The atmosphere at this year’s BCSC and Mapic conferences was unsurprisingly subdued, but there are still some rays of hope for cautious optimists. Ben Cooper reports from the events.
The extraordinary economic events of this year have left businesses reeling, not least the retail property industry. Expansion plans have been put on hold, developments have been shelved and deals are grinding to a halt. So no wonder the tone at this year’s BCSC and Mapic conferences was noticeably less cheery than in the past.
“There’s a different mood to the conferences this year,” admits seasoned developer John Laker, who is heading Dublin’s Northern Quarter development. “A lot of companies are laying people off and taking the view that development isn’t going to happen for a while.”
When retailers, agencies and landlords were making their plans for the conferences months ago they would have been unlikely to have anticipated some of the grim issues they would be facing now.
Take landlords for example. After years of fielding the sort of questions they like – such as whether there might be space available in development X – all of a sudden they are finding themselves facing a very different set of enquiries.
The straightforward deal conversations from hungry retailers interested in space have been replaced with concerned questions about the future of the development pipeline. Landlords spent much of this year’s BCSC and Mapic conferences trying to reassure prospective tenants that their proposed schemes would be going ahead and completed on time.
Given that it has emerged in the past few months that big schemes such as Hammerson’s Sevenstone in Sheffield will be opening their doors later than originally envisaged, the heightened anxiety was inevitable.
But the retail property sector did not come into being yesterday and many in the field have been through recessions before. As a result most people at the conferences kept their chin up and remained stoic in the face of the downturn.
Even so, numbers at BCSC were slightly down from last year, although 2,800 attendees was still a strong showing considering the difficult market.
Grosvenor director of leasing Jenefer Greenwood argues that there is less reason to be concerned than many fear and, while the big conferences this year were perhaps less buoyant, she still saw plenty of activity. “I don’t think sombre is the right word to describe the conferences at all; I would say the mood was cautious,” she maintains.
According to Greenwood there was no lack of demand from retailers interested in taking space at Grosvenor’s latest opening, Liverpool One. With Liverpool the setting for BCSC this year, the many retailers at the conference were able to see the new centre and the stores still available for themselves.
Greenwood says: “We were scurrying back and forth taking people to see units in Liverpool One for the whole conference.” With 27 stores still not let six months after the first phase opened the need to get the centre filled is becoming fairly urgent. It is promising that there are retailers still expressing an interest, but as one landlord put it during Mapic, “there is lots of talk but not much action”.
There may well be plenty of retailers making enquiries – and BCSC in particular was a hive of activity between landlords and prospective tenants – but it may well be that the proportion of interest that converts into deals is much lower than in previous years.
Talking to the European retailers at Mapic, many say plans for the UK are on the shelf until trading conditions improve. In just a year, what seemed like a golden opportunity to enter Britain is now a risky decision.
However, there are many retailers that still want to come to this country or take their expansion plans up a gear. Two of the names at Mapic that British shoppers can expect to see more of are Dutch babywear retailer Lief, which is looking for partners to open franchises in the UK, and US fashion brand McGregor, which is on the hunt for stores here.
These and other international players are still thirsty for expansion and see the UK as a very attractive place to set up shop. While conditions here are by no means easy, there are good deals to be had for retailers that are well prepared, do not carry too much debt and can exploit landlords’ weakened positions. There are still plenty of strong schemes and landlords with a solid foundation, and the resilient players are optimistic.
Laker says: “There are good schemes out there and in the medium to long term retailers will need them because when we come out of this they will need the space. Retailers are still interested in talking to developers about taking space but they are being more cautious. The stronger schemes will survive but some of the weaker ones might not be completed at all.”
He does not deny that there are tough times ahead, but believes that the hardest period will come in the short term. He says: “At the moment it’s easier to let a scheme that’s finishing in four years’ time than one that’s finishing next year.”
One of the biggest talking points of BCSC was Tesco chief executive Sir Terry Leahy’s comments at the opening session. When the chief executive of the UK’s biggest retailer talks, people tend to listen – especially when he calls on the Government for action to help the retail industry through the present downturn. Leahy caused quite a stir when he urged the Government, among other things, to review the business rate increase set to come into effect in 2010.
Leahy told the BCSC: “The Government needs to ensure that it doesn’t place extra burden on business. The priority should be to help the industry to get on in these difficult times.” As ever, Leahy demonstrated he had his finger on the pulse of the industry and homed in on one of the key issues in the coming years. Since his BCSC speech, Retail Week has launched its Rate Rage campaign to press the Government to do more to protect the industry from unjustified rate increases.
Leahy also had advice for retailers facing a rough ride over the next year. While he was forthright about the harsh conditions on the way, he also urged a positive, straightforward approach as a way to survive.
He said: “This economic challenge is the most severe many of us will ever have experienced. Tesco has weathered many storms before – here in the UK in the early 1980s and early 1990s, and in Central Europe and Asia. The lesson we have learnt is very simple: keep your eye firmly on the customer.”
Another big change over the past six months is the state of the Eastern European market. It was not long ago that this was being touted as the most recession-proof and resilient area of the Continent, and that it would keep surging ahead despite the woes in the West. Now the credit channels have all dried up so rapidly this region is also beset by severe problems.
