Five ways that online is changing the retail landscape: British Land

Retailers’ move to prioritise stores that work within a multichannel context is resulting in the “polarisation” of retail space, British Land said today, as it reported its full-year results. In the year to March 31 the group reported pre-tax profits of £195m, down from £195m a year ago, while the value of its property portfolio fell by 1.4% to £13.9bn. Returns from its retail properties rose by 3.5%, down from 7.8% a year ago. It also had some interesting insights into the way click and collect shoppers spend. Here are the main points that struck us from British Land’s account of how the way shoppers buy is changing the way that retailers sell.

The polarisation of retail space

The retail and commercial property developer said that its strategy was to invest in regional shopping destinations and local community centres that were more convenient in the course of daily life.

“The growth of online has driven polarisation in retail, as occupiers are increasingly focused on the best, and the most appropriate space to profitably grow sales across all channels,” British Land said in its full-year statement today. “We expect this trend to accelerate in the coming years, as retailers face a range of headwinds such as cost inflation and weaker consumer spending while the terms on which the UK leaves the EU are negotiated.

“For many of our occupiers, the best space means a number of flagship or ‘hub’ stores supplemented by a network of more convenient outlets which ensure sufficient coverage and are an important part of online fulfilment networks, including click and collect. This mirrors our strategy in retail which is to operate both regional centres, attracting visitors from a wide catchment for planned trips, with a breadth and depth of retail and leisure, and local centres which fit into the daily life of communities and are more convenient and accessible.”

Changing shopper behaviour

British Land says its insights into how consumers like to shop come both from shopper surveys and the data that it collects from their online interactions. It aims to reflect the range of shopper missions in its shopping centres.

It says that footfall and in-store sales were flat on last year – though ahead of the benchmark. Footfall at regional centres fell by 1.9% but sales were up by 0.3%: shoppers, it says, visit larger centres less often by spend more when they do. The opposite is the case at local centres, where footfall was up by 2.1%, and in-store sales down by 0.7%. British Land says that reflects greater use of click and collect that is not included in in-store sales.

Click and collect

It points to its True Value of Stores research, carried out with retail consultancy GlobalData, that found the use of click and collect at its local centres was 46% ahead of the national average. Click and collect customers, it said, spend about 50% more than the average shopper. “This outperformance illustrates that in a polarising market, our centres are attracting a disproportionate share of consumer demand.”

Who takes space, and where

Fashion, homewares and food and drink accounted for 25%, 27% and 15% respectively of British Land’s leasing. It plans are to increase the leisure and food and drink allocation across the portfolio from 10% currently.It says that it is seeing more retailers expanding to out-of-town locations, including Smiggle, Superdry, Charles Clinkard and Pret-A-Manger, while retailers such as Primark, JD Sports, Sports Direct and Schuh are opting for flagship stores at regional centres. Local centres have seen new lettings to Wilko, River Island, Nando’s and community-focussed occupiers such as Explore Learning and local gyms.

Retail leases are getting shorter

British Land showed that the average length of time to the first break in retail leases had fallen over the year to 8.6 years from 9.8 years last time. That reflects many retailers’ stated desires to be tied into stores for less time.

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