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International arrivals in the fashion retail capital of the world

Overseas retailers continue to flock to the UK to set up their global flagships

Trinity Leeds, West Yorkshire

Trinity Leeds, West Yorkshire

Trinity Leeds, West Yorkshire

London has long been the destination of choice for international retailers seeking a spot on the global fashion map. From the findings of its 2016 Destination Retail report, property consultancy JLL identified London as having a higher presence for international retailers than any of its global peers, including Hong Kong, Paris, Dubai and New York. And although, in the past, few non-domestic retailers have looked beyond the Greater London hot house, more brands are also beginning to settle outside the capital.

“Armed with brand confidence after successfully opening in London, a flurry of international retailers are looking to expand regionally, particularly into Manchester, Leeds and Brighton,” says Marie Hickey, Savills’ director of commercial research. “Only two international retailers opened their first stores outside the capital in 2013, but the following year there were five, including [traditional Pakistani clothing label] Khaadi and [Italian legwear and beachwear brand] Calzedonia.”

From the US, luxury accessories brand Michael Kors opened a regional flagship at Meadowhall in Sheffield earlier this month, following a £60m refurbishment of the centre. It opened the doors of its European flagship on London’s Regent Street a week later.

Another brand that has mushroomed across the UK is Victoria’s Secret, in an expansion that was aided by landlord Hammerson.

“Having welcomed Victoria’s Secret to the portfolio at Brent Cross shopping centre in north London, we have also enabled the brand to expand its footprint across the UK, with stores now at the Bullring in Birmingham, the Oracle in Reading, Cabot Circus in Bristol and WestQuay in Southampton,” says Iain Mitchell, Hammerson’s UK commercial director.

In the past two years we’ve seen an increase in Australian brands looking at the UK market

Marie Hickey, Savills

The next stop for the American lingerie powerhouse is Dublin. Following the news that the iconic BT2 department store (the little sister to luxury brand behemoth Brown Thomas) will be closing in January 2017, Victoria’s Secret will reportedly take over the three-floor, 30,000 sq ft space on Grafton Street. This will be the brand’s first Irish high street store, following the opening of a concession in Terminal 2 at Dublin Airport in 2013.

Although it is still rare for a brand to bypass London altogether and pitch its first flagship regionally, there are examples. Australian accessories retailer Lovisa, advised by Savills, secured its first UK store in Land Securities’ Trinity Leeds.

“It’s unusual for a new international brand to open its first store outside London, but Trinity Leeds is such a strong scheme and attracts the key target market for Lovisa,” says Paul Nicholson, associate director in Savills retail team. The accessories brand is currently working with Savills to find a further regional site in Manchester.

Michael Kors opened in Meadowhall in May 2016

Michael Kors opened in Meadowhall in May 2016

“European brands have accounted for the majority of foreign firms opening in the UK, representing 61.3% of new entrants in the past five years, and those have been dominated by French and Italian brands. But in the past two years we’ve seen an increase in Australian brands looking at the UK market as part of their international expansion,” says Savills’ Hickey. “Like the US brands, they see London and the UK as a good stepping stone before expanding into mainland Europe.”

“It’s not uncommon for brands from one geographical region to come here at the same time,” adds JLL’s director of retail, Duncan Gillard. “There’s a herd mentality and, when a brand sees its competitors expand or do well internationally, it encourages it to move to the same city.”

Success stories are brand-specific, however, and other US and Canadian retailers are struggling to keep up with the UK consumer’s insatiable appetite for newness.

“I read that for about every two international stores that open here, one closes,” says retail consultancy Pragma’s strategy and consumer director, Sara Ghazi-Tabatabai. “The UK has a very demanding consumer, who has really taken to the speedy Zara model. Brands such as J Crew, Abercrombie & Fitch, Hollister and Forever 21 have lost the consumer’s attention by failing to keep up with fast fashion.”

The air of uncertainty surrounding the exit from the European Union may have temporarily pressed pause on international brand expansion in the UK, some property market analysts believe.

“One or two retailers have told us they’re putting their plans on hold until the Brexit outcome is finalised in June,” says Kevin Farrow, CBRE senior director. “But while demand has dropped to a less frenzied level, that is likely to lead to more availability and a drop in premium rates, something we’re already seeing on Bond Street [in London].”

Hickey also observes how “the spend in the West End is closely linked to currency exchange” and points out the positive effect the UK referendum could have on the market, anticipating a pick-up in tourist shopping over the summer, as a result of the compromised position of the British pound.

Coupled with the growing interest from non-domestic retailers beyond the ubiquitous players such as Zara and H&M, the landscape of the regional high street is primed for an exciting transformation over the coming months.

 

The London focus

The reasons for retailers to settle in London are well documented: beyond its geographical advantages and reputation as a trend-setting city, London’s unique blend of market size, maturity, high degree of transparency, large volume of tourist shoppers and legacy as a creative, cultural hub, have also made it a magnet for international brands hustling for expansion. Yet, despite these benefits, an established expatriate presence, and the aforementioned rise in regional interest, the number of non-domestic entrants opening their first stores in London and across the UK is in decline.

