FSP - Widely regarded as the UK's leading business consultants http://www.fspretail.com/blog/ fspretail.co.uk:blog:235 2013-05-20T00:00:00+01:00 Last week Estates Gazette, in association with BCSC, held the 2013 Retail Summit. The main focus of the conference was: Management of and investment in the high street, shopping centres and out of town Online vs. high street The view from retailers What is next for the retail developer? FSP attended and were delighted to have provided information to support the PBA consultation paper on town centre investment management. Peter Miller from Westfield discussed Omni-channel as an opportunity not a threat. Retailers are reducing the number of stores they have and focussing on quality. Owners need to bring in new retailers in order to stay relevant. Marty Plocica from Hammerson talked about how it is important to give customers what they want. You can only understand this by knowing who they are, where they live and what they want to spend. Charles Miller of New River Retail backed this up saying that you need to know what makes locations tick and understand customer needs in order to make retailers perform to their maximum. Both these points are music to our ears, - in FSP’s view everything starts with understanding your customer. Marty also talked about how important catering and leisure are, as centres need to create new and different reasons for customers to visit. The impact of online ran through all of the different talks. Consumers now have up to seven channels via which they can research products and price. Mark Bourgeois from Capital & Regional supported this with the statistics that since The Mall shopping centre launched its mobile site, 50% of visits are now via mobile phones. The centre has introduced a Reward Me card, available through an app, and sees this as an evolution through investment. It is estimated that by 2020 £14 Billion sales will be made through mobile devices, with 59% of customers already having used click and collect services. FSP has talked about the importance of mobile shopping at length in the ‘FSP View’. The PBA consultation paper on town centre investment management aims to give new ways to address the fundamental issues faced by the high street and give professional with the expertise to affect change the tools with which they can do so. For more information contact fspretail@fspretail.com or call 01494 474740.   http://www.fspretail.com/en/blog/2013/05/235-estates-gazette-retail-summit-2013-online-is-an-opportunity-andamp-give-customers-what-they-want/ FSPRetail fspretail.co.uk:blog:234 2013-05-10T00:00:00+01:00 According to recently published research by Trevor Wood Associates, the vacancy rate on UK retail parks rose from 9.1% to 9.9% in the second half of 2012 - the largest year-on-year increase since 2008. While the causes are obvious (failed retailers, weak consumer demand and the growth of online shopping to name but three), the solutions are less clear. The abundance of available space has made it an occupier’s market, with some desirable and sustainable retailers attracting a wide range of offers for each planned store opening. The challenge for most parks, therefore, is to stand out from the crowd and secure the best lettings in an increasingly competitive marketplace. In response, FSP has developed a new cost-effective leasing support product for retail and leisure parks which provides landlords with key demographic and spending data, plus benchmarking against similar parks. Delivered as a concise 3-page report, this information enables landlords to present each park’s opportunity more effectively. Its low cost makes it affordable even for relatively small assets, many of which will have never benefited previously from catchment research. The second stage is to tailor the information to specific target retailers, placing the park in question within the target’s store portfolio and identifying similar trading locations. This allows retailers to place the opportunity in context and reduces the possibility of an approach being dismissed out of hand because it is not on a requirements list. Whilst this basic information is not a substitute for bespoke survey-based research, it does enable a much wider range of parks to begin to engage with retailers on similar terms to the major parks and shopping centres, and increase their chances of securing important lettings.   http://www.fspretail.com/en/blog/2013/05/234-out-of-town-leasing-support/ FSPRetail fspretail.co.uk:blog:233 2013-05-02T00:00:00+01:00 On Tuesday FSP attended the second Completely Retail Marketplace in Spitalfields, East London - an event that is quickly establishing itself as one of the key dates in the retail and property calendar. With attendees including a mix of landlords, agents and retailers, it provided an excellent opportunity for FSP to share its independent insight and discuss its range of support and services. Having attended the inaugural event in 2012, FSP this year took a stand in order to provide a base for meetings – a wise decision on what proved to be a hectic day! With the event spanning just one day and in a relatively compact space, there was a great deal of energy within and around the market with a high degree of recognition and shared common interests between attendees. Of particular benefit to FSP was the ability to meet both new and potential clients, re-engage with previous clients as well as catch up with existing, long standing partners. And, as the day wound down, the evening drinks and chance to relax was much appreciated! With the next CR event taking place in close proximity to BCSC – also to be held in London this year – it will be interesting to see how the industry reacts to both events. Having repeated its initial success, CR is clearly meeting a requirement for a straightforward, professional event in the first half of the year. The location and pared down nature of stands/displays seems to have proved a further key attraction to making the event a success. FSP looks forward to exhibiting again in 2014!   http://www.fspretail.com/en/blog/2013/05/233-completely-retail-marketplace-2013-a-successful-day-for-fsp/ FSPRetail fspretail.co.uk:blog:232 2013-04-25T00:00:00+01:00 A fun evening was had at the Hammerson ‘We Love Retail’ Awards. Claudia Winkleman hosted the awards with just the right mix of enthusiasm and slightly irreverent humour. With 18 awards to present, there was no time for speeches but the winners were all clearly thrilled, with Claudia often swamped by hugs and thanks only emerging to organise a winner’s photo for each category. In addition to the awards there were a number of short films set in Hammerson shopping centres, interviewing many of the nominees. The tone of the evening was set when each appearance by a nominee on film was greeted by cheers. There was also a strong partisan element as representatives of the individual centres strove to make the most noise – it should be said that West Quay, Southampton and Queensgate, Peterborough would have shared the prize, had there been one, for loudest cheering. Nominees in each category were judged on a combination of mystery shopper results and sales performance. With all 10 Hammerson shopping centres included from West Quay (Southampton) to Union Square (Aberdeen), there was nationwide competition and being nominated was an achievement in itself. FSP sponsored the Fashion Accessories Award which was won by Claire’s. The FSP table included three retailer teams from The Oracle (Reading) - Brother to Brother, and two rivals for the Health & Beauty award – The Fragrance Shop and L’Occitane. The award went to L’Occitane with the team especially pleased having been nominees last year and now this year winning! All in all it was a great evening with the enthusiasm of the retailers shining through.   