THE RETAIL BULLETIN - The home of retail news
Click here
Home Page
News Categories
Department Stores
Electricals and Tech
Food and Drink
General Merchandise
Health and Beauty
Home and DIY
People Matter
Retail Business Strategy
Retail Solutions
Electricals & Technology
Sports and Leisure
Christmas Ads
Shopping Centres, High Streets & Retail Parks
Retail Events
People in Retail Awards 2024
The Future of The High Street 2024
Retail HR Summit
THE Retail Conference
Retail HR North 2025
Upcoming Retail Events
Past Retail Events
Retail Insights
Retail Solutions
Subscribe for free
Terms and Policies
Privacy Policy
Mapic review: retail property back on the front foot

Physical retail is gaining momentum following a torrid time during Covid-19, with stores increasingly recognised as playing a critical role in the multi-channel model, and food… View Article


Mapic review: retail property back on the front foot

Physical retail is gaining momentum following a torrid time during Covid-19, with stores increasingly recognised as playing a critical role in the multi-channel model, and food and beverage outlets helping to inject more excitement into high streets and shopping centres.

This was the over-riding message from the retail property industry who gathered for MAPIC, its annual conference and exhibition, on the south coast of France. Christian Luft, head of retail valuation advisory for EMEA at JLL, says: “Out of the pandemic the performance of shopping centres has been stellar. Footfall is not quite there but there are higher conversions. Physical sales are coming back. Gen Z’s want to shop in physical stores and there is lots of room for growth in click & collect, with the fulfilment/retail hybrid stores coming round in the future.”

Buoyancy out-of-town

One especially buoyant area of the sector is out-of-town retail parks. Giles Membrey, managing director of Rioja Estates – which specialises in outlet parks that sell off-price goods, says the market is “very positive”. He adds: “People feel safer in these more open spaces and a lot of stock is going into these stores as brands bring in products that has been returned from unwanted internet sales. People are also looking for bargains and will travel an hour to find products at a discount.”

One feature of the outlet parks Rioja is involved with is all the leases are turnover-related, with the levels dependent on the attractiveness of the brand. Membrey says an Italian luxury brand will be paying 6% of turnover in rent whereas an outdoor leisure brand will be paying more like 12%.

Other operators of malls have brought in such rental arrangements too following much discussion during Covid-19 about the need to change the rigid rental structures that have historically been imposed by landlords. Nicholas Porter, head of brand asset management at Landsec, says the company has spent much time over the period of Covid-19 talking to its tenants to better understand their needs.

Need for flexibility

“We collect data from them for turnover-related rents and new leases have some turnover-related element in them to help us manage the risks better. It’s a win/win for us and the tenants,” he says, adding that the company has also sought to be more flexible by offering a small number of units to lesser known brands on short three to four month leases at its Trinity Leeds development. “It’s good to have Primark, Apple and Zara driving traffic but it is also important to have some discovery brands taking up a modest proportion of shopping centres,” says Porter.

This is very much the domain of Tom Price, head of site acquisition at flexible retail space provider Sook, who says the property industry is moving only very slowly to embrace flexible solutions and that smaller retailers can be intimidated by the size of many landlords who are reluctant to engage with them if it des not involve a headline rent.

Sook offers units on high streets, with modular fit-outs, which can be taken for very short periods including for pop-ups. The plan is to grow from the current 11 units and help satisfy the demand from what Price says is thousands of businesses that want to access physical space: “It’s ludicrous that retail space stays empty. We want to unlock the huge opportunity in these spaces that have been inaccessible to people through traditional leases.”

For larger, established retailers flexible leases – involving turnover-related rents – are not always the preferred solution, according to Russell Loveland, director of UK asset management at Pradera Lateral, who says some brands at the Trafford Centre do not want turnover-related rents as they know it would result in higher rents.

Flight to prime

This is a reflection of the strength of this particular shopping mall that he says is benefiting from the “rise of a number of dominant schemes” around the UK with retailers wanting fewer stores but locating these flagships in key locations. “They want larger, fewer, better outlets. The Next store at the Trafford centre has grown in size from 45,000 sq ft to 65,000 sq ft and JD Sports has gone from 15,000 sq ft to 50,000 sq ft, creating its largest store in the world.”

What has also been fundamental to the mall’s success is its food court that Loveland says is one of the highest grossing food areas in the country with 800 seats for a wide variety of brands from KFC to Franco Manca and Real Greek.

Landsec has also benefited from the “flight to prime” – with many brands upsizing their units – and also enjoying the success of the food and beverage offer, which Porter says will play a greater role in the future. Over the next three to five years he predicts its footprint will grow by 30-40% across the group’s portfolio.

Appetite for food and beverage

There was certainly no escaping the widespread excitement around food and beverage at MAPIC this year. Among the big announcements was Time Out Market revealing that it has signed a deal with the developers of Diriyah in Saudi Arabia to open an enormous 9,000 sq m food market incorporating 23 kitchens, five beverage stations, and 1,650 seats indoors and al fresco within the Diriyah Square part of this major development. This will sit alongside 450 retailers, entertainment venues, cafes and restaurants.

Jay Coldren, co-CEO of Time Out Market, says: “We’re super excited to be going into Diriyah Square with our largest market. It’s a big step for us to be this big anchor. It’s very unusual in the world to have something on this scale.”

Also looking to grow the footprint of his food halls is Martin Barry, founder & CEO of Manifesto Markets – that operates a unit in Prague and will be opening a new facility at the Potsdamer Platz development in Berlin on January 17 that will involve 23 kitchens and two cocktail bars serving what is expected to be 85% local customers, with 40% predicted to return month-on-month.

Changing face of retail

Another interesting announcement involved Stephane Keulian, F&B concept development leader at Ingka Centres, who launched the new Saluhall concept that involves a plant-based food hall that adheres to Nordic values. The plan is to incorporate it into city centre locations where the company has increasingly been developing retail properties that include smaller IKEA stores.

An important part of the concept is that it is tailored to the local market and Keulian says as much as 60% of the food operators in these food halls will be from the local area. Paco Underhill, strategic advisor at Envirosell, recognises this phenomenon and says the retail industry is in a period of dramatic change that is taking it away from the globalised model of shopping. “The challenge for retailers and mall operators is how to get more local. It’s the village versus large city shopping,” he says.

This is all contributing to the changing face of the high street. Darren Williams, global head of leasing at the leading orthodontics brand Impress, says this Barcelona-based business is taking vacant retail sites around Europe and the US on high streets and in shopping malls. “It’s a big opportunity for us that might not have been there before. Retail is changing. It’s all part of the re-purposing of physical retail. Online is definitely not killing stores,” he suggests.

Another important factor involving the physical space is sustainability and major brands have it high up their agendas including Adidas where Alexandra Von der Grun, VP of retail expansion in Europe for Adidas, says the most important thing is to create awareness around sustainability. Based on this the three main areas of focus for the brand this year have been: understanding and controlling energy consumption; educating people so they know the problem and how to address it; and re-modelling the stores to be more sustainable.

She has also tried to bring in a mindset that avoids the belief that more sustainable means more expensive to the customer. “It means having smarter tools and systems such as LED lighting and HVAC systems. These solutions are there, they just need accelerating,” says von der Grun.

Hugues Laurencon, general manager for France and Benelux at The Body Shop, agrees with this thinking and cites the Body Shop initiative involving customers being able to purchase products like shampoo and hair conditioner in refillable aluminium bottles. Not only did this save 60,000 plastic bottles from potentially going into landfill in France but customers using this service would save Euros 80 over the course of the year.

Subscribe For Retail News