Savills declared a drop from 32 international entrants in 2013 to 27 in 2015. To date, it has counted seven newcomers for 2016 and has forecast a total of 25 by the year-end. A consistent decrease of this scale in just three years is significant.

“We are still seeing robust levels of demand from international brands – the problem is really around availability,” says Hickey. “The decline in new entrants since 2013 is down to more constrained levels of availability for the right type of unit in the right location, rather than reflecting a slowing in occupational demand.”

For foreign retailers that are flexible about securing a prime postcode, lack of availability in London may soon be less of an issue. As well as the redevelopment of regional centres such as Meadowhall, regeneration projects in London’s King’s Cross and Battersea have created prime retail opportunities with far more reasonable rents.

“We’ve started calling Battersea ‘the King’s Road of the south’,” says Ghazi-Tabatabai. “With two new Tube stations opening at the Nine Elms development on Wandsworth Road and at Battersea Power Station, we’re predicting this will be a key shopping destination.”

We’ve started calling Battersea ‘the King’s Road of the south’

Sara Ghazi-Tabatabai, retail consultancy Pragma 

Indeed, value-led or bridge brands may see sites such as these as an opportunity to test the London market without coughing up premium prices. Past successes of this mode of entry include Vancouver’s cashmere connoisseur, Kit & Ace, which landed on Shoreditch’s trendy Redchurch Street in September 2015, before opening its flagship (albeit pop-up) on Regent Street two months later.

Luxury brands have a seemingly more secure shelf life in this city. The JLL report announced London as the main home of more luxury brands than any other city in Europe, edging out Paris as Europe’s most attractive city for international and indigenous luxury brands. As well as its being a hotbed of established and emerging fashion designers, and having consumers with a healthy appetite for high-end designer wares, this is also due, from a retail perspective, to dedicated spaces such as the “London luxury quarter”, which are now experiencing an expansion.

131 Sloane Street

Cadogan Estate’s 131 Sloane Street

131 Sloane Street

The Cadogan Estate’s 131 Sloane Street development has already attracted UK flagship debuts from Red Valentino, Spanish luxury brand Delpozo and Middle Eastern concept store Boutique 1. The shops, scheduled to open this summer, will take up more than half of the six flagship spaces facing Sloane Street. Two of those have been taken by Boutique 1 as a double-fronted space: it will feature an edited line-up of designer brands including Galvan, Alexander Wang and Proenza Schouler, a nail salon, a juice bar and library area.

When we started to think where our next Delpozo boutique should be, London was the immediate response

Pedro Trolez, founder and president of Grupo Perfumes y Diseño

“These three international luxury brands are an exciting addition to the south end of Sloane Street,” said Hugh Seaborn, chief executive of Cadogan. “Each of them brings something different and fresh to the area, complementing the elegance of the street and reaffirming its unique place on the international shopping scene.”

“It’s our first store in Europe, after our flagship in Madrid, which opened in 2013,” revealed Pedro Trolez, founder and president of Grupo Perfumes y Diseño, which owns Delpozo. “When we started to think where our next Delpozo boutique should be, London was the immediate response. [131 Sloane Street] is a fresh location and customers are constantly looking for new places. It’s the right place to be.”

Who’s next? Overseas labels looking for a UK  home

With future infrastructure across the UK offering a range of possibilities, and London’s international retail market maintaining peer prominency, meet some of the other retailers that will soon join Britain’s international line-up.

Maiyet FW16 Look 004

Maiyet FW16 Look 004

Maiyet

The sustainable luxury label from New York has struck a deal to occupy 41-42 Conduit Street, next to the Westbury Hotel, paying rent of £3m a year and further evidencing the expansion of the luxury quarter in the London district of Mayfair. This marks the brand’s first European flagship, having opened its first stand-alone store in SoHo, New York in July 2013.

Elie Saab

The Lebanese courtier will open a four-story shop stocking the brand’s ready-to-wear, accessories and fragrance lines, and housing an haute couture salon, at 24 Bruton Street in the heart of Mayfair. The shop is the third stand-alone store for the brand (the other two are in Paris and Dubai) and has been designed by the same architectural agency, RDAI.

Honey Birdette Veruka 2

Honey Birdette

Honey Birdette

The Australian lingerie retailer is exploring prime West End locations for its first UK boutique and has asked  Savills to look for space of about 500 sq ft.

Isetan

The Japanese department store with branches throughout Japan and east Asia is eyeing a return to London following the news that it will launch a concept store in Paris this autumn.

Reserved

The Polish retail property management company LPP has agreed to lease part of the Bhs Oxford Street flagship. Reserved, its flagship brand, is described on the company website as a fast-fashion brand for “brave customers”, and has just opened its largest branch in the Galeria shopping centre in St Petersburg, Russia.

 

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