http://www.fspretail.com/en/blog/2013/04/232-hammerson-we-love-retail-awards/ FSPRetail fspretail.co.uk:blog:231 2013-04-18T00:00:00+01:00 With Margaret Thatcher and football hooliganism dominating the news, the past few days have felt like a step back in time to the 1980s. Though the retail landscape has progressed significantly since then, the role of one of the great hopes of the 1980s, the entrepreneur, is becoming increasingly relevant. With a number of national retailers either entering administration or consolidating their portfolios, a new band of entrepreneurs would be extremely welcome. Step forward the temporary store. FSP research indicates that temporary occupiers currently account for around 6% of shopping centre units, rising to as many as 15% of units in some centres. With a further 12% of units standing vacant, the opportunity for today’s entrepreneur is clear. Vacant units in shopping centres provide entrepreneurs with a range of possibilities – the chance to test a new market, product or location – all in a high footfall location with minimal overheads and a short term lease. The number of success stories that emanate from single unit opportunities are vast, including: Poundland, which started with one store in the Octagon Centre, Burton; The Entertainer, which began with a single store in Amersham and Fat Face, which started life selling t-shirts in ski resorts! But what are the benefits for landlords keen to recruit retailers on longer term leases? As well as voiding potential rates liabilities, temporary retailers can improve perceptions of a scheme at a time when the diminished role of the high street and vacant space is never far from shoppers minds. Temporary operators can offer an instant solution to rectify an imbalance in merchandise mix, provide a seasonal offer to draw shoppers into a scheme or act as a forerunner to ‘prove’ the opportunity to a national retailer. Offering vacant space at a reduced package to local independents, allowing operators to establish and grow their business and in time, convert to permanent leases, generates strong PR whilst reducing vacancy levels in the medium/longer term. Where demand is low, creative uses such as community events, pop-up art galleries and even squash courts create vibrancy and drive footfall. Companies are now being set up with the specific purpose of linking entrepreneurs with opportunities, easing the process of recruiting and installing temporary occupiers for landlords. Whilst detrimental to both a scheme and the balance sheet, vacant units provide landlords with a short term business opportunity and can provide much needed interest in what might otherwise be an unproductive, unattractive void.   http://www.fspretail.com/en/blog/2013/04/231-fsp-view-back-to-the-future/ FSPRetail fspretail.co.uk:blog:230 2013-04-10T00:00:00+01:00 Successful shopping locations are those that sufficiently satisfy consumer needs to attract enough shoppers. To become relevant in this way calls for:   A thorough understanding of the profile and requirements of current and potential customers A good grasp of the attractions of alternative shopping options, including internet shopping The development and implementation of a coherent retail offer to appeal more strongly than the alternative options to the chosen group of shoppers. The lack of a coherent retail mix is a key factor in the decline of many UK high streets. Multiple ownership makes the implementation of an agreed retail mix extremely difficult Research amongst consumers has identified 5 principal drivers of shopping behaviour: Convenience – alternatively expressed as the cost of access Experience – shopping is a social activity Value for Money – defined by only 5% as paying the lowest price Range – the choice that is relevant to the shopper Community – sense of belonging can be important FSP has long and varied experience working with asset managers and leasing teams to develop and implement the appropriate retail mix in a wide range of situations. FSP works both in town centres and on retail parks, with new and existing shopping locations. In each case, the work starts with gaining a thorough understanding of shoppers for each location and their priorities. The depth of investigation varies according to the requirements of the project. For major new developments, such as Union Square in Aberdeen, FSP undertakes detailed, qualitative research to understand shopper motivations and how best to satisfy them. On other projects, a purely quantitative approach may be appropriate. Accurate definition of the scale and scope of the research required is one of the benefits of working with FSP. With its emphasis on developing long-term client relationships, FSP will recommend research to answer the relevant questions, not simply implement a standard research programme. Having identified the scale and nature of potential demand, FSP works with the leasing team to specify retailers who can best satisfy the demand and trade profitably. The SnapShop database has details of more than 2,000 UK retailers, including their offer, their target market, geographical distribution, their financial performance and ability to pay rent. Warwickshire Shopping Park in Coventry is an entirely new retail location for which FSP developed the retail mix and worked with the leasing team to make the business case to the relevant retailers.   http://www.fspretail.com/en/blog/2013/04/230-product-focus-retail-mix/ FSPRetail fspretail.co.uk:blog:229 2013-03-21T00:00:00+00:00 Learning to Live with Online The continuing growth of online retail sales is irrefutable. For example, a recent Axa Market Edge report claims that by 2020, online retail sales will account for 30% of retail sales across seven major European countries. The report expects that online sales will account for 90% of retail growth in the years to 2016. Each of the seven countries included in the analysis will be differentially impacted so that average sales density in Spain is forecast to decline by 5.7% and by 1.2% in UK. The danger in interpreting this analysis is to assume that online retailing and physical shops are necessarily in conflict. The retailer’s over-riding objective is to best satisfy customer demands. Shoppers have a variety of requirements some best met via the internet and others via physical stores. The challenge is therefore to create the optimal combination of channels to market and to understand the best role for each channel. Physical stores can effectively fulfil various roles. For some, an emphasis on local provenance may be relevant, particularly in the wake of the horsemeat rumpus. For others, acting as a hub for online purchases, for ordering, delivery and return may be appropriate. This latter role may extend to the provision of brand showroom space as illustrated so effectively in Apple stores. An opportunity inherent to physical stores that is denied to online retailing is to provide a unique shopping experience that creates a personal relationship between the shopper and the store. Recent research by an online retailer showed that the leading barriers to online purchasing are the