The UK is in the midst of a tall building craze. Every major city is getting – or at least planning – a glittering tower of 35 storeys or higher.
These massive architectural achievements will house offices, hotels and flats, and will be landmarks for generations to come.
But one thing the new buildings won’t house, at least above the first floor, is retail. The love of things hundreds of feet off the ground is just not shared by shoppers – nor, for that matter, by retail developers.
And the reason is simple. It is, apparently, because British people are encouraged to be lazy – they have never been expected to climb stairs in order to shop.
“The supply of retail accommodation in the UK is the main reason that there is no vertical retailing in Britain,” says Nick Symons, retail director at Savills. ” With the exception of special locations such as central London, there has been no need to educate the UK consumer to retailing over many levels.
“So, in reality,” he adds, “we have created a nation of lazy shoppers.”
But vertical retailing – universally accepted as mixed brands in a shopping centre format of three storeys or more – works really well in other parts of the world. In the US, for example, there have been several success stories (see panel, p43).
And in the Far East, such as in China and Japan, shoppers have taken to tall shopping centres like ducks to water – although it has taken some centres time to find their feet.
“Most centres in China require a period of adjustment to their local marketplace,” says David Hand, international director and head of China retail for Jones Lang LaSalle.
“We are working with the 10-storey Super Brand centre, Shanghai, and it has been being very successful in attracting international fashion brand names such as Zara to the market.”
Will it always be the case that UK customers will want to keep their feet on the ground? What would make them accept vertical retailing, after decades of shopping in the likes of Bluewater in Kent (a tiny two levels) or Manchester’s Arndale Centre?
Entry levels
“Realistically, a vertical retail centre will only work in the UK if there is entry at different levels,” says John Strachan, global head of retail for Cushman & Wakefield. He quips that if the likes of London’s Oxford Street – a horizontal mile-and-a-half stretch – were built on a slope, it could be one of the best vertical shopping centres in the UK.
Certainly, such centres have worked in other countries. Dundrum, the 950,000 sq ft linear building spread over three levels on the outskirts of Dublin, is a good example.
When it opened four years ago, Niall Kerney, a director of Dublin-based architect Burke Kennedy Doyle, which designed the building, says: “We were fortunate with the site topography. It was long and linear but, being on the foothills of the Dublin Hills, it rises up to 20m.
“From any level, you can walk directly from the mall to the car park, which has six entrances. No matter where you park, you are no more than one level from the mall.”
But when developers are not that lucky with the landscape, sheer need could propel shoppers beyond the ground floor. For as Symons points out: “As retail destinations now have to compete with so many other retail sources, I suspect our reluctance to shop vertically will change.”
Indeed, vertical retailing in other parts of the world is spurred on by high land pricing or limited availability. This is particularly relevant in the Far East in countries such as Japan, and especially China, with its huge and growing population. The UK hasn’t quite reached that point – yet.
However, vertical retailing need not be in a shopping centre format. Two formulas that do work – and are also working in the UK – are free-standing retailing and department stores.
Laura Pomerantz, a principal of PBS Real Estate in New York, highlights Nike’s 57,000 sq ft Nike Town store on 57th Street in the city, and Armani’s 980m2 store over three floors in Tokyo, Japan, as international examples of free-standing stores.
They come with conditions, though. “Free-standing can work,” she says, “but it has to have density of population, and it has to be destination-led, like Armani. People were sceptical of whether Nike would work, but it did.”
Pomerantz adds that the onus is on the retailer to create that much-needed destination. “Most free-standing vertical retailing has to do with product,” she says, “and if there’s consistency and excitement and there’s a ‘hangout’ environment, then that is where these places differ.
“They are creating something which is uplifting, fun and interesting for people who are exposed to a very fast media and communications environment. And when they work in a vertical retailing building, it’s a perfect match.”
This description exactly fits US retailer Abercrombie & Fitch’s first UK store, which opened earlier this year in London’s West End, and trades on two levels. Models stand outside the 18,000 sq ft store to entice people to enter, and inside there is loud disco music and a dark environment.
