The new look has also been trialled at the retailer’s Fosse Park store in Leicester and both stores are showing increases against branches with similarly-sized George departments.

shoppers emerge at the other clutching merchandise- filled bags.

This would be fine if there were only a couple of operators in the market, but UK consumers have real choice. The outcome of recent moves has been the evolu-tion of what is generally referred to as ‘warmer’ in-store landscapes, with Tesco performing a volte-face on its previously hyper-efficient, but almost factory-like interiors.

Hand-in-hand with this trend has gone the continuing headlong rush into convenience and, in a number of locations in the UK and abroad, spin-off fascias that take elements of a supermarket’s offer and turn them into standalones.

Better interiors, sharper pricing and a renewed concen-tration on the shopper experience all stand as evidence of the scramble to retain market share. For consumers, the outlook seems positive. l

autumn 201228

Some opportunities reflect perfectly a moment in time and edge-of-town and out-of-town schemes are just such an example.

Aside from its shopping centres, Land Securities previously focused on developing town and city centre locations. However, as

the impact of the global downturn was felt there were increasing viability issues in terms of the costs and potential income from such schemes. Costs were going up but the likely income from potential projects was not keeping pace.

Land Securities was one of the first investors in out-of-town retailing and built up a large portfolio over 20 years, which demonstrated attractive returns for shareholders. In the credit crunch, the schemes proved more liquid due to the average lot size, which was important for the company balance sheet. It made sense to focus on refreshing the portfolio with new prime assets.

With increasing polarisation between desirable locations and those that Land Securities no longer felt would be viable for development, it looked at the opportunities for projects off-centre. The decision coincided with the broader range of anchor retailers, which had begun to look afresh at edge-of-town and out-of-town locations. More fashion and homewares retailers developed formats for such sites, rather than the traditional bulky goods retailers that had previously dominated these parks.

Land Securities assembled a team to start looking at the opportunities strategically and to reach out to key retailers in order to fast-track the filtering process of opportunities, only concentrating on the strongest retail propositions.

Strong partnershipLand Securities development director Chris Ward says: “About two years ago we started building a development pipeline; we identified where we believed the demand would be in a rapidly changing world and which retailers we could develop deep relationships with.

“We first created the Harvest Partnership with Sainsbury’s but we also identified that there were other retailers such as Next, Marks & Spencer and Debenhams where this sort of partnership approach would work well for both parties.”

Sainsbury’s and Land Securities placed three assets with development potential into a joint venture holding, which has now increased to seven sites across the UK. In Wandsworth, southwest London, Harvest secured planning consent to enlarge the existing Sainsbury’s store to the biggest in central London with a 120-bed hotel and additional retail. The scheme is now on site and has been pre-sold to PRUPIM, acting on behalf of the M&G Secured Property Income Fund. The Harvest Partnership was retained by the

Living on the edge

Prospects for Land Securities’ out-of-town and edge-of-town developments have thrived after bringing a new partnership strategy into play. By Mark Faithfull

Development

purchaser to manage the future development of the property. The enlarged Sainsbury’s and the new retail unit are expected to open in March 2013 and the hotel in August 2013.

“At its heart is the idea of pooling the advantages of having a strong occupier commitment coupled with the property resource, expertise and balance sheet to deliver,” says Ward. “We still see the quality of the building and environment as critical in the long-term durability of a trading destination.”

He adds: “Trying to buy prime stock at the right price remains difficult and so we have become opportunity-led, working with those who bring us opportunities to create compelling retail buildings with strong investment attri-

Selly Oak, Birmingham

Crawley

autumn 2012 29

butes. What is important is that we work with the landowner if they bring a suitable site to us; our conviction is that we should all share in the opportunities, as that is the best way to become the sort of partner that people want to work with. We agree up-front the rewards for each party, which vary depending on investment to date and future risk and we stick by those agreements.”

Ward says the important element of any scheme is its potential to be dominant in its catchment: “We will either invest in assets with an end value of £40m to £60m, which are liquid in nature or alternatively those of £60m plus with potential to be regionally dominant destinations. The target opportunities must be in locations where we believe, or the local authority demonstrates, there is a strong case to achieve the necessary planning accreditations.

“From a development and a competition for capital perspective, we have to be flexible and be in a position to bring forward product that can be kept within our portfolio balance or sold to fit other property owners’ investment criteria,” says Ward, citing Crawley as another example. Land Securities is delivering a 75,000 sq ft superstore for Morrisons and a 110-bed hotel for Travelodge together with four restaurants, for a total of 120,000 sq ft. Work is expected to start in September 2012 and completion 14 months later.