need to see the merchandise (40%) and the lack of easily accessible, relevant product information (33%). Both problems are effectively resolved by a physical store. It is therefore disappointing when the demise of the High Street is laid at the door of online sales. The reality is that the decline set in long before online sales took off and is better explained by High Street shops that are fit-for-purpose for neither shoppers nor retailers. Customers are deterred by expensive car parking, an unattractive environment and a tenant mix that does not adequately reflect their requirements. Meanwhile, out-dated unit sizes, poor shop adjacencies, difficult servicing arrangements and low shopper numbers discourage retailers. In announcing expenditure of £32m on upgrading its stores, Andy Street of John Lewis said, “The improvements are necessary to ensure that our stores are “complementing a rapidly growing online business rather than being replaced by it”. At the same time, Moo.com, which supplies business stationery on-line, has announced the opening of its first shop, in Shoreditch. It seems increasingly clear that the future of retail will be about shops as well as online. But those shops will be highly-targeted to satisfy a specific customer group to which the shop will offer plenty of complementary services. The high street is not dying, but it is changing to reflect a new pattern of shopping. And that means retailers must rethink the role of the shop in their business and better understand the requirements of their shoppers. It is in this area that those who manage shopping centres and retail parks can provide significant help, by knowing who shops at their facility and their reasons for doing so. Information and insight are powerful tools in recruiting new tenants and FSP can supply both   http://www.fspretail.com/en/blog/2013/03/229-fsp-view-the-shop-challenge/ FSPRetail fspretail.co.uk:blog:228 2013-03-15T00:00:00+00:00 Following on from Bloomberg’s article ‘Carlyle to Henderson Cash In as Discount Brands in Demand ’, outlet centres are fast becoming the leading shopping format for fashion brands, attracting visitors from as far away as China, Brazil and the Middle East. According to FSP, revenue at European outlet malls climbed to 10.8 billion euros last year, a 60% gain from 2007, while floor space provision has increased by over a third. Today excluding Russia and Turkey, there are 201 outlet malls in Europe, 178 larger than 5,000m2. Demand outside of Europe for brands owned by companies like Burberry Group Plc, Escada, Armani, Polo Ralph Lauren and Prada means that foreign shoppers spend twice as much per visit as Europeans, whilst domestic tourists spend twice as much per visit as domestic shoppers, according to FSP shopper survey data. However, not all schemes are dominated by Luxury and Premium Brands and not all focus on attracting international tourists from nearby capital cities. A clear hierarchy of schemes has emerged to serve different types of market, including provincial cities, domestic tourist destinations and underserved rural districts. As a result, the mix has extended to include sports brands, multi brands and quality high street retailers and fashion positioning has evolved from upscale brands aimed at Assured shoppers to midscale brands targeting Family shoppers. FSP identifies 30 European outlet centres with a true Luxury position, 75 centres with an upscale position with the remainder providing a more midscale offer. Scheme performance loosely grades according to this proposition however; strong management, a catchment relevant offer and informed leasing activity are just as important in determining success. Director Ken Gunn commented: With new schemes such as One Nation Paris, London Designer Outlet, One Fashion Outlet (Bratislava), Factory Annopol (Warsaw) and Eifel City Outlet (Cologne) under construction, plus planned extensions at existing sites, there is a great deal of choice for occupier expansion. With site positioning becoming increasingly critical in driving shopper performance, it is important that occupiers take the time to consider whether the market opportunity and proposed proposition is truly consistent with their brand values and capable of attracting sufficient numbers of the right customers to support a profitable store. For the full Bloomberg article, click here.   http://www.fspretail.com/en/blog/2013/03/228-outlet-centre-growth-continues/ FSPRetail fspretail.co.uk:blog:227 2013-03-07T00:00:00+00:00 Managers of shopping locations have an increasingly important opportunity to provide a valuable service to their existing and prospective tenants. By knowing the characteristics and motivations of their shoppers, shopping centres can help improve the sales of their tenants. The need for retailers to understand the motivations, behaviours and requirements of their customers has never been greater. On-line retailers, whether giants like Amazon or niche specialists, provide new alternatives to physical shops. Nearly all shoppers in every merchandise category have a choice of retailer and of shopping channel. One relatively new way to gain consumer insight is to use the Big Data generated by the use of Google and social media. It is possible to track consumer interests, behaviours and attitudes by analysing their internet usage. This is particularly effective for the brands with a global or at least a national profile. However, whilst Big Data provides great insights, it also has limitations. It can for example show only what has happened. It is less able to predict the future, what consumers will do or how they will react. Effective use of Big Data by smaller brands or by shopping locations is more problematic. There is less direct data about the brand or the place and the cost of analysing Big Data can be significant. Therefore, there continues to be an important role for talking directly to relevant groups of shoppers to understand their attitudes and aspirations. These are not subjects suitable for questionnaires, either written or on-line. The requirement is for exploration and dialogue. This can be achieved in various ways. Focus Groups consist of getting together a group of shoppers who share certain characteristics. For example, they may all be purchasers of luxury labels or be frequent shoppers at a particular centre. These Groups working with a skilled facilitator can be extraordinarily creative. The collages produced by one such Group to illustrate their vision of Southampton, Fareham and Portsmouth were powerful, succinct summaries of how, in the view of these shoppers, these centres interact. Whilst highly effective, Focus Groups are relatively cumbersome in set up and participation, typically lasting for around 90 minutes. A lighter alternative, used successfully by FSP in transport interchanges and in shopping centres, is a one-on-one conversation between a skilled moderator and an individual who fits the respondent specification. The conversation lasts around 15 minutes, which enables the respondent to have as much individual time as in a full Focus Group. Of course, what is missing in a Mini-Depth is the interaction between participants but the FSP experience is that this is compensated by the greater individual input that is generated. Accompanied Shopping is similar to a Mini-Depth in being one-on-one but differs in that the stimulus is provided largely by the environment. Observation of respondent behaviour is a major part of this