UK retail is not in a happy place, but it would be wrong to tar everything with the same brush, panellists agreed at Real Asset Media’s the ‘Two sides of the coin: Retail vs Logistics’ Investment Briefing, which was held at MIPIM in Cannes.
‘We have a huge challenge in the UK’, said Andrew Creighton, Head of Real Estate Continental Europe, Aberdeen Standard Investments. ‘We own a lot of shopping centres like Brent Cross, Wimbledon and Brighton and the value and over-rentedness is scary. The underlying value and the rents that retailers have been prepared to pay prevent the owners from getting a return on that investment to make things happen’.
Change will have to come but it will probably be imposed from the outside rather than coming from within, he said: ‘I think valuation declines will force the issue and force change on the sector’.
Secondary shopping centres that cannot renew themselves and offer the experience customers want will become redundant and be repurposed. But other forms of retail are being successful and click and collect, which relies on the integration between online shopping and physical stores, has been particularly popular in the UK.
When it comes to shopping centres the Australian example could come in useful, said Lachlan Macgillivray, Head of Retail Investment, Australia, Colliers International: ‘Our shopping centres are in a very different position. They are in the middle of big population centres, not in out of town locations, and they are anchored by supermarkets, not department stores’.
The upshot is that customers will visit a major shopping centre that has a $1 bn turnover at least once a week, often more, while in the UK it will be every two to three weeks.
The continuing success of shopping centres in Australia, where footfall continues to increase, is also due to the fact that e-commerce has had some challenges. ‘We don’t have the infrastructure in place to get the same delivery time-frames as the UK and speed of delivery is key’, he said. ‘Habits are also different and 95% of households have at least one car and tend to drive to do their shopping’.
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