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Property: Station retail

Transport for London wants retailers to climb on board to help it cash in on the millions of people who pass through its network each day.

Old Street station in east London has never been described as a “retail destination”. A random collection of shabby newsagents and outdated shoe shops, the station was one visitors sought to escape, if only they could navigate its confusing network of exits.

However, last month saw the launch of a project to help Old Street, which is Drapers’ local station, do justice to the buzzing Shoreditch scene of which it is part. Through a shake-up of retail properties, mayor Boris Johnson’s Transport for London hopes to integrate Old Street with the cluster of fashion-forward businesses that have made ‘Silicon Roundabout’ their home.

TfL has agreed a deal with online property agency Appear Here, which connects landlords with short-term tenants, to fill 13 disused units with pop-ups including eyewear brand Bailey Nelson, confectioner Mallow and Marsh and juice cafe Press London.

Each pop-up will be in situ for between three and 12 weeks to publicise its brand and showcase new stock to some of the estimated 23 million people that pass through the station each year. TfL has also redesigned shops, signage and passageways and created gallery-style spaces to encourage passengers to spend more time there.

The run-down kiosks have been given a lick of paint and are crammed full of colourful products - arthouse magazines, organic juice and, of course, hipster entrepreneurs. The deal with Appear Here will also see emerging brands take space at major central Underground stations including St James’s Park, Piccadilly Circus and Baker Street.

TfL is particularly interested in the pop-up phenomenon - last Christmas it leased vacant units at Piccadilly Circus to Nike to sell special-edition trainers. For landlords, it is a good way of reducing vacancy rates and regenerating an area; for tenants, it is a cheaper form of advertising. “Our pop-up at Old Street is a fantastic platform for us to test the market. It’s the kind of exposure, marketing and recognition small companies cannot normally afford,” says Harriot Pleydell-Bouverie, founder of Mallow and Marsh.

Yet the campaign to attract temporary occupiers is just one strand of TfL’s drive to rejuvenate stations by providing a better mix of retailers, underground Wi-Fi and click-and-collect services to passengers.

It aims to generate £3.5bn of secondary revenue - income other than fares - over the next 10 years to reinvest in the transport network. Last year it made around £250m from secondary revenue, 10% of which was from retail, and predicts rent increases of more than 200% in some locations from regearing leases and bringing in short-term tenants.

The opportunities for fashion and other retailers are significant. TfL owns 1,200 shops and kiosks at Tube, rail and bus stations, and more than 11 million journeys take place on its network every day. Stuart Anderson, who joined TfL from shopping centre operator Westfield last year as head of retail in the commercial development team, tells Drapers the Underground is part of the “cultural fabric” of London. “Stations are transport hubs where footfall is as high as, if not higher than, in shopping centres and retailers should make the most of this.”

TfL’s portfolio offers a wide range of retail propositions, he says - from small units on the fringes of the City and West End, perfect for pop-ups, to larger units in prime locations where long-term leases are sought. There are also stations undergoing redevelopment, such as South Kensington and Earl’s Court, where medium-term occupancies will be possible.

Over the past six months TfL has sought to demonstrate its offer. As well as stationing Nike at Piccadilly Circus, it provided drinks firm Diageo with a disused unit on South Molton Street to host a pop-up cocktail bar, and the same unit was used a few weeks later by womenswear brand Paper London.

The unit is now under offer to an unnamed jewellery retailer that plans to take a five-year lease, and Yo! Sushi has signed a five-year lease for a unit at Baker Street. “This is not about selling properties, it’s about boosting rents and revenue and pop-ups are a good place to start,” says Anderson.

At Old Street, units range from £500 per week for a 20 sq ft market stall, to £2,000 per week for a 600 sq ft shop and £5,000 for a 1,000 sq ft exhibition tunnel. Ross Bailey, founder and chief executive of Appear Here, says he is “on a mission to help people share their ideas in front of the right audience, in amazing spaces, to showcase and transact.

“Each station is like a TV channel with a different captive audience. Old Street is about those who work in technology, design, start-ups. Brands there can showcase their wares to people slightly ahead of the curve.”

For Wendy Klerck, general manager at Little White Lies, a film review magazine with a pop-up at Old Street, this is a big opportunity. “First, it allows us to lift our offering off the page, bringing our publications to life in a space where we can talk face-to-face with our audience.

“Second, it lets us do this at low cost and low risk. Full-time retail is not an option for us; it’s not our core business. And a mall or shopping centre location wouldn’t achieve our goals - it’s too competitive.”

She adds: “The transit retail proposition - being able to own a space for a flexible amount of time and surprise and delight a high-targeted footfall - has distinct advantages.”

Capital & Regional is another landlord that has worked with Appear Here. Chief executive Mark Bourgeois says: “Pop-ups enable fashion start-ups or companies that have previously only traded online to experience the benefits of bricks-and-mortar retailing.”

As yet, few fashion-specific retailers trade from Tube units, and brands that do tend to limit their offer to mainline stations such as Victoria or St Pancras; for example Joy, Oliver Bonas and Joules.

Oliver Tress, managing director of Oliver Bonas, says: “We have several units in key London stations, all of which perform well and are great for brand visibility. We hope to continue to find great sites in similar locations, not least because our customers tell us they like them. They are, however, only one part of our estate and we would consider many different types of location, from small community settings to high streets.”

Nigel Richards, managing director of cashmere brand Brora, says the TfL setting “would suit impulse purchasers in the critical winter trading season”.

“Brora is a luxury brand so not one that would naturally fit with TfL retail locations. However, we have successfully used Tube station display advertising in the past, and the chance to showcase the brand to lots of passengers in appropriate Tube stations may be an opportunity.”

Other retailers were reluctant to speak to Drapers, fearing their comments could jeopardise discussions with TfL or other landlords.

This suggests the interest in TfL’s offer is there, but even Anderson admits talks with larger, more established fashion retailers are at an early stage. The challenge for them, he says, is to “fit their offer into the small, capsule spaces available”.

There are other drawbacks, warns Richards. “TfL would need to upgrade the tenant mix and ensure fashion fitted in, otherwise the retail experience would not be cohesive.”

And Klerck says: “If you want to showcase something new, start a conversation, experiment and connect with your audience, it’s great. But I don’t think it’s the best permanent space for traditional retail, apart from complementary station services, such as coffee shops and newsagents [which comprise the bulk of TfL’s current tenants].”

Another issue would be rush-hour periods in which commuters focus on minimising journey times rather than shopping. TfL hopes to mitigate this risk by installing click-and-collect facilities across London Underground, ensuring Tube stations remain part of the retail journey.

It has agreed tie-ups with InPost, which operates click-and-collect lockers, and supermarket giants Asda, Tesco and Waitrose, and Anderson says that with the unabated rise of internet shopping, similar opportunities exist for online fashion retailers, such as Asos. He says TfL is in talks with “a wide range” of retailers and logistics operators, but no further deals had been agreed as Drapers went to press. Asos did not respond to requests for comment.

A critical mass of clothing shops at Tube stations will be necessary to attract an influx of fashion brands, but TfL’s property shake-up could create an interesting new retail landscape.

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