Shopping center owners must make their space more flexible to react timely to store closures and slow declining rental income, says data and analytics company GlobalData.
Results from Intu, Hammerson and Unibail-Rodamco-Westfield were disappointing, primarily attributed to the high number of company voluntary arrangements (CVAs) and administrations in recent months. Following these results, many key retail landlords have announced plans to diversify their shopping center space as retail spend continues to shift online.
“Diversifying shopping center space is a wise long-term strategy to reduce exposure to the tough retail market and will help drive footfall to shopping centers,” says Sofie Willmott, retail analyst at GlobalData. “However, alongside major strategic investment, short-term solutions are essential to cope with the number of struggling retailers that are currently reducing their physical presence. Karen Millen and Coast are the latest to announce closures, following Arcadia’s CVA approval in June with around 50 of its stores set to shut.”
Shopping center owners should restart conversations with online pureplays that may be interested in opening popup stores, temporary showrooms, or event spaces, with the potential for these to become permanent if successful. Online pureplay Gymshark runs popup events with influencers to promote its brand identity, while the boohoo group has recently confirmed that it is taking on a 5,300-sq.-ft. store near Oxford Circus to use for events and as a showroom.
“As native online brands continue to seek growth, temporary physical locations will help build their brand awareness without the cost commitment involved in opening a permanent store,” Willmott says.
Units that become empty at short notice can be transformed quickly using creative visual merchandising to turn a vacant shop window into a mini store. For example, shelving inset into a temporary shop front can make the space appropriate for a smaller retailer or brand’s product range.
“Much smaller units will be more affordable for local independent brands and could be viable as a second location for retailers that have larger stores in the shopping center but want to display a specific range in its own space. This is a technique we have seen used in the Emaar-owned Dubai Mall,” says Willmott.
Alongside different retail options, property owners could quickly adapt units to bring in local food and leisure services, adding to the variety in shopping centers and creating interest for visitors. For example, a few street food vendors could be placed within one former retail store to create a mini food market, or a novelty leisure concept could be trialled such as the Selfie Factory that recently launched at Westfield London.
“Unoccupied space could be used as learning studios seeing landlords partnering with local companies to provide tutoring for children, craft classes or technology lessons,” says Willmott. “This is similar to what John Lewis has started to offer as part of its focus on experience.”