When it comes to retail Europe leads the way, delegates heard at Real Asset Media’s European Retail Investment briefing, which was held at the International Investors’ Lounge at EXPO REAL.
‘I believe retail in Europe is a model for the rest of the world,’ said Bill Kistler, Executive Vice-President & MD EMEA, ICSC. ‘The pure-play e-commerce players are realising that having a physical store brings an uptick in sales in the catchment area of the store, so the two are complementary. E-commerce should not be seen as a bogeyman’.
The so-called ‘halo effect’ refers to the positive interaction between the traditional physical store and the online channel or, as ISCS puts it, how ‘bricks impact clicks’.
Retailers can definitely benefit from the halo effect, said Andrew Westbrook, Partner, RSM: ‘You can pinpoint within 2 or 3 kms where your customers are’. Brands are increasingly accessing customers directly by having a store, he said.
Valuation can be an issue in this shifting world. ‘Online is clearly set to grow, as now even in the shops you’re pushed into an online deal,’ said Herman Kok, Head of Research, Meyer Bergman. ‘But how do you value the rental value of a store if turnover is no longer relevant?’
The UK, which led the way in online penetration in Europe, is feeling the pinch. ‘One thousand stores, equal to thirty billion square feet, have been given back to landlords and the reason is the increase in online sales from 4% to 21% of all retail sales in a decade,’ said Westbrook.
But it is not all doom and gloom. The UK is streets ahead when it comes to innovation and mixed use.
‘The UK is ahead of the cycle,’ said Eri Mitsostergiou, Director of European Research, Savills. ‘There is more focus on redevelopment and an awareness that better returns can be made through active asset management. There are some inspirational examples of non-performing schemes that have been transformed through hard work and a creative approach’.
In Western Europe, she said, landlords are looking at the UK and trying to think ahead and be prepared.
Mixed use is another way forward. Department stores, that have size on their side, can add other functions, like healthcare centres on the ground floor or apartments on the upper floors. In London, for example, one in three department stores have planning consent for residential, said Westbrook.