Retailers describe the Scottish capital as a “bellwether”, relatively immune to the storm battering the UK market. Will the new Edinburgh St James scheme disrupt that stability?
“If you’re rolling out around the UK, Edinburgh is always going to be in your top five [locations],” Peter Ruis, Anthropologie’s managing director of international, tells Drapers. “Edinburgh is a bellwether for us. It is one of the most consistent retail locations in the UK, and has been for some time.”
It is a glowing testament to the Scottish capital in a period of unprecedented change for fashion retail, as businesses seek to optimise the performance of their property portfolios. But a new development is set to shake up the Edinburgh retail scene and polarise the city’s offer.
Anthropologie’s performance in Edinburgh is no anomaly. In April, Johnstons of Elgin opened its fifth UK store on Edinburgh’s luxury shopping street, Multrees Walk, and thanks to the city’s steady “tourist tap”, its first four months have been a success.
Edinburgh is one of the most resilient cities across the UK at the moment
Stuart Moncur, Savills
“[A lot of] retailers [in other UK locations] will make a loss 11 months of the year. However, with the tourism model in Edinburgh, sales are buoyant the whole year-round,” says George McNeil, retail director at the cashmere and woollen manufacturer.
The Scottish capital has the second-largest UK tourism trade after London, and more than 4 million visitors a year inject £1.32bn into the local economy. And thanks to the city’s numerous festivals spread throughout the calendar year, the footfall is dependable. Add the city’s affluent population into the mix and a safe haven for fashion retail begins to emerge.
“Edinburgh is one of the most resilient cities across the UK at the moment,” Stuart Moncur, head of national retail at property services firm Savills, explains. “Tourism still continues to drive the economy, with 3 million visitors to the Edinburgh Fringe Festival this year, and it is a financial capital in the European landscape with a wealthy resident population.”
Nuveen Real Estate’s 1.7m sq ft Edinburgh St James development opens in 2020, and promises to maintain the city’s reputation for steadfast economic growth and transform its retail landscape.
Nestled in the East End of the city, the new centre combines 850,000 sq ft of retail with a W Hotel, 152 flats and 30 restaurants.
Its fashion retail strategy is to bring new brands to the city, including Inditex fascias Stradivarius, Pull & Bear and Bershka.
“It’s about getting those sub-brands in and new fascias – those that are not represented in Edinburgh,” says Nuveen’s director of retail, Chris Pyne. “It’s about who is best in class, who suits the demographic and the tourist footfall and who’s got the best trading potential.”
Inevitably, though, many high street heavyweights including agreed tenants Next and Zara will take the opportunity to right-size their city centre stores and relocate to the development, leaving holes in the high street.
Retailers will wait for St James, and they are offering very soft deals
Callum Mortimer, CBRE
Edinburgh’s main retail thoroughfare on Princes Street is one-sided, exacerbating what is already a comparatively contracted shopping district. The city’s historic buildings, beloved by tourists, are restrictive for retailers who are prevented from expanding them because of their listed status and as a result brands are migrating towards to East End of the city – fuelled by St James’ imminent opening.
“Most fashion retailers’ heads have been turned [by the development],” Callum Mortimer, head of the national landlord team at property company CBRE, tells Drapers. “As a result, there has been less competition on Princes Street [in the West End of the city] when a shop has come up.
“Retailers will wait for St James, and they are offering very soft deals, which the landlords in the rest of the city centre can’t compete with.”
Nevertheless, while admitting that the development is the “biggest threat” to the rest of the city as it allows new tenants to drive harder lease negotiations, Mortimer is optimistic that Edinburgh’s existing retail space is still drawing considerable interest.
“There are plenty of tenants looking at Edinburgh and that is a positive sign. The calibre of tenants is very strong,” he adds. “I’ve been telling landlords to push out expiry dates [on leases] with rent-free [deals] so that their expiry date is way beyond when Edinburgh St James can affect [them].”
Edinburgh St James promises to attract an annual footfall of 20 million people on completion and stem the “leakage of shoppers” to Glasgow, Scotland’s largest city. However, the traditional retail areas across Edinburgh will have to sharpen their thinking to compete.
Property sources agree that Princes Street will transform into a tourist-focused convenience offering. This will further divide the city as multiple fashion retailers move away from the West End in favour of the St James side of town after the centre opens.
“It will become more polarised,” says Nigel Pashley, owner of West End-based menswear independent Frontiers Man. “There is a ‘big city’ feel at the East End now, and more niche independents will drift towards the West End, as the rents are cheaper and it’s a more relaxed shopping experience.”
Edinburgh boasts a strong independent scene that draws its own international and UK-wide customers with exclusive-led and well-curated boutiques. Lower rents and the historic properties of the city’s secondary retail locations are a natural fit for independents, yet many believe the council should better support areas outside the traditional retail pitch.
“Festivals do increase trade, but there could be much more funding to support and advertise the independent areas, and make sure that if [the council] is so festival obsessed, that it is distributing the footfall,” says Uli Schade, co-owner of Stockbridge menswear independent Dicks.
Adele Crombie, owner of West End womenswear independent ALC, agrees: “There’s a lot more that could be done from the likes of the council to promote the smaller streets. The local clientele definitely know we’re here, but for tourists, which is a huge part of Edinburgh all year round, they don’t know as much as they could.”
“Thistle Street [where the store is located] should be a lot busier in August and sometimes the footfall isn’t really where you’d like it to be.”
Edinburgh is not immune to the wider issues affecting UK retail and the independent scene is suffering its own property issues.
Independents were hit by “obscene” hikes in business rates following the 2017 revaluation, tipping many over the threshold for financial assistance from the Scottish government and leaving some with business rates bills that doubled overnight. Nevertheless, many welcome the investment in Edinburgh St James.
Sarah Murray, owner of womenswear independent Jane Davidson, tells Drapers: “We’re very fortunate in Edinburgh because there are really strong independents, and anything that makes Edinburgh a stronger city for retail is good for all of us.”
It is Edinburgh’s organic and steady growth that has allowed the it to remain a constant in the retail landscape. The city, says CBRE’s Mortimer “punches well above its weight” – and with an uncontested consistency amid retail uncertainty, it should be a location on any retailer’s list for expansion.