Cracking the future of retailing conundrum

In this piece, retail design expert, Adrian Griffiths, argues that the manner in which retail-led mixed-use developments in the UK are financed is fundamentally flawed.

Having written a number of articles on the future of retail, this will probably be the most controversial. As an architect and urban designer who has always been trying to push the boundaries, and coming from a family which includes chartered surveyors amongst my siblings, I have heard too many times, “Oh you can’t do that, because the institutions and funders won’t accept it!”

Well I think the time has come where we all need to look at how schemes are funded and appraised, because, in simple terms, the future is not about the security of long-term income, but how much money can be made each and every year.  Long-term income is secured by agreeing long-term leases and collecting the rent. Maximising short-term income is achieved through strong management and having control, which ultimately means short leases.

Old model versus new

Historically, the basic formula for a UK retail-led scheme is to sign up a department store at a huge cost, which then underpins the lettings of the value-generating shop units. The department store is managed by an operator, noting that these house many of the brands that should be on the high street, and the rest of the scheme tends to fend for itself. If a retailer is struggling then tough luck, because you are tied in to pay the rent over a longer term.

Now let’s compare this with a different model - for instance, Bicester Village, one of the most financially successful developments, yet which is no larger than a major department store. This is a managed scheme, with the concessions on a high street rather than being inside a building. This scheme is no different to a department store, but, most importantly, through effective management, marketing and control, the owners have been able to consistently raise the quality of the offer by churning the retail brands every year. The last thing the owners want is long leases, as up to 30% of the tenants can change in one year. Under-performing retailers are out if they do not raise their game, and this philosophy ensures that the overall quality of the scheme is not undermined.

So now is the time for all of us to realise that the financial model of the past is broken for ever, as it has to respond to a new form of retailing that we have never seen before – a form that is difficult to value accurately on day one, but one that can be justified over time by its track record.

Moving beyond just shopping

The future of retail is all about providing an experience. This experience does not just happen, but is designed for, planned and managed on a daily basis. If you want to look at the “best in class” in terms of delivering this experience, then let’s take Disney, world leaders in creating a family day or week out. I am not thinking of the themed park experience, but the management skill-set and drive which we need to bring to our town centres.

So what is the experience of the future? Clearly, retail sits at the heart of this, but will be more than just shops. We shall see showcase pavilions, brand-experience destinations, the production of your own products etc., all of which might well be purchased online. We will see transient pop-up of retail and food and leisure bringing activity to the public realm. There will be innovation centres which could be funded by the main local industry leaders, promoting what they do. There will be restaurants, flexible live work and offices, hotels, PRS housing of differing standards, libraries, culture, art galleries, cinemas, extreme sporting activity, the list goes on. What is not required is a department store, because the new management company will fulfil and curate this role.

The fundamental point is that we need to create an exciting environment where people want to spend money. How the promotors of these developments reap their rewards will be the challenge we need to resolve. Clearly, there will be the requirement to commit significant funds to create the development without a secured income, with the local authorities playing a key part in this process. We must have faith in the product we can produce. Faith that the experience we deliver will incentivise the public to spend money to maximise the year-on-year turnover. Partnering and sharing in success is the aim and cracking how online spend is shared with the physical sits at the heart of this conundrum.

Others already mentioned in this article, such as the designer outlets, Disney and even the likes of WeWork have demonstrated there are other financial models which can reap huge rewards. Let’s bring this entrepreneurial spirit to the high street. The future is bright and exhilarating, and a fantastic opportunity for those willing to grab the mantel and champion the management of these developments - the new Harry Selfridges of the high street. I look forward to working with the stars of the future.

The last thing the owners want is long leases, as up to 30% of the tenants can change in one year. Under-performing retailers are out if they do not raise their game, and this philosophy ensures that the overall quality of the scheme is not undermined.

So now is the time for all of us to realise that the financial model of the past is broken forever, as it has to respond to a new form of retailing that we have never seen before – a form that is difficult to value accurately on day one, but one that can be justified over time by its track record.