Time for leisureLand Securities and Sainsbury’s also unveiled plans in October last year to take forward a big regeneration scheme in Selly Oak to transform a brownfield site in southwest Birmingham into a mixed-use development anchored by a 100,000 sq ft Sainsbury’s store. Two 150-room, mid-range hotels are also planned, both of which would be close to the University of Birmingham and the Queen Elizabeth Hospital, plus 400 student rooms and 100,000 sq ft of offices on the site.

Ward points to the need to continue innovating and the introduction of higher levels of leisure is one example of how the landscape of these schemes is changing dramatically. This is demonstrated at Thanet where there is not only an extensive retail offer including Debenhams, M&S, Topshop, Boots, Next, New Look, TK Maxx and River Island, but leisure operators including a Vue multiplex cinema, a 20,000 sq ft casino and a Travelodge hotel, plus dining options including Nando’s and Ask.

“Bringing a partner with you in a scheme provides a number of advantages,” says Ward. “The first advantage is the up-front capital and the reduced risk from having a strong covenant from the partner retailer. In terms of planning consents, bringing in a strong retailer helps from the perspective of presenting the employment benefit for the local area and also it is vital to undertake proper stakeholder consultation. That doesn’t mean paying lip service to the process but doing it properly and in good time. It really makes a difference.”

With the continuing pressures on the high street, Ward foresees a bright future for edge-of-town and out-of-town locations providing the right offer is brought to the table. “We’ve only scratched the surface on leisure as an opportu-nity, increasing dwell time will give these schemes a sense of place,” he says. “I can only see the sector getting stronger.” l

Living on the edgeSelly Oak, Birmingham Garratt Lane, Wandsworth

autumn 201230

Socialhot spotThe Cornerhouse in Nottingham is the perfect example of how Land Securities is developing its interest in the leisure sector. By Joanna Perry

C onsumers are ever more discerning about how to spend their free time, however, Land Securities is turning this trend to its advantage with growing investment in the leisure sector to create compelling destinations.

Land Securities head of retail portfolio management Ashley Blake says the company has decided that leisure will be crucial to its tenant mix going forwards, as the sector has grown so strongly through the recession. “There has been nearly 5% like-for-like growth in restaurant sales in the past year, and cinemas have also performed well. We now have £48m in leisure income and more than 250 restaurants and cafes in our group portfolio.”

Food for thoughtOne reason the catering industry is doing so well is the changes in social trends that see more consumers eating out – for instance at Sunday lunchtime – an activity that was less common even 15 years ago. Land Securities has embraced this trend, reviewing the leisure in its existing schemes and purchasing leisure-only schemes including the O2 centre in northwest London.

In May, Land Securities acquired its second dedicated leisure scheme – The Cornerhouse in Nottingham – for £50m from BP Pension Fund. Leisure is becoming a more important part of Land Securities’ retail portfolio, and also reflects the changing nature of the UK’s high streets. At 225,000 sq ft, The Cornerhouse is the only purpose-built leisure scheme in Nottingham, and is anchored by the city’s only multiplex cinema – a 14-screen Cineworld, which will soon include an IMAX screen. This is complemented by 11 restaurants, two bars, a casino and a nightclub, which also hosts regular comedy club nights.

With its location at the heart of the city centre, it draws footfall throughout the day – particularly at lunchtime from nearby office workers – as well as the evening. Leases for leisure operators tend to be longer than for retailers, and the

average length left on the leases in the scheme is 14 years. However, Land Securities aims to introduce one or two quality new entrants each year in order to keep the centre feeling fresh. To increase loyalty and repeat custom, the centre has its own membership card. Consumers who sign up to the scheme receive substantial discounts at many of the outlets including discounts on food bills, beauty treatments and reduced entry to the comedy club. Blake adds that offering linked promotions gives operators in schemes such as The Cornerhouse the chance to maximise the potential of the footfall.

The scheme appeals to a range of generations with family dining and bars oriented to the younger crowd. Nottingham is home to far more in the under-34 age group than the national average with a large student population of more than 48,000 enrolled at the two universities in the city. The centre also promotes special student deals, which also makes sure footfall is busy all through the week and not just on Friday and Saturday nights.

Blake says leisure, and particularly dining options, are helping make centres a destination for locals’ free time and also draw in tourists. There are 11 million tourist visits to the city each year thanks to its many attractions such as Nottingham Castle and the annual Goose Fair, which is the largest travelling fair in Europe.

