SCMC 2016 Report: Stephen Toal gives performance pointers
Published: 14 April, 2016
Stephen Toal, director of property management research at Savills, gave an overview of the factors driving shopping centre performance.
The retailers celebrating success in 2015 were those offering their customers the best experience, both in store and online, said Toal, pointing to figures from the British Retail Consortium last year showed a slight 12-month growth in like for like sales growth, while footfall tended to fall.
“Those that struck the balance between the digital and the physical won out,” said Toal. “The likes of John Lewis and House of Fraser realise a sale, regardless of how it’s made, is a sale. They want to give the best experience possible to get the sale. Those investing in that area are those that are successful.”
And he noted: “We are becoming a lot more interested in pleasure spend. Shopping is very much a social pastime. It’s about the experience. It’s about giving people a reason to go to their centre and we are seeing some real, big growth there.”
Toal highlighted menswear, f&b and sporting goods as areas of growth in 2015. while categories struggling included clothing and footwear, music and DVD sales, homewares and electricals.
But with conditions in the economy fairly good, with wage increases, price deflation, a fall in oil and energy prices and pension withdrawals, there are good opportunities for retail growth in 2016.
“Going forward there will be new entrants into the market,” Toal forecast. “Retailers that have either by-passed the UK or gone into specific pitches within central London for their shops, such as Oxford Street or Bond Street, are getting more adventurous and are going into the regions. And a lot of Internet retailers want a physical presence, so it’s the merging of the physical and digital. It’s not one or the other. “
So what can we look out for in 2016? Toal said there will be a need for retailers to invest in omnichannel so that they have a better understanding of what their customer is doing. But he said the challenges also include the national living wage, which may affect those retailers on tight margins; Brexit and interest rates, which will add a little uncertainty to retailers; while business rates also, may affect investment decisions in terms of those stores that were previously unprofitable may open and vice versa.
“It will be quite an interesting year with come interesting issues coming out of it,” he concluded.