UK retail is the envy of the world - here's how it can stay on top
Our Chief Executive Lawrence Hutchings, recently spoke to Estates Gazette about the evolution and resilience of the UK retail market, the relevance of physical retail space and the overall shopper experience.
'I am currently approaching 100 days in my new role as Chief Executive at Capital & Regional, and 100 days back in the UK after five years working overseas.
As you can imagine, it is has been a busy period. I have spent a lot of time re-engaging with people from the various facets of retail and retail property sectors, and getting different views on how the market is changing.
When I left the UK for Australia in 2012, the country was basking in the glow of the London Olympics, Andy Murray’s Wimbledon win and the Queen’s Diamond Jubilee. More importantly, after the aftershocks of the global financial crisis, the UK economy was returning to growth and there was renewed confidence in the retail sector.
When I returned to the UK a few months ago market sentiment was similar. At Revo in September it was clear many businesses have a cautious outlook due to the unknown of ‘Brexit’, but most people – myself included – were confident the retail sector will once again prove resilient to whatever challenges lie ahead.
Certainly on the global stage there remains huge confidence in – and admiration for - the UK retail market.
I think those of us working here sometimes forget that the UK is the world-leader in retail. People I have met around the world revere British brands such as John Lewis, Top Shop, Karen Millen, All Saints, Waitrose, Next, Harrods, Debenhams and Selfridges. They also consider the level of online penetration here to be way ahead of other markets. We should all take pride at being at the epicentre of the global industry.
But to retain our leading position we must continue to embrace change.
Five years ago the retail property market was hierarchical: retailers placed a lot of emphasis on the top 40 locations, and everywhere else struggled to compete. Today, the market feels more like an ecosystem: a myriad of different assets, in contrasting locations where retailers see opportunities to develop different formats for different audiences. It is more important than ever before to be close to retailers and through these relationships develop a deeper understanding of the end consumer, or as we call them at Capital & Regional, our ‘communities’ and ‘guests’.
It is worth remembering that many retailers are entrepreneurs at heart; they want to innovate, test ideas and if they fail, fail quickly and move on. Our job is to keep pace with this speed of thought and progress.
Their thinking on physical stores is indeed moving rapidly. The role of the store is polarising, some retailers see it as the brand emporium, while for others the objective is fulfilling the immediate need of the customer. However, customer experience and emotion is important at both ends of the retail spectrum.
It was clear at Revo that an increasing numbers of retailers see the store as a means of establishing a connection with consumers that will drive them to engage and transact, either in store, online or though other channels. But at other centres, such as our own, guests differentiate less, it’s simply shopping to them. This presents a new challenge for landlords: the environment, services, merchandise mix as well as the store space itself has to be aligned with – and adaptable to – the changing perception of physical retail space.
Linked to this, our understanding of shopper experience has evolved over the past few years. Firstly, we are far more adept at collecting and interpreting data, so have much better insight into what mix of leisure and F&B will boost enjoyment and dwell time. But secondly, we now understand that ‘experience’ can also be enhanced in a number of more subtle ways.
At our centres, which are dominant within their communities, we are focused on the ‘marginal gains’ which make a difference to customers visiting on average 1.5 times a week. For example, an improvement to toilet or baby-changing facilities, new public seating, or more efficient technology in our car parks can really impact how customers feel when at the centre.
We have learned that even the smallest things contribute to the sense of place and experience, which have become increasingly important words in the retail property vernacular.
Today I see developers, investors and retailers assuming much more responsibility for creating places that are vibrant and sustainable.
The global financial crisis left many UK towns and cities struggling and that has influenced how retailers choose locations today. There is still a desire to cluster with complimentary brands, but now there is greater consideration as to the long-term health of the town or city they are investing in.
Retailers want to know, does the location have sufficient housing? Does the leisure amenity drive the right sort of footfall? Is the infrastructure future-proof? As a result, the onus falls on us as owners and managers to play a far more active role in shaping the places in which we operate.
In five years, the retail landscape has changed significantly, but the entrepreneurial spirit of the industry remains the same.
If we continue to marry collaboration and innovation there is plenty to play for. One of the greatest attributes of this industry is change, no two days are the same and that rate of evolution keeps getting faster – it’s exciting and a privilege to be part of.'