Blake concludes that ownership of schemes such as The Cornerhouse means Land Securities is learning much about the different ways such centres need to be marketed and this is feeding back into how it markets its retail developments too. “It’s about marketing a destination,” he points out, adding that as shopping in person becomes more of a social activity, this is going to be a discipline that is applicable across all of its marketing activity. “It is all about under-standing what your consumer wants in a location, and building a destination around them. Shopping is a social activity and eating out can be exactly the same, so the more we encourage shoppers to stay and do both, the less inclined they are to stay shopping at home. l

Report

autumn 2012 31

The Cornerhouse in Nottingham is anchored by the city’s only multiplex cinema, which has 14 screens and will soon include an IMAX screen

The scheme includes 11 restaurants, two

bars, a casino and a nightclub, and has its

own membership card to increase repeat custom

Dining options draw in locals and tourists

winter 201032

Fashion

FACTS

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Retail view

autumn 201232

What’s the biggest structural change retailers currently face? Michael Sharp “The impact of mobile and the broader multichannel shopping phenomenon.”

Malcolm Walker “The internet and the general state of the economy.”

Robert Gregory “The shopper is rapidly evolving – looking for convenience, fl exibility, interaction and value. Many store-based retailers are fi nding it hard to keep up.”

David Riddiford “The biggest change is customer behaviour. They will determine the need for change.”

Richard Akers “Retailers’ adoption of technology is supporting changing customer behaviour; giving them options on channels and delivery methods.”

Gary Grant “Rebalancing costs. We are living in a diff erent retail environment now.”

Which changes will most impact retail in the next decade?Sharp “How retailers embrace multichannel and make a physical shopping experience truly entertaining and value added, so stores are as compelling as newer channels.”

Walker “The same as before – the internet and the general state of the economy.”

Gregory “An ongoing shift from large hypermarkets towards smaller stores – driven by factors such as weaker non-food sales, rising petrol prices, high street vacancies, an ageing population and the popularity of ecommerce.”

Riddiford “There is going to be a restructuring of retail because the need for having as many bricks-and-mortar stores to get national coverage has gone away.”

Akers “The erosion of margin in commodity products will drive both brand and product development by retailers.”

Grant “Property and leases. We are negotiating with landlords on rent and service charge, and the Government on rates, but also have to keep investing in our stores.”

Do high street retailers see the internet as an opportunity, or a threat to their business models?Sharp “There are very few that still see it as a threat. The reality of life is that’s the way shopping is going and you have to see it as an opportunity.”

Walker “Both – it depends who you are.”

The pace of change in the retail industry is faster than ever before. But what’s driving this change and how is it impacting on the UK’s retail businesses? asked for the views of six retail experts on the dynamics of the market in 2012 and beyond

The

reta

il vie

w

Robert GregoryGlobal research director, Planet Retail

Michael SharpChief executive, Debenhams

Malcolm WalkerChief executive, Iceland

autumn 2012 33

The internet is an integral part of being a retailer on the high street

Gary Grant, The Entertainer

Akers “The popularity of out of town is still growing, but it’s really all about the quality of the individual destination that determines success.”

Grant “It depends on what the retailer is trying to achieve. For us, for example, it’s not our style to do out of town.”

How should retailers react to such substantial structural changes in the industry?

Sharp “You have got to develop the ability to look around corners and see things coming. As an industry we manage the here and now very well but more time should be allocated to looking into the future too.”

Walker “Diff erent types of retailer by product type and size will react in diff erent ways. If you are selling books or CDs you are in trouble. If you are a high-end jeweller you don’t need to worry.”

Gregory “With the shopper moving and changing so fast retailers need to get as close to them as possible, be fl exible and move with them at the earliest possible stage.”

Riddiford “You have to understand which are the most important centres, make sure you invest heavily in multichannel and think about opportunities for wholesale.”

Akers “By identifying their real core competencies; rather than being blinded by technology. They must focus on what diff erentiates them and push it through every channel.”

Grant “You have got to be prepared to change and have the ability to move quickly. Long-term handcuff s just don’t work.”

Gregory “Successful retailers now view the internet as an opportunity – and something that should complement stores and brands rather than compete against them.”

Riddiford “Within a business, store managers can see the internet as a threat so it’s important that there is joined-up thinking and everyone is incentivised to drive sales through all channels.”

Akers “All of them feel it’s an opportunity, but it requires expertise and capital investment in a multichannel platform. Those that can’t aff ord to invest might feel threatened.”

Grant “The internet is an integral part of being a retailer on the high street. It really does enhance sales and is a way of attracting new customers and retaining old ones.”

Will retail square footage move away from high streets to centres and out-of-town developments?Sharp “Directionally that’s probably what will happen. Some of that is to do with planning and some with convenience. As retail parks evolve they are increasingly important and are now compelling places to shop.”

Walker “No more than it has done already.”

Gregory “Long term there will be a shift in growth from larger out-of-town superstores to smaller stores in high street and residential locations. This is already happening.”

Riddiford “As national multiples relocate and consolidate it opens up an opportunity for independents to fi ll high street vacancies to give a point of diff erence.”