research and can powerfully illustrate the obstacles and aids on the shopper’s journey. FSP has long experience of helping clients refine their existing and proposed proposition to shoppers by combining the best qualitative research with its own insights and knowledge of retailing. For more information, contact FSP on 01494 474740 or email fspretail@fspretail.com.   http://www.fspretail.com/en/blog/2013/03/227-product-focus-qualitative-research/ FSPRetail fspretail.co.uk:blog:226 2013-02-26T00:00:00+00:00 A member of the FSP team recently visited Poland and noted that the Polish market for retail space is still booming, with new premises being built and existing ones being expanded and modernised. Global Brands Entering Poland Poland is still an attractive market for international shopping chains. Strong purchasing power attracts retailers for expansion: several new chains have recently entered Poland, including; Victoria’s Secret Beauty & Accessories American Eagle Outfitters Michael Kors LC Waikiki Karen Millen Carpisa American Eagle Outfitters actually opened their store in Poland before entering the UK market. Hollister (operated by the Abercrombie & Fitch chain) opened the chain’s first store in Poland at Galeria Mokotów. UK chains Debenhams, All Saints, French Connection and Superdry, and US chains Disney Store and Banana Republic would also like to establish a presence on the Polish market. The entry of the Bath & Body Works chain is a good example of the growing potential of the health and beauty sector, which recorded the highest increase in sales per square meter last year. The number of DIY stores is also on the rise, with Castorama having opened the largest number of such stores in Poland. International shoe retailers are eyeing Poland as well. Footwear store operators Centro and Kari have recently entered Poland and the CCC chain is increasing its number of stores. Fashion retailer LPP Group plans to add a new brand, Sinsay, to its portfolio at the beginning of 2013. The H&M chain, which recently introduced COS, plans to launch a new brand: & Other Stories. In total, about 140 new store openings are planned in Poland for Year 2013, placing the country in 3rd place in terms of the scale of planned expansion, after Germany and Spain. New Shopping Centre Opening The last quarter of 2012 was the most active period in terms of shopping centre openings. 162,000 sq m of new space in seven new locations and three expanded facilities were delivered. All in all, Poland is the third most active market in Europe in terms of retail space development. 750,000 m2 of retail space is currently under construction and ca. 550,000 m2 of new space will be delivered in 2013 - an overwhelming majority of which are located in medium-sized and small cities. FSP RETAIL BUSINESS CONSULTANTS is a member of the Polish Council of Shopping Centres, providing retail property consultancy activities in Poland and in the other Central European countries. For more information about these and other FSP products and services, please contact Ken Gunn at ken@fspretail.com or call +44 1494 47 47 40.   http://www.fspretail.com/en/blog/2013/02/226-retail-development-booms-in-poland/ FSPRetail fspretail.co.uk:blog:225 2013-02-18T00:00:00+00:00 It is widely recognised that shopping behaviour has been significantly impacted by the use of smartphones and tablets. For example, YouGov reported a survey in September 2012 in which 96% of shoppers claimed to engage in pre-shopping internet research (44% Always, 52% Sometimes). 41% were reported to use their mobile to find the store and a similar percentage (43%) to compare prices and access product reviews. The effect of such behavioural changes on shopping trips has been less widely considered. Surveys undertaken by FSP show that shopping frequency has been dropping modestly, especially amongst more occasional shoppers. Both Ipsos and Experian report reduced pedestrian flows. However, the National Travel Survey has been showing that the average number of shopping trips has been falling for some years – down 19% from 1995/7 to 2011, to an average of 192 a year. Over this period, the greatest reduction has been in walking to shops, with a consequent 13% increase in average travel distance, to 4.4 miles, without any change to average travel time, steady at 18 minutes. However, FSP believes that the impact of changed shopping behaviour on shopping centres will be far more radical than a small reduction in pedestrian flow. The internet obviates the need to go out to shop. If a shopper merely wants to acquire merchandise, the internet is often more convenient and cheaper. To remain competitive, shopping centres will have to offer something unavailable on-line, a worthwhile experience for their visitors. It seems this is a view shared by CSC. It is unlikely that the Company would spend £7 million simply to develop the Intu consumer branding or plan to invest £25 million on implementation unless they too had identified a real need to alter the role of their shopping centres. The increasing presence of restaurants and cafes in the tenant mix is testament to changes that have already occurred. As has been noted previously, “You can’t eat on-line.” The provision of leisure facilities, often multiplex cinemas, buttresses the experiential offer. The role of shops is increasingly to act as a brand showcase, where visitors can see, touch, try on and interact with the product. The actual purchase may be divorced from this experience – who wants to pay more to lug home something that can be delivered for free? This seems to be the logic behind the Intu shopping website and the free wi-fi in all CSC centres. The 10% cut Intu will take from each sale reflects the turnover rent percentage that might otherwise have come their way. Changes that are fundamental may be more difficult to identify than those that are incremental because they alter the rules of the game. The FSP view is that the internet has seriously modified the rules of shopping.   http://www.fspretail.com/en/blog/2013/02/225-the-new-role-for-shopping-centres/ FSPRetail fspretail.co.uk:blog:224 2013-02-07T00:00:00+00:00 Measuring marketing department effectiveness is fundamental to good management. However, how and what should be measured depends on agreeing and maintaining clear marketing goals. In changing market conditions, this may not always be easy to achieve. The overall aim of marketing is to increase sales, either directly or indirectly, for example by changing customer perceptions through developing a dialogue with the shoppers. However, marketing departments in shopping centres do not have direct customers. The sales information belongs to the tenants who may not be prepared to share it. This disconnect explains the enthusiasm of centre management to glean as much sales information from their tenants as possible. A popular measure of marketing effectiveness in shopping centres is the change in pedestrian flow. However, it is over-simplistic to assume that increasing annual footfall is always desirable. Anyone who has traded on a very busy thoroughfare (Clumber Street in Nottingham might be an example) knows that it is possible to have too many people on the street, so that it is difficult for shoppers to get out of the crowd and into the shop. Within a shopping centre, a more targeted measure would be the change in footfall in a particular area of the centre. It is of course possible to increase footfall artificially. The use of a