Lara Marerro and Owain Roberts

Lara Marerro and Owain Roberts

INTERVIEW: The future of retail

Published:  29 June, 2017

Shopping Centre spoke to Lara Marrero, Firmwide Retail Practice Area Leader; and Owain Roberts, Design Director at Gensler on the impact of BHS’s closures and the changing landscape of retail.

Can you talk a little about the background of the current state of UK retail?

O: The London market is incredibly buoyant, which is a bit of an anomaly considering the uncertainty in the UK, but it’s definitely in a positive place.

L: Globally, we’ve seen that our clients are looking for smaller spaces. They’re looking on average for units that are 20 per cent smaller than they used to, perhaps with the exception of the very largest high street brands.

O: M&S’s figures have recently been released and they’ve taken yet another  hit. We’ve also seen the big players like John Lewis, House of Fraser, amongst others announcing publicly that they need to innovate  and reinvent themselves for their retail spaces to remain relevant. Many independents are doing well, but they’re looking for shorter leases and smaller units,

What is the overall impact of BHS closing down and what does impact has it had on shopping centres and retail?

O: M&S’s figures have recently been released and they’ve taken yet another  hit. We’ve also seen the big players like John Lewis, House of Fraser, amongst others announcing publicly that they need to innovate  and reinvent themselves for their retail spaces to remain relevant. Many independents are doing well, but they’re looking for shorter leases and smaller units,

What is the overall impact of BHS closing down and what does impact has it had on shopping centres and retail?

O: BHS was yet another wakeup call for retailers. It’s a reminder of the need to be relevant or get left behind. If you look at the likes of Woolworths, Blockbuster or Jaeger – all significant brands in their time – it’s possible to be pushed from the high street if you’re not keeping ahead of your competitors.

L: BHS was not moving with the times, and it comes back to the online versus offline conversation. 20 years ago, there was the fear that the clicks would take over from the bricks, but whilst there might have been a reduction in the overall footprint, it didn’t come about because brands were reinventing themselves.

What challenges have landlords encountered in repurposing empty BHS units to suit potential tenants and what approaches are the most successful?

L: What we have seen with BHS is that units of this size just aren’t suitable for most retailers, so it’s been a case of someone like a supermarket chain or a one of the big discounter like Home Bargains taking on the space, or what more and more landlords are looking at is repurposing these large units to make way for F&B and leisure brands. There is a move towards experiential, from food markets and food halls to leisure offers. They’re trying to find a solution to the problem, and at the moment it looks like it’s more about F&B and increasing dwell time.

O: Customers’ have moved from shopping commodities –to expecting a more complex offer. Brands need to win the hearts as much as the wallets of consumers and show them why they should be spending money there

In light of the closures, as the face of retail swings in favour of experience, what strategy should landlords adopt when it comes to driving foot fall in their centre?

O: F&B, entertainment, hospitality, service and wellness brands are all looking to find their way in, but the units are not built for many of these offerings which can be an issue when it comes to changing usage.

L:Centres need to understand that it’s not just a case of shopping and retail anymore, it’s about lifestyle and experience. They need to understand what their consumers are looking for.

If you look at the rest of the world,Bangkok for example, they have centres where two out of three floors are dedicated to F&B. In San Francisco, there are destinations such as Market Street. The world has changed. It’s not just about shopping.

Centres are becoming community spaces and are a centre point for every kind of activity. It’s about providing them with the ability to choose how their day is and coming away satisfied. If they want to shop, if they want to eat, if they want to go to the IMAX and see a film, it doesn’t matter, it’s about customer satisfaction and keeping that constant footfall coming in. The question is: can you have a place that is an all in one offer and the answer needs to be yes.

People don’t distinguish their day between work and eating and shopping and leisure. Maybe they work in the morning have their lunch and do some shopping for an hour, back to work in the afternoon, eat out in the evening. They are going to do these things and making it convenient by putting them all in one place and catering to their needs is going to increase dwell time.

And you’ve got to remember the ageing population too. They want somewhere they can come and have an experience but also understand the modern world. Life doesn’t end with retirement, it’s about lifelong learning and giving them the opportunity to find this and everything else they need in once place is going to drive footfall.

People want to spend their money on experience. They want to invest in themselves, whether this is in the form of education or in the form of art or exercise, it’s about helping that space to be adaptable and ready for changing usage with minimal disruption. People want gaming space – and I don’t mean casino, I mean e-sports and video games.

It’s really about following the breadcrumbs and seeing where they take you at the moment and keeping your space open to conversion.

How are the competitors to the now defunct department store, such as John Lewis, Debenhams and House of Fraser, continuing to drive sales and what can landlords to ensure their anchor tenants stay where they are?

O: John Lewis and house of Fraser have all got plans for reinvention. They know that they need to stay relevant in order to stay profitable. For John Lewis, it’s drawing on their rich heritage and going back through the archives to really drive their brand. People love John Lewis and they want to be reminded why.

Debenhams are opening new stores and they’re really focusing on getting their offering right.They’re all putting a big effort into extending their F&B. You expect to find something like a café in a department store, but I would expect  the variety and type of hospitality offer evolve and grow in the future. They’re also focusing more on beauty and well-being.

L: It’s a much different market to what it was. Back 20 years ago, Amazon didn’t exist, and these brands which have been around for over a hundred years haven’t had the competitive push to innovate and change, but now they do and it’s progressing faster than ever.

And they need to do more than just keep up with the changes, they need to become more disruptive and unexpected. It’s about looking at the next, not looking just the now. You can’t look left and right too much, you have to learn to look within in order to look forward and assess your brand and discover what else you can bring to your offering all whilst maintain your corporate bid.

They know who they cater to and they are learning to utilise this. They know now that consumers are expecting more, they’re expecting change. If Amazon can deliver your product in two hours then they need to ask how they can do the same. There is no time to wait.

O: They need to understand their customers and give them something that fits in with their brand. They don’t need to wait for permission to be more creative and innovative anymore because consumer outlook has changed. Ten years ago, if you suggested installing a yoga studio in House of Fraser then you would have been laughed at, but now it would be accepted as a viableoffering.

Landlords need to work closely with brands and assess if they are right for the centre. They need to give a retailer the right reasons to take a unit.

L: You need to find the right store for the right position in your mall, and this comes down to looking at things like the day parting and the week parting. Who is shopping in the morning versus who is shopping in the afternoon and the evening, who is shopping during the week and who is shopping at the weekend. You need to understand your demographic to ensure that offering your centre has is right, and work with retailers with time sensitive promotions.

But more than that, you need to work with them and understand the kind of performance they expect and hold them to that. If they’re not performing as well they expect themselves to or as well as you need them to then it’s worth considering refreshing your offering. You need to keep all the spaces at the right level and bringing in a positive footfall, and sometimes that can mean bringing in new brands to reinvigorate the traffic

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