By Mark Bruce
Opportunity lies in creating destinations that provide the right experience for the type of Shopper one wants to attract. Landlords and developers are looking in earnest at rejuvenating or re-developing retail spaces to create premium destinations. Success in that regard is helping to drive the retail renaissance.
Renaissance through Rejuvenation and Redevelopment
Redeveloping or reshaping a retail asset is not only effective, as you already have the space and an established destination, but in today’s society, where sustainability is front of mind, redevelopment is leading the way over new-build.
However, while breathing new life into spaces is a great option to help drive the continued growth of retail, getting it wrong can have devastating consequences. Retail is more than bricks and mortar: It’s about curating the right tenant mix and the right environment to attract shoppers and build brand loyalty. So, how do you deliver that in a way that limits the risk of getting it wrong?
1. Health and Viability of Existing Tenants
Firstly, it is important to properly understand what’s working and what’s not. It is important to know which tenants are performing and which are having a more negative impact on the performance of an asset. Understanding the tenant mix and its health lays the foundations of a successful retail environment. It is only once the current tenant mix has been assessed that looking further afield to new brands or offerings makes sense; otherwise, you might end up replacing highperforming tenants that could have been incentivized to remain or grow at your destination.
2. A Well-Balanced and Diverse Tenant Mix
It is not enough to simply have high-performing tenants. Consumers like variety, both in terms of the diversity of brands and the diversity of offerings. As retail is much more of an experience, it is important to curate a space that offers the right mix that both attracts people to a destination and encourages them to remain there and, of course, to spend.
3. Competition in the Surrounding Area
Like any business, retail needs a USP. There is little point in creating something that has the same offering as a nearby destination, as that diminishes the catchment for potential consumers. It is as important to understand the wider environment that an asset is being redeveloped in as it is to understand which tenants will perform well.
4. Consumer Trends: National and Local
Much like with fashion, retail has trends. Shoppers have different demands based on location and demographics. Failure to understand that could have a negative impact. For example, what works at a destination in France, might not have the same level of success in Germany. Or on a more micro level, what works in a destination near a city, might not perform at a more remote location. Understanding habits and trends is hugely important when it comes to curating an experience that resonates with those in the catchment.
The cost of leasing to the wrong retailer is substantial. Not only will the sales performance be low, but there will be a knock-on impact to a destination’s brand. Stores with low footfall and a poor offering do not exactly contribute to customer confidence. In addition, vacancies can occur, which create a considerable cost burden for the landlord. That is not only due to the loss of rental income and service charges, but also to hoardings, solicitors’ fees, and marketing and leasing costs. Reputationally speaking, no landlord wants to have empty units as that detracts from the shopping experience.
The Counter Problem
For some locations looking to revitalize their tenant mix, the problem is not a lack of tenants, as they have low vacancy rates, but rather being spoiled for choice. With very few vacant units, there can be an influx of tenants looking to occupy the space. Contrary to what many may think, the best tenant is not necessarily the one willing to pay the highest rent. It’s better to find the right brand and the right operator – one that complements the tenant mix. They will fit better into the overall tenant mix and improve the overall performance of the property. That in turn will lead to longevity and encourage customer loyalty. However, determining the right tenant, whether it’s F&B, fashion, or leisure, can be a difficult undertaking.
In the past, these elements were addressed through experience or lengthy consultations. Retailers had all the data and insight, from customer data to sales transactions and website data. Landlords relied on that insight to make the right decisions. In recent years, the situation has changed in that more data is available to the landlord. Such information might come from access to rich data such as tenant sales data, banking data, geo-location data, footfall data, demographic data, and census data. In effect, the landlord should now have the upper hand.
All Data and no Insight
In today’s technology-saturated world, information and data are easy to come by. Over the years, point solutions using different types of technology have been added at every step of the property lifecycle. CRE and PropTech have become interlinked, and most companies have a tech strategy in place. However, not only has having multiplepoint solutions become costly, but it has also resulted in data sitting in silos. It’s one thing to have access to data, but it’s an entirely different thing to be able to derive insight from it that can facilitate strategic decision-making.
The Simple Solution
The retail renaissance will not reach its potential without a change in approach. While that might seem like a blunt statement, it’s the truth. There’s only so much to be gained from experience or delivered in time through manual processes. The answer lies in having the right technology – the type that doesn’t just access data, but that provides the data needed to solve real problems and provide real and actionable insight. While that might seem too simple, I first experienced it during my time at British Land, and I can see it now at Mallcomm when we serve our customers – I see the impact of our new Sales Collection Portal and Data Platform. The ability to access and visualize datadriven analysis is game-changing, providing a lens on the impact on NOI. Connected data sources provide a complete picture of asset performance, with real-time integrated data. Reporting and insights create ways to analyze, monitor, and benchmark to support business decisions. Access to operational data removes the guesswork.
My Experience
The improving stats of retail performance are hugely encouraging. However, simply focusing on redevelopment or rejuvenation will not be enough to capitalize on the positive winds, if landlords, owners, and property managers can’t understand the performance or address tenant health, competition, and trends.
Having spent my career in retail, I’m incredibly excited about what the future holds. That excitement doesn’t just come from positive stats about increased footfall or slightly increased retail sales growth (although they are positive signs): It comes from the potential to go from signs of life to full revival, by utilizing technology to not simply access data, but to gain actionable insight to effect positive change.
Mark Bruce
Mark Bruce is the Data & Insights Director at Mallcomm.