The description could also be said to fit the likes of Primark, which has three levels in its flagship Royal Avenue Belfast store and multi-level shops in most major UK cities, including the 70,000 sq ft flagship store on London’s Oxford Street.
Of course, it can’t be forgotten that the UK has a long history of thriving department stores. Symons says: “The only really successful vertical retailing format in the UK is the large department store, with operators such as John Lewis, House of Fraser, Selfridges and Debenhams.
“Their success is based on a point of difference on each level, whether it is the usual men’s and ladies’ wear split, or electrical, sports and home furnishings.”
Proven format
Symons adds that variety stores such as Marks & Spencer prefer two trading levels, although multi-floor trading is effective in specific locations such as Oxford Street. “Large fashion stores such as Next, Hennes, Top Shop and Gap also have a proven multi-level format,” he says, “but, again, they can create a differential between levels.”
If UK shoppers can accept vertical retailing in a single retailer format, or as a department store, why can’t it work for multiple retailers in the shopping centre format?
Anchor stores could be the answer. But, while they tend to work over two floors, they get swamped in a vertical retail development, and this means that they lose their anchor status. In addition, anchors, in the traditional sense of Debenhams or John Lewis, are not necessarily needed in the vertical retail centre.
Birgit Schilz, director of retail in Savills’ Hamburg office, says: “Whenever there are centres higher than three levels, there are always these so-called anchor rentals, such as cinemas, hotels, gyms and technical department stores such as Media Markt and Saturn. While food courts and large sport or toy shops are usually found in the basement, the other brand stores are located on the ground and first floors.”
Maybe in the UK it’s not that the public need to be educated, but rather the preference is for developers to build single storeys. As Strachan puts it: “From the developer’s perspective, they have to ask themselves, ‘What can I let?’ Or, ‘What should the letting space be?’”
Westfield, the Australia-based developer behind some of the UK’s biggest schemes, such as that in Stratford, takes a pragmatic approach to vertical retailing.
Leasing director David Slade says: “The first thing we noticed when we entered the UK market is that the English are great at the utilisation of difficult space. This has given us a fantastic opportunity when planning our new retail developments and shopping centres to maximise their potential.”
Slade adds: “When planning our centres in Derby, London and our next developments in Stratford and Bradford, particularly in Stratford, we have devoted entire floors to retail trading with the opportunity to utilise mezzanine space.
“It would not be possible to create such an outstanding tenancy mix built around the world’s best retailers if we were not able to include them in our centres.
“Vertical space, planned correctly, is economically sound for both our retailers and our company,” says Slade.
If it’s any consolation to the UK shopping public, their German counterparts also suffer from retail vertigo. Schilz says: “Most German customers are too conservative to shop above the second floor.”
She does, however, concede that an exception in the German market is the recently finished Europa Passage in the centre of Hamburg, which has 30,000m2 spread over five retail storeys. Defying expectations, she says, the development has been accepted by customers and clients alike.
But such exceptions are rare. Gerry Mason, executive managing director of Savills Granite in New York, says that, even in densely populated Asian and North American urban centres, shoppers tend to neglect the upper floors, despite the attraction of cinemas, supermarkets, restaurants and destination anchors.
As an example, Mason says: “The Montreal Forum, an ice-hockey arena, was converted to a multi-level retail/entertainment centre with a 20-screen AMC cinema on the top two floors. It was a spectacular failure, despite the enormous local population and high disposable income. The property sold at half the cost of the original development. Shoppers simply preferred the one- and two-level stores in the neighbourhood.”
Does the UK really need – or, indeed, want – vertical retailing? No, according to Jason Sibthorpe, head of in-town retail at GVA Grimley. He says: “Currently, vertical retailing doesn’t exist in the UK. In a perfect world, it wouldn’t be here, as it can never replace clean open-ground floor space.”
