London retail has a positive future. Hardly a revolutionary statement in isolation, particularly to the many millions of people who live, work and visit the capital and experience its unparalleled consumer offer.
However, there are challenges too: technology, changing shopper habits, and predictions of falling consumer confidence.
April saw the biggest quarterly fall in retail sales for seven years, as price rises started to bite – a reminder that 2017 is set to be a challenging year for retailers. Margins look like they will be squeezed further as operating conditions toughen.
Things aren’t equal across the UK. Strong high streets that have low vacancy rates, underpinned by a wealthy demographic and a robust economic backdrop continue to thrive.
Those with a low quality retail offer are disproportionately more susceptible to the shift towards online shopping, and remain vulnerable.
The harsh reality is that the UK has more shops than it currently needs. But high performing retail destinations will continue to enjoy healthy sales. The retailers that re-think and integrate the experience they offer in physical stores and invest in better customer journeys will be the ones that prosper.
London will continue to succeed on a relative and absolute basis, irrespective of Brexit. Here, there is scope to combine motive and opportunity in the creation of compelling places.
Brent Cross Shopping Centre in north London, which is jointly owned by Standard Life Investments and Hammerson, is a useful lens through which to consider how retail trends will evolve. We’ve seen the increasing importance of leisure in the retail mix for some time, and this still plays an important part in attracting and retaining footfall.
People demand better places. Places where they can indulge in a broader range of activities and enjoy a high-quality, diverse mix of food, drink and social interactions. Customers expect innovation, and physical places to evolve and innovate at the same pace as virtual spaces.
Brent Cross was the first US-style mall to come to the UK 40 years ago. For its loyal customer base, Brent Cross has become something of an icon and over four decades it has seen considerable change. Our impending £1.5bn capital investment programme into the redevelopment of the centre will fix it firmly in the vanguard of the next generation of retail development. It will be the first physical destination to be designed and delivered into an online world.
On completion, Brent Cross will not only become one of the biggest retail centres in the UK but will also set new standards in catering to customer generations of today and tomorrow.
Much of the shape of things to come, at Brent Cross and elsewhere, will revolve around a few key concepts: creating holistic destinations; providing flexible spaces and an evolving mix of uses; offering a breadth of experiential opportunities; and embedding leisure as a thematic ‘anchor’.
It requires creative thinking, alignment between a huge number of different stakeholders and careful orchestration. It requires experienced, patient, and long-term capital, with owners and retailers sharing a clear vision and a joint will.
Above all it requires hard work, confidence and ambition. We’re optimistic the results will meet the high bar set and are very grateful for the broad encouragement and support that we’ve received to date.
London is clearly not immune to economic headwinds, nor the various other challenges facing its retail landscape. But the city’s core areas will continue to innovate, specialise and evolve. Everyone with an interest in London retail will need to ensure that innovation delivers vibrant spaces that bring shopping, entertainment and leisure together in a single, successful and coherent whole.