Aspirational fashion stores in flagship retail locations, unique experiences that can be shared on social media platforms, food markets and a visit to a shopping centre for a “big day out”, are the flavour of the day for property firm Hammerson, as it moves away from department stores and retail parks.
On 24 July the property development and investment firm announced it is shrinking its department store space by a quarter and high street fashion space by a fifth, and will replace them with “differentiated brands, aspirational fashion, leisure, events and lifestyle spaces”.
The company is also exiting retail parks over the medium term to focus on flagship retail destinations and premium outlets. The first is defined as a “top-tier city shopping centres underpinned by strong demographics and consumer catchments” such as Bullring in Birmingham, Cabot Circus in Bristol and Westquay in Southampton, while its premium outlets include Bicester Village, which it has an investment in through its partnership with Value Retail.
The company is making the changes to adapt to an “unusually turbulent retail backdrop” in the UK, in which 104 of its stores across its portfolio are in administration or subject to Company Voluntary Arrangements (CVAs).
It has identified a series of market trends driving change, including growing urban populations that create demand for more mixed-use lifestyle venues and reduced requirements for car parks. While ecommerce sales are increasing, it points to research from Global Data which outlines that two-thirds of sales growth over the next five years is expected to come from store-driven sales.
Hammerson is adjusting its strategy to adapt to the growing polarisation towards flagship retail locations at the expense of smaller shopping centres, as well as a notion of a “big day out” at a shopping centre.
By reducing its exposure to department stores and high street fashion, Hammerson hopes to benefit from strong demand from categories such as aspirational fashion, leisure, consumer and digital native brands “all which see value in a physical store in the very best retail locations”.
Of nine key leasing deals Hammerson flagged in its trading update, only two were fashion retailers: Pakistani clothing brand Khaadi which opened its first store in Scotland at Silverburn and Cornish lifestyle brand Seasalt which opened at Victoria Gate in Leeds. The others were focused on beauty (NYX Professional Make Up), food or sports and leisure (Cotswold Outdoor and Runners Need).
It said it will re-purpose department store space and introduce more flagship retail showrooms, marketplace food offers and “enhancing” event spaces. Examples of these include hosting the Amazon Treasure Truck at a number of its centres to provide a “unique pop-up experience”.
The truck drives around different locations offering one product that can be bought at a discount, operating almost like an ice-cream van, but the purchase must be made via the Amazon app.
At Cabot Circus, Hammerson created an installation of 16 giant hot air balloons along Concorde Street last month to pay homage to Bristol’s balloon fiesta to generate a buzz on social media.
In possible good news for retailers, the company also indicated it would be more flexible with lease terms and contracts.
“A more responsive retailer strategy will also include investigating the structure of our leases and contracts to create versatility and flexibility,” the company said.