Walking down a Manchester street, you are as likely to see a Burberry bag dangling from the arm of a Bolton teenager as hanging from the shoulder of a Wilmslow wife. What was once aspirational has become commonplace and achievable.
Luxury retailers have made Manchester their favourite location outside London. Names such as Armani, Vivienne Westwood and DKNY pepper the streets alongside upmarket department stores such as Harvey Nichols and Selfridges. But has the invasion gone too far? Have luxury retailers been victims of their own success, becoming too attainable?
Both analysts and agents agree that trading at Harvey Nichols and Selfridges in the city is not as hot as it could be. But while Selfridges is coasting along, Harvey Nichols is struggling. “Harvey Nichols is not trading well,” says Richard Ratner, a retail analyst at Seymour Pierce, although he adds that this is the case at all of the store’s locations.
Maureen Hinton, senior retail analyst at Verdict Research, agrees. “Selfridges does not work as an anchor tenant in shopping centres. Both Selfridges and Harvey Nichols should have limited the number of their stores.”
Both Harvey Nichols and Selfridges have kept silent about their trading figures. Andrea Stott, associate partner at GVA Grimley’s Manchester retail division, makes the point that Harvey Nichols only opened its doors onto New Cathedral Street last summer.
“Retailers need time to bed down, and Harvey Nichols should be allowed to become established before comments are made as to how successful it is,” she says.
Her colleague, Richard Lucas, partner at GVA Grimley, points to the Trafford Centre as case in point. “When the Trafford Centre opened there were all sorts of retailers whingeing about trade. Selfridges and Harvey Nichols are not that dissimilar to a shopping centre in that it takes two or three years to bed down. Now Trafford Centre is doing very well.”
Manchester agents hope he is right. The city is settling down after a mammoth amount of activity. This has seen the focus of the main retail pitch shift onto Exchange Square as luxury retailers such as Selfridges, Harvey Nichols and developments such as The Triangle congregate in the surrounding area.
Change continues, with The Triangle on New Cathedral Street undergoing renovation. Development work has also begun on the unashamedly mass-market Arndale Centre to the north of Cannon Street, which is due to open by Christmas 2005. New Cathedral Street, formerly The Shambles, is now fully let, deepening the controversy about how neighbouring King Street will reinvent itself.
But not every agent shares Lucas’s optimism. Jonathan Thompson at Jones Lang LaSalle believes that, while Selfridges has provided a good mix of up-and-coming designers, established names such as Prada and Jimmy Choo, and familiar brands such as Oasis and Miss Sixty, Harvey Nichols is another story. “In Harvey Nichols you pay £700 for a Stella McCartney dress. I think it may be a bridge too far for Manchester,” he says.
Anecdotally, many of the city’s retail agents say that although Harvey Nichols always appears to be teeming with shoppers, more Selfridges bags than Harvey Nichols are spotted on the high street.
While the two offerings are diverse, they also have many similarities — sharing, for instance, 26 brands of ladieswear among those on display in both stores. And many of these have standalone shops in the city centre.
“Retailers with their own stores have taken concessions in Harvey Nichols or Selfridges because they did not want to miss out, and they have ended up cannibalising themselves,” says Thompson. Gary Crompton of DTZ agrees that luxury brands are going through a tough time in Manchester.
Indicating extended sales, such as that at TM Lewin (see above), he says: “The working population of Manchester is happy and comfortable with shopping at Debenhams and Moss Bros. The luxury end serves a much smaller proportion of the population.”
Part of the problem, believes Verdict Research’s Hinton, is that shoppers can get too much of a good thing. “There is probably a maximum size for a luxury brand before it becomes part of the mass market,” she says. “If you have too many people selling designer labels then you can have an exclusivity problem.”
Hinton highlights Gucci as an example. Following a period of bad sales, the company reduced the number of its licenses and franchises, restoring its exclusive appeal. Hinton also refers to the role of fakes. While Wilmslow’s wives will probably always buy the real thing, do they really want to be associated with cheap rip-offs?
“Burberry has always had a problem with fakes, and the whole point of luxury is the limited supply,” says Hinton. Ratner agrees that this has affected the brand’s integrity. However, he adds: “You would have thought that it would have affected Burberry’s sales, but it has not.”
So if fakes have not hurt the luxury market, what is causing the dip? “You can have a bit too much luxury,” says Ratner. “Selfridges, for example, has two stores in Manchester.”
Designer labels are aware of the problem. For example, Vivienne Westwood limits the number of franchises it has within a given city. “This prevents dilution of the brand,” explains GVA Grimley’s Stott, who recently relocated Vivienne Westwood’s Manchester boutique to the corner of Spring Gardens and King Street.
The Triangle, on Cathedral Square, also probably had an eye on Westwood’s move when it decided to reposition and diversify its offering away from top-end luxury (see below).So the jury is still out on the key questions: will the aspirations of the Bolton teenager keep Manchester’s luxury retail market afloat? Or will the Wilmslow wife’s more discerning taste in labels prevent it from reaching saturation point?
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TM Lewin appears to be a prime example of how luxury outlets in Manchester are struggling. “It started its half-price sale in September and that got extended to the end of February. To my mind that tells its own tale,” says Gary Crompton of DTZ. The latest figures from the government’s consumer price index show that TM Lewin is not alone. In the year to February, inflation fell to 1.3% after retailers kept prices at January sales levels. In addition, spending on clothing and footwear is down by 4%. This may seem relatively insignificant, but it is the largest drop of all 11 sectors covered by the CPI, and the only one of two categories that fell. TM Lewin, however, defends its strategy. The shop, which is the company’s first foray out of London, opened in November last year. “We are delighted with trade and, as a result, we are considering opening stores in other places,” says Anna Davey, marketing manager at TM Lewin. “We use sales promotions throughout the year, using multibuy deals to encourage people to buy three shirts instead of one. So it is not a sale as such.” |
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When Milligan bought The Triangle from Frogmore in 2002, the centre was aimed at “ladies who lunch”. “It wasn’t very successful,” says Samantha Chown at Milligan. “It was a very schizophrenic tenant mix.” Referring to the planned changes at The Triangle, she says: “Harvey Nichols and Selfridges swamp everything else, and we would be stupid to take them on head-on.” Milligan is now carrying out major work to tackle complications at The Triangle’s entrance and improve the flow of pedestrians through the 150,000 sq ft centre. Chown insists that the company is definitely not taking the centre downmarket. Its new and improved offering, which will hit Manchester next month, will target what she describes as the “urban achiever”, and will feature brands such as Hooch, Bench, Freespirit and Lambretta. Average zone A rents are around £150 per sq ft, which contrasts sharply with Collier CRE’s figure of £300 per sq ft zone A for Manchester city centre. |
