Retail has entered ‘era of belonging’
What does the future hold for retail and leisure? These are clearly challenging times, but seen against those sectors that were cruising before Covid but are now flailing for new ideas, such as offices, retailers have a headstart in confronting uncomfortable truths, and daring those who hold the purse strings to rip it up and start again.
PlaceTech gathered a cross-section of industry experts to examine where we are now and engage in some future-gazing.
The event was sponsored by Bruntwood Works, Mills & Reeve, Mallcomm and Node and chaired by PlaceTech editor Paul Unger.
Full video recording of the event is available to watch here.
- Are landlords accepting that the days of long-term leases from huge retailers are over?
- How is proptech being used to give landlords and retailers a better chance of success?
- How has Covid affected retail?
- Some of the largest institutional landlords are accepting and advancing flexible short-term leases as a reality
- Retailers, landlords and cities need to win the battle for people’s time: customers are looking to belong and to be loyal, but have options
- Investors are keen to back ideas taking proptech forward as an enabler in retail
Panel One – retail’s role in placemaking
Lara Marrero, global retail practice leader, Gensler
Denz Ibrahim, head of retail and futuring, Legal & General
Danny Crump, director of urbanism, Broadway Malyan
Ed Cooke, global growth director, Mallcomm
Denz Ibrahim is one of those charged with changing institutional thinking from within in his role at L&G. He said there’s a need for new thinking right across the sector.
“We have to speak a different language, we can’t talk primarily in terms of tenant, yield, square footage, rent – people, place, service, experience and rhythms have to come first.
“It’s not all doom and gloom. We can reimagine how people work with space in an era when everybody has apps telling them what to do. The landlord is moving from a librarian function to an editor function as brands seek to engage differently, bringing touches of theatre and gallery to their spaces.
“People talk about the ‘third place’ in working terms, and the true third place could be an answer for retail. People living at home longer need places to entertain guests, people who live in studios or shared flats need to work elsewhere at times. Redesigning customer interface and reimagining public realm are key.”
“In property we’re good at hard data, but have too little idea about behaviours. Everything we’re working on now is about changing this.”
Lara Marrero said we’re moving from the age of experience to “the age of belonging”. She said: “Rather than two worlds – online and physical retail – people now see it as one thread running through their engagements. Everything in my inbox is ‘please help us create meaningful spaces’. A lot of this is driving relevance into locations that are already well placed.
“All brands need a way to attract customers and create and develop relationships, and retail has to work with that. We’ve worked with a huge number of brands who started online and have gone offline, because they can’t keep a customer loyal without having a face.
“Understanding the value of time is key – it’s how people judge you: are you making their use of time as convenient as possible. Simple things being wrong frustrate the hell out of customers. If you can make people want to be somewhere, that’s how you earn loyalty.
“Data takes you so far, but ethnography and understanding individualised behaviour shows you how things will evolve in future, and there’s definitely a part for machine learning and AI in this.”
Ed Cooke said there is still a need to make places distinctive. “One of the things we can do now is to free people up from mundane tasks to be creative in how we make bespoke towns and cities.
“There’s never one answer in retail, never a specific individual, but there is a need for curation. Almost across the board, communities need to be involved more, and increasingly we are seeing developers consult with groups beyond the obvious stakeholders: community groups, charities, BIDs.
“Our Mallcomm platform provides the ability to get messages out to and ideas from those diverse groups. Tech is a very efficient way of collecting, analysing that info and setting a strategy.”
Danny Crump said: “The ‘clonetown’ point is pertinent – in the 1970s, 70% of UK goods were bought from 29,000 retailers, but by 2000, 70% of goods were coming from 100 retailers, with the top four of those accounting for a huge proportion. It’s a fundamental problem in creating distinctive spaces.
“How we respond as placemakers to the new challenges is tricky. Covid has added weight to a lot of the things we’ve talked about around health and wellbeing, and people-focused centres. Facilitating walking and cycling, reducing noise and air pollution is all being shown as the way forward. Another issue is in retrospectively reconnecting shopping centres that don’t interact. Biophilic experts, circular economy specialists, anthropologists, all have a part to play.”
Panel Two – driving value in a changing landscape
Hugo Silva, investment manager, Pi Labs
Caroline Hanratty, partner, Mills & Reeve
Becky Jones, head of partnerships, Appear Here
James Tootle, head of retail & leisure, Bruntwood Works
Building on a point raised in the first session, Hugo Silva agreed there was a silver lining. “Almost half of traditional real estate companies invested in tech just because of the pandemic, and proptech investors think Covid will help the industry over next 12-24 months.
“There are two parts to rebuilding retail: flexibility in leasing; and consumer data sharing. With the first, retail platforms like Sook work like flexible office spaces, not a five-year lease, but booking slots by the day or hour. L&G for one will look to flexible leases from 2021. We’ve seen a few platforms matching landlords and tenants that can provide a win-win.
“Tech investors are still interested in property. Covid still feels ‘temporary’. Capital may have become pickier, but as with any crisis survivors are in a great position. It’s a great opportunity to launch a business in a small way.”
James Tootle said: “Our approach with both Stretford and Altrincham’s Stamford Quarter has been to engage with community to understand what they want.
“Our sense is that with business rates being relaxed, there are people willing to take a chance on starting a retail business – some we’ve seen grow from market stalls and we are happy to work with them on flexible terms, it’s great for us as it gets lights on, and it’s great for them. There’s also a sense that it’s time for town centres to have a resurgence, with a different, convenience offer to city centres.
“We’ve always recognised the value of independents in giving towns uniqueness, and there’s a huge role in our Pioneer buildings for different uses: coffee shops, yoga spaces, gyms, sleep pods.”
Caroline Hanratty said: “We’re seeing flexible models come forward, but they’re not always embraced. There are tensions.
“There has been huge government intervention, basically stopping landlords from removing those not paying rents, but it can’t last forever. Certain tenants might be taking advantage, and we have to figure out how to bring parties together, because they’re a long way apart.
“The reality may be that it needs new ways of working, with value calculated in different ways. Landlords have to come to terms with fact that the relationship is changed. They’re a long way apart at the moment.”
Becky Jones said: “In all the time we’ve been banging the drum for flexible retail, convincing landlords has been the issue: we’ve got thousands of brands keen, but not wanting to tie themselves into long-term leases without testing it first.
“With the pandemic, it’s flipped: landlords are throwing chunks of their portfolio at us, desperate for help, but not all brands are confident now: we hope the two level out. Demand from shops flatlined. One positive is landlords are now engaging with their tenants on a human level.
“Where we have seen people being incredibly successful is young fashion brands taking their ideas to where people live, selling for a few weeks in a certain neighbourhood, then moving on. Some local shops have done brilliantly and are expanding.
“Flexible space is seen as a nice social fix in the short term, but if it drives footfall it drives higher rents across the board. From a placemaking angle, it’s almost as if the independents are the anchors now. At Old Street in London, which we curated for five years, we’d only take bigger brands if it was something new, or a unique concept. The big brands wanted to follow independents.”