Moving beyond just shopping

The future of retail is all about providing an experience. This experience does not just happen, but is designed for, planned and managed on a daily basis. If you want to look at the “best in class” in terms of delivering this experience, then let’s take Disney, world leaders in creating a family day or week out. I am not thinking of the themed park experience, but the management skill-set and drive which we need to bring to our town centres.

So what is the experience of the future? Clearly, retail sits at the heart of this, but will be more than just shops. We shall see showcase pavilions, brand-experience destinations, the production of your own products etc., all of which might well be purchased online. We will see transient pop-up of retail and food and leisure bringing activity to the public realm. There will be innovation centres which could be funded by the main local industry leaders, promoting what they do. There will be restaurants, flexible live work and offices, hotels, PRS housing of differing standards, libraries, culture, art galleries, cinemas, extreme sporting activity, the list goes on. What is not required is a department store, because the new management company will fulfil and curate this role.

The fundamental point is that we need to create an exciting environment where people want to spend money. How the promotors of these developments reap their rewards will be the challenge we need to resolve. Clearly, there will be the requirement to commit significant funds to create the development without a secured income, with the local authorities playing a key part in this process. We must have faith in the product we can produce. Faith that the experience we deliver will incentivise the public to spend money to maximise the year-on-year turnover. Partnering and sharing in success is the aim and cracking how online spend is shared with the physical sits at the heart of this conundrum.

Others already mentioned in this article, such as the designer outlets, Disney and even the likes of WeWork have demonstrated there are other financial models which can reap huge rewards. Let’s bring this entrepreneurial spirit to the high street. The future is bright and exhilarating, and a fantastic opportunity for those willing to grab the mantel and champion the management of these developments - the new Harry Selfridges of the high street. I look forward to working with the stars of the future.

The fundamental point is that we need to create an exciting environment where people want to spend money.

How the promotors of these developments reap their rewards will be the challenge we need to resolve. Clearly, there will be the requirement to commit significant funds to create the development without a secured income, with the local authorities playing a key part in this process. We must have faith in the product we can produce. Faith that the experience we deliver will incentivise the public to spend money to maximise the year-on-year turnover. Partnering and sharing in success is the aim and cracking how online spend is shared with the physical sits at the heart of this conundrum.

Others already mentioned in this article, such as the designer outlets, Disney and even the likes of WeWork have demonstrated there are other financial models which can reap huge rewards. Let’s bring this entrepreneurial spirit to the high street. The future is bright and exhilarating, and a fantastic opportunity for those willing to grab the mantel and champion the management of these developments - the new Harry Selfridges of the high street. I look forward to working with the stars of the future.

About the Author

ADRIAN GRIFFITHS (荣誉学士学位 建筑学文凭 英国皇家建筑师学会会员,城市设计硕士,皇家艺术协会会员)

合伙人, UK

艾德里安1986年加入查普门泰勒,并于1998年升任董事会董事。作为所有者之一,他与其他董事会成员一道决定公司发展战略,积极推动公司发展。他是英国境内设计项目的领导人,同时积极担任伦敦和布里斯托事务所的管理工作。 作为拥有30年丰富经验的建筑师、城市规划师,艾德里安将二者技巧完美融合,在业内享有声誉

专长领域:
城市设计/总体规划/综合体/零售商业/休闲场建筑

Adrian entra a far parte di Chapman Taylor nel 1986 e si unisce al Main Board nel 1998. Come architetto e specialista in progettazione urbanistica, è conosciuto a livello internazionale per la sua esperienza nei masterplan di grandi complessi multi-funzionali, che sono i principali autori nella rigenerazione dei nostri centri urbani.

Adrian è consapevole del fatto che le zone di sviluppo urbano che oggi costruiamo creano le società di domani, riconoscendo la responsabilità che la professione ha nell'influenzare la qualità della vita delle persone. Adrian partecipa abitualmente a conferenze e scrive articoli che promuovono i benefici degli spazi multifunzionali come modello sostenibile a lungo termine. Adrian guida il Concept Design Team nel Regno Unito.

Aree di competenza:

Urban design /  Masterplanning /  Mixed use / Retail / Leisure

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