celebrity for a store opening will boost footfall but generally deters shoppers. In other cases, where a centre is trying to re-position itself, the interest may be more in the type of shopper attracted than in the raw number of shoppers. Similarly, where research has shown a Shopper Gap, where the proportion of shoppers from a specific area of the catchment is lower than the anticipated average, the marketing target may be to remedy that specific weakness. Measuring the marketing effectiveness in such cases, where the focus is on particular groups of shopper, rather than on shoppers overall, is more complex and requires discrete research. Normally, it involves taking a sample of all shoppers and assuming that its profile reflects the overall shopper profile. The marketing effectiveness is shown by the differences in the results from the samples taken before and after the marketing effort, The appropriate sample size is determined by the relative size of the group which is of primary interest. Sometimes, the task is to change shopper perceptions of the centre. This can rarely be achieved by marketing alone; some on-the-ground change is also required. The research role is to define and measure the existing consumer perceptions and to understand how they can and have been modified. In summary, measuring marketing effectiveness is essential for good management. It requires a consistent approach over several years and experience and knowledge of retail market research, expertise which FSP is able to provide. http://www.fspretail.com/en/blog/2013/02/224-measuring-marketing-effectiveness-in-shopping-centres/ FSPRetail fspretail.co.uk:blog:223 2013-01-24T00:00:00+00:00 Christmas Sales Report 23rd January 2013 Comment Despite the very obvious indicators that all is not well in some walks of retail (see our Christmas Trading & Administrations section), the average like-for-like figures are still almost all positive.* Despite the very obvious indicators that all is not well in some walks of retail (see our Christmas Trading & Administrations section), the average like-for-like figures are still almost all positive.* This reminds us once again, that the fittest have survived, and are thriving, whilst those whose offer starts to appear irrelevant or has been superseded are now paying the ultimate penalty. Our work in FSP regularly reminds us that there is life in the High Street yet. The internet is very clever, showing us what we want because Facebook/Google et al are geared that way, and the same applies to shopping (“if you bought that, you’ll like this”, or “people like you buy these”). With a third of shoppers doing so for the experience, only physical stores and interesting centres and streets still allow for truly random browsing and purchases that really make us smile. Our research suggests that those who also shop online generally spend more when shopping than those who don’t. So, to build on what we said last week, not only are the technologically advanced retailers winning and keeping customers, but so too are those with a shopping experience which makes us smile. * A small note of caution should be sounded as the relatively small sample sizes (many retailers only report Total sales changes) can be heavily skewed by the odd exceptional result. Boux Avenue, for example, reported like-for-like increase of 79% over the Christmas period (not necessarily reflected across the whole year), however the overall picture in Clothing & Footwear is still positive. For the full Christmas Sales Report - Release 2, Click Here. http://www.fspretail.com/en/blog/2013/01/223-christmas-sales-report-release-3/ FSPRetail fspretail.co.uk:blog:222 2013-01-18T00:00:00+00:00 Despite a slight fall in December, Non-Food retail sales throughout 2012, as reported by ONS, remained modestly positive – i.e. they were higher than in the previous year. Nevertheless, the recent appointment of administrators at Comet, Jessops, HMV and Blockbuster (UK) indicates that something remains awry in UK retailing. These four retailers alone account for around 1,000 outlets employing nearly 20,000 staff. There are around 230,000 independent retailers in UK, most with a single outlet, accounting for nearly 60% of all shops. The balance is occupied by around 2,000 multiple retailers who account for over 90% of national shop sales. Therefore, when looking at the numbers of retailers falling into administration or some other measure of financial distress, it is potentially misleading to use figures for all retailers because the multiples account for such an overwhelming bulk of national sales. As is widely recognised, the retail market has been disrupted over the last 10 to 15 years by decentralisation, technological change in the shape of internet sales and the development of mobile commerce. The growth of internet sales is tracking along predicted lines and yet only a relatively small number of retail majors are doing most of the expansion and internet related investment. The losers can be classified into two broad categories: • Services that can be better supplied electronically than in physical stores. Examples include financial services travel agency and utilities. There are other merchandise categories, such as books, music and film, for which electronic transfer is highly effective although there may still be an experiential role for physical stores. The shakeout will no doubt continue but necessarily at a more moderate rate given the attrition that has already occurred • Retailers, particularly those with a broad or poorly defined target market, who have not developed a strong and effective internet based presence and offer Retailers beyond those services that are more effectively supplied electronically have the option to continue to grow by investing in the internet. The options for retail property landlords however, are more restricted. The brands which performed with great credit this Christmas (for example Whistles, H&M, Hobbs, House of Fraser, Ted Baker and John Lewis) are highly selective in their choice of new locations. The expanding catering and leisure sector requires passing trade and is seldom a traffic generator in its own right. For retail landlords to thrive, a more radical, strategic approach is required. Their problem is that many town centres no longer meet the requirements of either retailers, or their ultimate customers, the shoppers. The units are too small for the retailers and the overall retail offer is inadequate or irrelevant for shoppers. The fragmented ownership of town centres militates against the solution of these problems. It is time for some fresh thinking to find a solution to this situation. http://www.fspretail.com/en/blog/2013/01/222-fsp-view-whats-going-on-in-uk-retailing/ FSPRetail fspretail.co.uk:blog:221 2013-01-15T00:00:00+00:00 Christmas Sales Report - Release 2 15th January 2013 Comment The chart above bears out our thoughts in our first Christmas Sales report last week; it is not all doom and gloom. In the most part the picture is as good as, if not better than, the last couple of years, and in all cases, except Personal Goods (where no trading figures are available yet), the like-for-like sales changes per category are all positive.   