The changing face of Retail
The UK’s retail market continues to suffer from the increase in internet shopping and the untenable rises in high street rents and rates. We have already seen the impact on a range of brands from Mothercare to Toys R Us. The latest victim in this troubled sector is the House of Fraser with their recent announcement of a proposed Company Voluntary Administration (CVA) – I will come back to CVAs. The 169 year old chain is seeking to avoid complete collapse by reducing its stores from 59 to 28, with its flagship store on Oxford Street, first opened in 1937, being one of 31 stores proposed for closure.
Earlier this month Chris Grigg, CEO of British Land – one of CPC’s top 10 clients, was interviewed in Property Week and covered the subject of CVAs and the impact this form of financial restructuring is having on property owners and that the need for Government to address this loop hole in the law. The CVA essentially leaves the landlord with no option than to accept the loss of rental income from a tenant reneging on their lease agreement. When big brands with multiple stores, such as Carpetright and New Look, enter into CVAs the impact on businesses like British Land is not inconsequential.
The challenge the retail developers face is how to compete with the increasing trend of shopping online in the comfort of one’s home or lunch break. They have accepted that they cannot compete on price or convenience, but they can compete on the overall experience by creating destinations for individuals and families to go to shop, eat and be entertained, as well as improving the public realm by providing green and engaging environments. From major shopping centres to out-of-town retail parks there is major investment in making these outlets the leisure parks of the 21st century.
With the retail parks market in the UK expected to grow by 13.8% over the next 4-5 years, CPC is working with a number of developers, including British Land, Rockspring and M&G, to increase the value of their assets by getting the right mix of retailers, leisure and restaurants to attract the footfall required and deliver an experience for shoppers that can be sustained alongside the internet revolution.
Category: Steve's Blog