Leonard Design and Gleeds were joined by industry experts from the retail and mixed use sectors (developers through to investors and local authorities) to discuss how we transition from the current Retail Toxicity to create truly Vibrant Cities.
The group were invited in advance of the event, to read a selection of thought provoking written texts to arrive in a fresh, and new frame of mind to celebrate all that is positive in the industry, and the opportunity
that exists to reshape our urban centres.
Opening remarks acknowledged that the retail sector as we once knew it, has moved on and is engaged in fast moving structural change, but the room were unanimous in the verdict that retail is not dead or dying, but rather the sector’s transformation will provide the biggest opportunity since the rebuilding of Britain post-war to bring our towns and cities back to life.
A brief reflection on the pertinent issues in the industry (which are too often cited as the creators of a retail recession) being CVA’s, e-commerce, business rates and the net loss of stores on our high streets, concluded that these issues were to be viewed simply as speed bumps on the highway to urban hubs becoming the main artery for everything in a consumer’s life. The long held belief that e-commerce is the shark in the water, killing off our retailers like hapless surfers is just not valid, as the distinction between on and off line retailing must be extinguished as it has in the new consumer’s mindset.
Whilst UK shopping centre investment is at a 16 year low, there is no shortage of local and global capital and indeed, new funds and entrants to the market view retail as an exciting opportunity, particularly in high growth cities as valuations fall and we no longer know what the real value of property is. Funds from the United States in particular are beginning to show real interest.
The starting point for change, is the recognition that the British high street is an institution which goes well beyond the act of simple shopping, and represents the physical embodiment of the local community. It is at the community level that the high street can best be saved by creating exciting and dynamic places to visit and shop.
A theme which was reinforced throughout the discussions was that of creating a story rather than a store. To realise this aspiration, retail must move away from the metric of square foot sales which extinguishes any flame of creativity, and has led to the delivery of clone towns and cities with the same mega retail corporations selling the same safe bet products in all locations. This cycle of boredom in physical stores needs to be unlocked to prevent retailers killing themselves with consumers as eye witnesses to the crime.
The proposition was advanced that stores today are gathering places for products, with city centres being viewed as product distribution points. Future physical spaces need to be designed as gathering places for people to create incredible spaces that behave like a town square. A high degree of personal attention in a new lean store model is envisaged, which acts as an experimental media channel introducing consumers to the brand and promoting theatre and interaction within and outside of the physical form. Experiences still hold favour with the consumer, as doing rather than buying prevails, but the transformational economy is gaining ground with the consumer wanting to better themselves physically, intellectually and emotionally. Brands with a strong sense of purpose remain attractive and deliver success.
The independent and the local offers are better supported by the new model of consumer. Landlords are embracing this and the impact on both income and risk profile with the financial model of 25 year leases with mega corporations with upwards only rent reviews being a distant memory. Forget just leasing space and start taking an interest in the operation, take your seat at the table and put skin in the game. Listening to the consumer and providing what they want today with versatility and flexibility to adapt with speed to changing requirements may sound simple, but has for too long been a missing component from the development equation which has been driven simply by financial returns and complacency.
Financial covenant can no longer be a concern in an emerging market where we must strive to do what is right and values will follow. We must stop thinking about the solution for our towns and cities as that relies on historic data and precedents to inform which are by necessity out of date. We must keep imagining and wishing, bring conversation back and acknowledge the competition as a picnic in the park on a sunny day, being the place where people want to be when they are not in your destination. Selling time in minutes in our curated environments is very much on the agenda going forwards.
As we review scheme composition once again, health, education and residential form vital components in our work, rest and play destinations. The ground floor offering (supplemental by the contextual works including public realm) remains critical to the success of the overall development. The enlivenment at street level of retail, F&B and possibly creative trades, may account for less than 10% of the overall development area but drives the values above and hence, the realisation that concessions can be made on the rent at the ground floor also supports the start-up business and the necessary incubation periods.
We must not shy away from a partnership approach to deliver successful and vibrant places which also stimulates the local economy. The current model for financing and delivery of our urban centres is coming under increasing challenge and hence some public sector intervention is now a necessity, whether as commissioning agent for the regeneration, or by providing funds through various sources including local enterprise partnerships. Shared purpose and vision to create sustainable and thriving communities is key, recognising that local authorities only take centre stage in the process by necessity, to protect and deliver their vision for key sites which fit within their wider city or town strategy, not as conscious investment decisions.
We have been too acceptive of negative publicity around our industry and must reinforce the message that for every loser there is a winner. We should celebrate the success stories and highlight how we are adapting to reflect the changing purpose of our urban centres. We must embrace, use and enjoy the digital experience rather than viewing it as a threat. Also acknowledging that retail, the high street and our towns and cities have been through many models of change and this is simply another iteration in the cycle, or one more tremor in the long earthquake that continually shakes us. The new shared high street has everything in the mix as we start the next property revolution so let’s dare to be different, take our responsibility as custodians of community seriously and get more people loving their towns and cities again!
We appreciate not everyone was able to join the event but if you would like us to come and share our findings with you, feel free to contact us and we can meet you for a coffee.