Richard AkersExecutive director, Land Securities

Gary GrantManaging director, The Entertainer

David RiddifordChief executive, Links of London

Robert GregoryGlobal research director, Planet Retail

Land Securities Retail

Shopping Centres

Location PropertyName Areasqm(sqft) PrincipalContact PhoneNumber

Aberdeen Bon Accord / St Nicholas 47,844 (515,000) Katherine Armstead 0141 331 4409

Birmingham Priory Square 26,003 (279,900) Gemma Dew 020 7024 5133

Bristol Cabot Circus 134,986 (1,453,000) Howard Smith 020 7024 5115

Cardiff St David’s Dewi Sant 130,063 (1,400,000) James Larmuth 0207 024 5132

Dundee Overgate Centre 39,019 (420,000) Katherine Armstead 0141 331 4409

Exeter Princesshay 49,238 (530,000) Vasiliki Arvaniti 0207 024 5134

Glasgow Buchanan Galleries 57,599 (620,000) Katherine Armstead 0141 331 4409

Leeds White Rose 63,174 (680,000) Harlan Pollitt 0113 261 5351

Liverpool Clayton Square 16,722 (180,000) Harlan Pollitt 0113 261 5351

Livingston The Centre 88,257 (950,000) Katherine Armstead 0141 331 4409

London One New Change 50,740 (546,170) David Atcherley-Symes 020 7024 3730

London Shopstop, Clapham 4,170 (44,884) Ailish Christian 020 7024 5066

London Lewisham Centre 34,513 (371,500) Andrew Rawlings 020 7747 2336

London W12, Shepherd’s Bush 27,118 (291,900) Andrew Rawlings 020 7747 2336

London The O2 Centre 26,013 (280,000) Andrew Rawlings 020 7747 2336

London Southside, Wandsworth 49,238 (530,000) Ailish Christian 020 7024 5066

Oxford Westgate Centre 29,729 (320,000) Vasiliki Arvaniti 0207 024 5134

Salisbury The Maltings 8,921 (96,022) Gemma Dew 020 7024 5133

Sunderland The Bridges 47,844 (515,000) Gerald Jennings 0113 261 5355

Worcester Cathedral Plaza 19,509 (210,000) Jack Busby 020 7024 5487

Outlets


Hatfield The Galleria 29,729 (320,000) Victoria Broadhead 020 7024 5488

Livingston Designer Outlet Centre 26,783 (288,300) Katherine Armstead 0141 331 4409

Portsmouth Gunwharf Quays 39,483 (425,000) Victoria Broadhead 020 7024 5488

autumn 201234

Retail Parks


Bexhill-On-Sea Ravenside Retail & Leisure Park 24,131 (259,750) Hermione Mackrill 020 7024 5486

Blackpool Blackpool Retail Park 12,782 (137,583) Charles Clarke 020 7747 2318

Bracknell The Peel Centre 15,384 (165,592) Nick Duffield 020 7024 5485

Chadwell Heath Goodmayes Retail Park 9,197 (99,000) Charles Clarke 020 7747 2318

Chester Greyhound Retail Park 18,859 (203,000) Hermione Mackrill 020 7024 5486

Chesterfield Ravenside Retail Park 9,615 (103,500) Charles Clarke 020 7747 2318

Derby Meteor Centre 16,920 (182,130) Nick Duffield 020 7024 5485

Dundee Kingsway West Retail Park 27,768 (298,900) Hermione Mackrill 020 7024 5486

Gateshead Team Valley Retail World 35,083 (377,650) Nick Duffield 020 7024 5485

Livingston Almondvale Retail, South & West 35,285 (379,800) Nick Duffield 020 7024 5485

Northampton Nene Valley Retail Park 13,657 (147,000) Charles Clarke 020 7747 2318

Poole Commerce Centre 19,325 (208,011) Nick Duffield 020 7024 5485

Taplow The Bishop Centre 12,811 (137,895) Nick Duffield 020 7024 5485

Thanet Westwood Cross 44,129 (475,000) Hermione Mackrill 020 7024 5486

West Thurrock Lakeside Retail Park 35,004 (376,778) Hermione Mackrill 020 7024 5486

Workington Derwent, Derwent Howe 13,991 (150,600) Charles Clarke 020 7747 2318

Leisure Centres


Bath Kingsmead 8,361 (90,000) Gemma Dew 020 7024 5133

Nottingham The Cornerhouse 20,900 (225,000) Jack Busby 020 7024 5487

Developments

Location PropertyName Areasqm(sqft) PrincipalContact PhoneNumber Opening

Glasgow 185-221 Buchanan Street 10,684 (115,000) Nick Davis 020 7024 5203 2013

Leeds Trinity Leeds 92,902 (1,000,000)* Andrew Dudley 020 7024 5091 2013

* Including store in scheme which is outside of our ownership

autumn 2012 35

Working in partnership to create the fi rst f lexible format John Lewis store

Opening in Exeter October 2012