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Real Estate Breakfast series: Retail sector

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20 th January 2017
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The bricks and mortar world of retail was the focus of our newly launched real estate breakfast series. Given the depth and breadth of experience of investors present, the aim was to draw as much comment from the guests as possible to provide a broad spectrum of contrasting viewpoints from across the sector on a number of topics.  The following is a summary of the main themes and discussions that came out of the session.

Guest speakers:

Ken Gunn: Managing Director, FSP

Mark Davies: Finance Director, New River 

Ian Goldsworthy: Head of Listed Commercial Real Estate, Lloyds Banking Group 

Is the retail sector changing?

Retail as a sector is constantly evolving and adapting to marketplace conditions. Everything from the invention of the motorcar to contrasting intergenerational spending habits between Baby Boomers and Millennials, have all played a part in the way retail looks today. The current post-Brexit referendum environment and the falling pound are just the latest factors to influence a sector that is in continuous flux. Online is also an important factor however, there is still a demand for a store presence for lower value goods. How these new variables will affect the sector is a subject of much debate however, everyone was in agreement that while there are less than optimistic viewpoints circulating, there are still opportunities to take advantage of.

How can organisations adapt to the most recent changes?

While the current factors influencing the market are new, the approach to adapting to them isn’t. It comes down to having intimate knowledge of the market from both the customer and the retailer’s perspective. For example, what works for shopping centres in London and the South East is not necessarily the same formula that will work in other regions. Organisations with a thorough understanding of their audiences and an adaptable approach are well placed to succeed.

How is the concept of ‘place-making’ playing out in retail?

Place-making is an important tool in the belt of both retail developers and the owners of retail centres and outlets and it’s important to get the balance right. Retail clients who are paying close to £2,000 per square foot, and those shoppers who are looking for affordability. Some suggested that subsidies for retailers could be introduced to make shopping centres more appealing, interesting and diverse for the consumer. Retailers are also increasingly switched on about who they want trading beside them and attracting a high profile brand will act as a drawcard for other retailers in the same complex. 

Guest speaker’s three biggest disruptors for the retail sector over the next 10 years?

  • Ken Gunn - Costs
  • Mark Davies - Politics
  • Ian Goldsworthy - Regulation

 

Summary

Predicting the future of the retail sector is a complex and difficult task. Many of the panel and guests were broadly optimistic about the opportunities available however, this does not equate to easy or guaranteed success. Both developers and retail owners must take heed of their respective audiences and deliver against market requirements. In the retail sector, change is the only certainty but this is by no means a negative. While retail may be in for a bumpy ride, those who remain informed, agile and adaptable will be ready to take advantage of opportunities presented to them.

If you would like to join us for our next real estate breakfast session in April then please get in touch us at events@jcrauk.com

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