Although we are now reporting a couple of administrations, it is not the case that the initial picture was unrealistically rosy as neither were a great surprise. Both Jessops and HMV have struggled with debt and were recognised by FSP as being financially risky. They were also in the unfortunate position where technology has surpassed them. In our first report, we championed the survival of the fittest, but fitness is irrelevant when your product starts to appear irrelevant or superseded. Jessops may be completely dead and gone, but HMV may yet be rescued. From our All Retailers chart you will see that online dominates the Total Sales gains, providing 7 out of the top 8 increases. As we said last week, the technologically advanced retailers are winning and keeping customers; particularly where the online function is an integrated part of the whole. It will therefore be a shame if, with its venture into an Amazon style marketplace and the launch of MyHMV, the UK High Street loses HMV altogether. For the full Christmas Sales Report - Release 2, Click Here. http://www.fspretail.com/en/blog/2013/01/221-christmas-sales-report-release-2/ FSPRetail fspretail.co.uk:blog:220 2013-01-08T00:00:00+00:00 Christmas Sales Report January 2013 Comment At FSP, we doubted the doomsayers with their prophecies of more failures this Christmas. With the still floundering economic situation and the generally held opinion that the internet will be the death of retail, they may have had a point. Except this discounted the Darwinian theory of Survival of the Fittest. The lean years since the retail meltdown in 2008/09 have challenged retailers to innovate and improve, then win and subsequently keep, our custom. Not surprisingly, the technologically advanced retailers are doing this very well. John Lewis have Click & Collect nailed and whilst this is evident in the increase in their online sales, it is also impacting positively on the group as a whole, with very healthy like-for-like sales over Christmas. Where stores support the online process, ensuring the visit and the attendant customer service is a positive experience will be key not only for the retailers but also for the location. Working to ensure the sum of parts is greater than the whole is essential for shopping centres and more importantly town centres. Rather more of a surprise is the result from the department stores as a whole. Not so long ago many were sounding the death knell, with these stores seen as the dinosaurs of retail. However John Lewis is not the only winner this Christmas, with House of Fraser and Debenhams posting good positive like-for-likes. The message here is to find your position and stick to it: Debenhams has its strong own brand via designer collaboration; House of Fraser has its house of brands; whilst John Lewis is updating for middle England and at the forefront of integrated online service. Undoubtedly as more results are published, we will see the strength of those who already recognise that bricks & mortar are as much a support for the online process as profit centres in their own right. FSP will keep you posted with these results with regular updates to this Christmas Sales Report throughout January. With kind regards Jo Hewson Managing Director, FSP Jo@fspretail.com   To read the full Christmas Sales Report - January 2013, click here. http://www.fspretail.com/en/blog/2013/01/220-christmas-sales-report-january-2013/ FSPRetail fspretail.co.uk:blog:218 2012-12-20T00:00:00+00:00 SnapShop members follow their favourite retailers. In 2012 the most clicked news items from our SnapShop Alerts were: ASOS - Cocosa raids ASOS executive Victoria’s Secret - Opened its first UK store Guess - Added to its senior management team Blacks Leisure Group - KPMG appointed as administrators Krispy Crème - Expansion continues TJ Hughes - TJ Hughes plans to open 11 stores MBT - The UK arm of MBT fell into administration Sports Direct - Mike Ashley pushed Gilesports into administration ALDO – Brought its Call it Spring fascia to the UK Irregular Choice - Secured two new UK stores in Leicester city centre and in Camden Jack & Jones - Bestseller continues UK expansion Republic - Savills has been appointed to advise Republic on its expansion YO! Sushi - Plans to double the size of its UK portfolio by 2017 Waitrose - Will up its store count to 600 JoJo Maman Bebe - Plans to open 12 stores this year after like-for-like sales rose Costa - Opened 16 coffee shops in the two months before Christmas Jigsaw - CEO resigns Moda In Pelle - Is embarking on an aggressive retail push Jamie's Italian - Opened a new restaurant in Greenwich Clintons - New chief exec to re-brand Clinton Cards Crocs - Opened around 150 new stores this year Sony Centre - 16 Sony Centre operators fell into administration ASOS made the top, with news that online retailer Cocosa poached a top ASOS executive to lead its business. SnapShop allows you to keep up to date with everything that is happening in retail, whilst keeping tabs on key retailer developments. For more information, or to discuss the changes, please contact Heidi Roberts on 01494 474740 or email snapshop@fspretail.com   http://www.fspretail.com/en/blog/2012/12/218-snapshop-favourite-news-in-2012/ FSPRetail fspretail.co.uk:blog:219 2012-12-20T00:00:00+00:00 As well as rushing to buy that last present, remembering to check if the turkey will fit the oven and ensuring sufficient supplies of Christmas fare, asset and property managers will also be nervously awaiting end December rent payments. As Comet closes its last stores and HMV warns of imminent breach of banking covenants how many more casualties will there be? FSP believes that in contrast to last year when January brought administrations for among others: Peacocks, Bonmarche, Blacks, La Senza (a total of 12 retailer casualties were recorded on SnapShop in January 2012), most companies are approaching the end of 2012 leaner and keener. Stocks have been kept tight and while pre-Christmas discounting has been plentiful it has seemed planned rather than panicked. The final FSP view of 2012 is a cautiously optimistic one – most retailers will make it through to 2013 and with less stock, keener margins and tighter costs should see profits at or above last year. One key statistic emerging from analysts is that online spending on Christmas may well have topped that in shops for the first time. Whether this will be substantiated post-Christmas is unclear but the direction of travel is unarguable. The implications are clear for physical retailing and will give us all food for thought in 2013. First indications of retailer performance will be available on 8th January in the FSP Christmas sales report. Until then have a very Merry Christmas and best wishes from the FSP team for a Happy, Healthy and Prosperous New Year.   http://www.fspretail.com/en/blog/2012/12/219-last-christmas/ FSPRetail fspretail.co.uk:blog:217 2012-12-06T00:00:00+00:00 Out-of-Town (OOT) retailing accounts for around 30% of comparison shopping expenditure. With figures from CBRE showing that OOT accounts for about 60% of the retail development pipeline, that share is set to grow. A critical challenge for the effective management of OOT retail assets is to identify relevant potential occupiers for whom a solid business case for taking new space can be developed. The accurate specification of potential target occupiers depends in turn on identifying the number and profile of consumers who will be attracted to the location. When economic conditions were easier, the level of evidence required for taking a new outlet was lower than in these more challenging times. The penalties for making a marginally sub-optimal decision have increased. To address this increased need for accurate and