Retail developments should be shaped around their localised target markets and embrace multiple uses in addition to retail and leisure use, according to a panel hosted by EG at Completely Retail Marketplace.
NewRiver director Emma Mackenzie said: “We are doing much more mixed use. A lot of that is with F&B and residential, and a lot of the residential adds value to the overall development. It brings residential back into the town centres and works very well within retail.”
In addition to incorporating residential into its developments, Mackenzie said NewRiver pays meticulous attention to the age demographic in their asset’s area in order to fine-tune its developments and tenant selection processes.
She added: “The research we have done shows that in some areas the older pound is shopping more regularly and the spend is much more bricks-and-mortar based.”
Mark Sherwood, director at Attis Asset Management and consultant to House of Fraser, said this is something he considers when working on House of Fraser’s estate: “Department stores are going through a period which is particularly challenging, but the range and convenience they offer is still a significant draw, and the age and demographic still love them and are loyal to them.”
Retail can also work alongside offices, which is something that Queensberry is planning on doing at its retail-led redevelopment of Sheffield in the Sheffield Retail Quarter.
Stuart Harris, commercial director and co-founder of Queensberry, said: “It’s not just about retail anymore – we are seeing much more residential and offices. We need to think about how to make shopping more vibrant, and we always talk about the internet but it doesn’t give you that social interaction.”
Despite the concern of the rise in e-commerce and the threat it presents to physical retail space, the experience and social interaction that shopping malls offer is what will cement them as a future asset class, said John Miu, chief operating officer at ABP London. “I think the retail trend will move from online to offline as shopping is an experience for all generations to enjoy. And you have the choice of both – you can get the prices online but you get the experience in a mall or a high street or any sort of area.”
The evolution of the department store
The department store model needs to evolve in order to survive, and operators that fail to do so may die out.
“The way that department stores have operated for the past 30 years just doesn’t really function in the same way anymore,” said Sherwood. “The market has moved. There are ambitions across all department stores for significant change and evolution and that is a response to the different ways of retailing and the desire from the customers for a completely different experience.”
One of the main challenges facing all department store operators in the current retail climate is how to manage surplus space, which many no longer need. They need to start thinking of ways to use this space in order to optimise the customer experience, including incorporating office, leisure, and storage.
“They are being positive in terms of finding ways for that space which really has no benefits for them as long-term retail space which could be used in an alternative way, and a lot of that means partnering with their landlords,” said Sherwood.
Operators that do not start to embrace these changes will struggle to secure their position in the market.
“Most of them are looking to reinvent themselves in some format. Some of them will come through really well, like a phoenix. Some of them probably won’t make it.”
Where are occupiers moving and why?
In this presentation we will be using EG data to show where retail occupiers are moving to and why. We will first analyse recent trends in specific occupier sectors then find out exactly where retailers are opening new space.
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