Cities and struggling town centres must turn to mixed-use developments to drive retail sales, property experts have warned.
As consumer spending on fashion retail falls, retail property bosses have highlighted the mounting importance of attracting visitors through regeneration by “placemaking”, or assessing local community assets and aspirations.
Speaking at retail property organisation Revo’s annual conference at Liverpool’s Exhibition Centre on 20 September, Nash Bond chief executive Cameron Scott maintained that retail will play “a most important role” in 20 years’ time, but only “in association with other components, [such as] leisure, and residential, offices, as the whole fabric of the area”.
He cited Westfield London, which is expanding in March 2018 with 740,000 sq ft of retail, office, leisure and residential space, as an example of how shopping centres will survive through mixed-use developments.
Landsec head of shopping centres Ailish Christian-West said that the “future of retail” entails a “blending of experiences for customers” in terms of retail and leisure mix.
Christian-West added: “This is not just for shoppers; brands [also] need to experience it and really buy into what your product is.”
Speakers across panel sessions also noted that both landlords and investors funding retail schemes are warming to the notion of agreeing shorter lease terms, to adapt to the drive towards operational flexibility from their occupiers.
Hammerson UK and Ireland managing director Mark Bourgeois remarked that institutional investors are starting to “accept the fact that it’s not all about 15 or 25-year leases anymore”.
Scott observed: “As we approach more challenging environments, a lot of the big shopping centre landlords are going to have to be more flexible in their approach to lease terms, and [perhaps even] embrace the idea of turnover-only leases. As we see the growth of digital, the shopping centre environment will change.”
Bourgeois said after polling around 50 retailers, 75% said that in five years they saw the main purpose of a shop as providing either “an extension of a brand or services”.
Bourgeois said: “It’s not just about buying stuff from a shop – [it’s about] tying into emotions and having an association with a brand you might ultimately shop online with, but [ensuring visitors] can only get a certain experience through a physical space and experience a retailer’s curation.”
Speakers including Christian-West also highlighted the importance of working with retailers and brands to stay on top of changes in the market.
But equally, shopping centre experts said retailers have a large part to play in keeping shoppers engaged, particularly in terms of store experience.
Stephen Wicks, director of shopping centres at investment manager TH Real Estate, said: “There’s a lot to be done in the industry but retailers also need to look at themselves and figure out how to make experiences better. We can do our bit by bringing them into the centre; they also have to look at how their operations [are] run and how to make them more efficient.”