comprehensive information, FSP has developed a new, tailored service for OOT asset managers. Readily accessible data about every retail and leisure park in the U.K. is now available on an in-house database for analysis and comparison. The information covers both potential shoppers and the current occupiers for each park. The number and profile of potential shoppers at any park can be compared with those at other parks of the same type. For asset managers considering the acquisition of an additional park, the fit with the existing portfolio can quickly be established. When making the case to an occupier to take a new unit, its potential can be set within the context of the potential within the occupier’s existing portfolio. The new database has been developed in response to FSP client requirements and has already demonstrated its effectiveness. If you have an asset that you think might also benefit, please get in touch. http://www.fspretail.com/en/blog/2012/12/217-product-focus-costeffective-research-for-outoftown-assets/ FSPRetail fspretail.co.uk:blog:216 2012-11-15T00:00:00+00:00 In the UK retail environment, modest changes at the macro level can disguise developments that are transforming the shopping journey. At the headline level, the decline of household disposable income that started in 2011 is forecast by Verdict and SAS to continue modestly until 2013. Their expectation is that 2012 Christmas expenditure will be 1% above last year and that 10.6% of it will be via on-line sales. These are not startling, unexpected figures.  Their report suggests that in Q1 2012, 8.2% of on-line shopping was conducted using a mobile phone. However, the forecast for Christmas is that 20% of on-line sales will be through a mobile – an increase of 240% within a year. These percentages are themselves averages that disguise a much wider variation for individual retailers. For example, Screwfix has noted recently that mobiles account for 16% of their on-line traffic and N Brown indicated that 18% of their on-line sessions originate from mobiles. Retailing is an industry with very high fixed costs, so quite minor variations in sales have a dramatic effect on retailer profits. If sales through mobiles account for a little over 2% of total sales, it is a channel that would be perilous to profits to ignore. One of the complaints of those shopping via mobile is that each retailer has an individual app. For nearly one third of smartphone and tablet users in a recent YouGov survey, this was sufficient to put them off using their device for shopping. This problem gives rise to an opportunity for shopping centres, or town centres, to provide a single app that gives access to all the websites of the retailers located within the centre. Recovery of the cost of the development might be possible through a combination of the Service Charge and a usage rate. In a period of continuing slow economic growth, exploiting opportunities to improve the shopping experience will be more important than ever.   http://www.fspretail.com/en/blog/2012/11/216-the-fsp-view-the-importance-of-mobile-phone-shopping/ FSPRetail fspretail.co.uk:blog:215 2012-11-08T00:00:00+00:00 There are currently nearly 200 factory outlet centres (FOC) in 25 European countries with total floor space of 3.2 million square metres. These trading FOC’s account for approximately 13,000 shop units and 5,000 occupiers, a substantial but highly complex market. The key issues; The average occupier portfolio size is less than 3 FOCs Only 34 occupiers present in more than 10 countries Only 29 Premium or Luxury occupiers present at more than 10 FOCs International and national tourists can account for a large proportion of sales In Western Europe, many FOC brands avoid being too close to major cities In Central Europe lower car ownership makes suburban locations desirable Shoppers choose between rival FOCs on the basis of retail mix, environment and the quality of visitor experience, not necessarily the operator brand Catchment characteristics (e.g. number of customers, spending power, lifestyle, competition etc.) are critical in determining both strategic opportunities for operators and the attractiveness of sites to occupiers Understanding individual occupiers and their evolving location preferences is an essential part of an effective leasing campaign. Understanding FOC customers, catchments and site performance is essential in assisting occupier brands select the best locations. Having advised over 75 outlet centre projects in 25 countries, FSP has the business intelligence and expertise necessary to help investors and occupiers maximise the value of their outlet centre portfolios. For more information, please contact Ken Gunn or Sandor Balogh.   http://www.fspretail.com/en/blog/2012/11/215-product-focus-factory-outlet-centres-retailer-recruitment/ FSPRetail fspretail.co.uk:blog:214 2012-10-18T00:00:00+01:00 Radical and decisive action is required to remedy the parlous condition of town centre retailing. It will not be enough simply to avoid further damage. In-town retailing needs a new role that incorporates the trend towards internet shopping. To increase business rates in line with the September measure of inflation will be entirely counter-productive. It will further disadvantage town centre retail against out-of-town and internet retailers. The inflexibility of the automatic annual increase in business rates contrasts with the readiness of some landlords to flex rents to match market demand. Historically, business rates on average amounted to around 30% of rent but in some portfolios it now exceeds 40%. In far too many cases, rates can even exceed the rent. The discrepancies between the business rates for different forms of retailing, in-town, out-of-town and internet, is only one handicap for town centre retailers. The complication of in-town redevelopment is not confined to the protection of planning laws. The relative physical inflexibility of town centre buildings, certainly compared to out-of-town sheds, makes change more expensive and time-consuming. Furthermore, the size and layout of in-town units often do not suit the requirements of modern retailing. These problems are compounded by multiple ownership of in-town property. However, even resolving all these problems will alone be insufficient to revive town centre retailing. The salvation lies potentially through the internet, which while still small, is the fastest growing retail channel. The IGD forecasts that the UK on-line grocery market will double, from current £5.6bn (market share of 3.4%) to £11.1bn by 2017. Meanwhile, the Walmart owned Chinese on-line retailer, Yihaodian, has announced plans to open 1,000 virtual supermarkets. Each will be around 1,200ft2 and stock roughly 1,000 virtual items, each with Augmented Reality to provide full background information. Other examples of the integration of on-line and stores include: The Argos Check and Collect service accounted for 29% of sales in Q1 ’12 86% of Halford’s on-line sales are for in-store collection A September 2012 survey showed that 96% of respondents use the internet for research before buying off-line and 41% use their mobile for store finding One of the wonders of the Portas Review was the very passing attention it paid to the internet possibilities for town centres. This suggests that it is not only soldiers who can fairly be accused of preparing to fight the last war. It applies also to retail gurus. http://www.fspretail.com/en/blog/2012/10/214-the-fsp-view-town-centre-retailing/ FSPRetail fspretail.co.uk:blog:213 2012-10-15T00:00:00+01:00 When FSP launched SnapShop, 7 years ago, we were testing the water. It seemed sensible to us; if we found the information on our database useful, then so would others in retail. We weren’t wrong. This year has seen some of our very first members sign up for their 7th year. Ken Ford, Executive Director at Capital & Regional said: "FSP's SnapShop service is a very convenient and accessible digest of retail intelligence used widely throughout our business. Over the years it has helped support the development of our deep retailer relationships, providing invaluable insight into our core customers’ businesses." It’s not only the reliability of the SnapShop service which our clients like, but our attention to detail, our customer service and, in line with the whole of FSP, our philosophy that nothing stands still and taking on-board what our clients say, we constantly aim to develop and improve. We, at FSP, use the database behind SnapShop on a daily basis. Our clients benefit from our own requirement to keep up-to-date. Renewing his membership this year, Rob Wingrave, Managing Director of Lunson Mitchenall commented: “I have used SnapShop since it was first introduced by FSP. We find it an invaluable information tool in this rapidly changing market” A driving philosophy behind SnapShop was that all information about a retailer should be in one place. Elaine Rutherford, Business Development Manager at Caledonia Contracts relies on this and told FSP: “Caledonia Contracts has a relationship with SnapShop spanning 7 years. We use the information on a daily basis to assist us with our market intelligence, essentially saving us valuable time and money.” “Cushman & Wakefield have been members of SnapShop for a number of years” said Partner, Charlie Barke, when asked why he had renewed the membership this year. “We find the information on retailers extremely useful and it has become a vital part of our research network”. Do you like what our clients have to say about SnapShop and think you could benefit from a reliable online retailer information service? Find out more on our membership page.     http://www.fspretail.com/en/blog/2012/10/213-snapshop-the-reliable-source-of-retailer-information/ FSPRetail fspretail.co.uk:blog:212 2012-09-25T00:00:00+01:00 Last week FSP’s European Consultant, Sandor Balogh held the first FSP master class in Kiev for E95 Outlet Center & EVO Land Development. The subject was ‘Trends in international retail / Outlet Shopper Profile & Shopping Characteristics’. The class was for marketing and retail & development managers of potential tenants for Ukraine’s first outlet centre, E95 Outlet Center. The main questions and topics discussed were: Recent trends in international retail including outlet strategy Does retail business efficiency increase after implementing outlet strategy? What is the age, gender, lifestyle, lifestage and purchasing motivation of the outlet shopper? What are the requirements for merchandise, service levels, brands, scheme positioning and marketing? How do outlet centres create a point of difference with standard shopping centres for shoppers? How do you develop loyalty from outlet shoppers? What is the typical drive time, frequency of visit, spend per visit and dwell time? How does catchment and visit performance vary across Europe? How important is the role of location and the role of competition in driving outlet shopping patterns? What is the impact on existing town centres and shopping malls? Sandor also covered the Key Retail Factors for the success of E95 Outlet Center. The master class advised the potential tenants of E95 on how to achieve better performance from there stores if they were to take up space. The feedback from the participants was extremely positive and the class will be followed up with another Master Class in Kiev. For advice on your European Outlet centre please contact sandor@fspretail.co.uk The E95 Outlet Center will be the first purpose built outlet project in the Ukraine. It will offer over 160 shops of quality international brands each trading with 30%-70% discount throughout the year. The centre will have over 26 654 sqm of gross lettable area, developed in 3 phases making it one of the biggest professionally developed centres in Europe and the local market leade. The centre will be built in a traditional European "village style" with 2785 parking spaces when fully completed. Phase one opening is scheduled for Q3 in 2013.   http://www.fspretail.com/en/blog/2012/09/212-fsps-ukrainian-master-class/ FSPRetail fspretail.co.uk:blog:211 2012-09-20T00:00:00+01:00 Successful retailers are adept at matching the changing demands of their shoppers. This reflection is triggered by the IPD estimate that the value of out-of-town retail property now, for the first time, exceeds the value of town centre retail. The trend has been evident in the figures over the last 10 years but how many retailers reflect this balance within their store portfolio? While change in retailing is a constant, the nature of the required change is not. Retailers are challenged now both by the immediate effects of the economic slowdown and by rapid technological developments that are permanently changing the shape and nature of their playing field. At the very time they need to invest substantially in new ways to interact with customers, many retailers are short of investment capital and without active support from their bank. Recent responses to the current economic conditions include: Very early launches of Mid-Season Sales (Dorothy Perkins on 13th September, Debenhams and Oasis reportedly on 25th September) A rash of pop-up shops for Christmas, including Toys R Us, Bank, Original Factory Shop and Boden Reformulations of grocery products and reduced pack sizes in order to lower prices The rise of omni-channel retailing makes the definition of on-line sales very difficult, perhaps even meaningless. Consider these snippets of news in the last few days: Johnlewis.com now accounts for 24% of John Lewis sales Forrester predicts that 14% of UK retail will be sold on-line by 2016, that cash will be replaced by mobile wallets and stores will primarily offer shoppers “experiential engagement” Between 60% and 70% of Next Directory returns go through Next stores 90% of Halford’s on-line sales are Click and Collect Amazon will open 20,000 ft2 Click and Collect centres in 10 locations around London and other big cities The proportion of transactions that involve the use of a Smartphone will rise from 6% currently to 18% by 2016, according to Deloitte research • Report from MasterCard claiming that by 2020 smartphones will overtake shops as the main avenue for consumer spending   The take-away from all this is that the behaviour of retail asset managers, planners and politicians will need more closely to reflect the behaviour of successful retailers. The requirement for retail property will not disappear but the nature and location of the space will, as has always been the case, change. The function of shops is developing, with the new Burberry store in Regent Street providing one example and the House of Fraser store in Aberdeen another. Nevertheless, shops will remain an essential element in shopping and understanding the best use for any particular asset will continue to be a key FSP service   http://www.fspretail.com/en/blog/2012/09/211-the-fsp-view-change-growth-or-decay/ FSPRetail