Even so, there remains demand and plenty of developers with big plans for growth. Many of the landlords at Mapic were being presented with requests to enter into partnerships and supply funding to the developers in the East who have bags of ambition but lack the cash to carry through their plans.
The conferences are also the time to take stock of the changes in the way retail is done. According to Esprit head of retailing for Belgium, the Netherlands and Luxembourg Katrien Maes, one of the biggest challenges facing retailers that are expanding is to keep the brand fresh.
Maes believes retailing will become more challenging in the future because an increasingly tech-savvy generation of shoppers is becoming more demanding. She says: “What is important is that everybody has their own identity. The young generation wants lots of choices and their tastes change very quickly. You need strong branding and to change stores regularly.”
Nobody would deny that there was a distinctly muted feel to both BCSC and Mapic this year. Many would argue that the good times were allowed to roll for too long. It might be a bitter pill to swallow, but a period of downturn may well correct a lot of the wrongs in the economy.
The next 12 months are likely to be a long, tough slog for retailers. But when the property conference season comes around next year, a much clearer picture of the health of the industry will have emerged. One sobering thought is that, sadly, not all the names at BCSC or Mapic, be they retailer or developer, will be at next year’s party.
“There’s a different mood to the conferences this year,” admits seasoned developer John Laker, who is heading Dublin’s Northern Quarter development. “A lot of companies are laying people off and taking the view that development isn’t going to happen for a while.”
When retailers, agencies and landlords were making their plans for the conferences months ago they would have been unlikely to have anticipated some of the grim issues they would be facing now.
Take landlords for example. After years of fielding the sort of questions they like – such as whether there might be space available in development X – all of a sudden they are finding themselves facing a very different set of enquiries.
The straightforward deal conversations from hungry retailers interested in space have been replaced with concerned questions about the future of the development pipeline. Landlords spent much of this year’s BCSC and Mapic conferences trying to reassure prospective tenants that their proposed schemes would be going ahead and completed on time.
Given that it has emerged in the past few months that big schemes such as Hammerson’s Sevenstone in Sheffield will be opening their doors later than originally envisaged, the heightened anxiety was inevitable.
But the retail property sector did not come into being yesterday and many in the field have been through recessions before. As a result most people at the conferences kept their chin up and remained stoic in the face of the downturn.
Even so, numbers at BCSC were slightly down from last year, although 2,800 attendees was still a strong showing considering the difficult market.
Grosvenor director of leasing Jenefer Greenwood argues that there is less reason to be concerned than many fear and, while the big conferences this year were perhaps less buoyant, she still saw plenty of activity. “I don’t think sombre is the right word to describe the conferences at all; I would say the mood was cautious,” she maintains.
According to Greenwood there was no lack of demand from retailers interested in taking space at Grosvenor’s latest opening, Liverpool One. With Liverpool the setting for BCSC this year, the many retailers at the conference were able to see the new centre and the stores still available for themselves.
Greenwood says: “We were scurrying back and forth taking people to see units in Liverpool One for the whole conference.” With 27 stores still not let six months after the first phase opened the need to get the centre filled is becoming fairly urgent. It is promising that there are retailers still expressing an interest, but as one landlord put it during Mapic, “there is lots of talk but not much action”.
There may well be plenty of retailers making enquiries – and BCSC in particular was a hive of activity between landlords and prospective tenants – but it may well be that the proportion of interest that converts into deals is much lower than in previous years.
Talking to the European retailers at Mapic, many say plans for the UK are on the shelf until trading conditions improve. In just a year, what seemed like a golden opportunity to enter Britain is now a risky decision.
However, there are many retailers that still want to come to this country or take their expansion plans up a gear. Two of the names at Mapic that British shoppers can expect to see more of are Dutch babywear retailer Lief, which is looking for partners to open franchises in the UK, and US fashion brand McGregor, which is on the hunt for stores here.
These and other international players are still thirsty for expansion and see the UK as a very attractive place to set up shop. While conditions here are by no means easy, there are good deals to be had for retailers that are well prepared, do not carry too much debt and can exploit landlords’ weakened positions. There are still plenty of strong schemes and landlords with a solid foundation, and the resilient players are optimistic.
Laker says: “There are good schemes out there and in the medium to long term retailers will need them because when we come out of this they will need the space. Retailers are still interested in talking to developers about taking space but they are being more cautious. The stronger schemes will survive but some of the weaker ones might not be completed at all.”
He does not deny that there are tough times ahead, but believes that the hardest period will come in the short term. He says: “At the moment it’s easier to let a scheme that’s finishing in four years’ time than one that’s finishing next year.”
One of the biggest talking points of BCSC was Tesco chief executive Sir Terry Leahy’s comments at the opening session. When the chief executive of the UK’s biggest retailer talks, people tend to listen – especially when he calls on the Government for action to help the retail industry through the present downturn. Leahy caused quite a stir when he urged the Government, among other things, to review the business rate increase set to come into effect in 2010.
Leahy told the BCSC: “The Government needs to ensure that it doesn’t place extra burden on business. The priority should be to help the industry to get on in these difficult times.” As ever, Leahy demonstrated he had his finger on the pulse of the industry and homed in on one of the key issues in the coming years. Since his BCSC speech, Retail Week has launched its Rate Rage campaign to press the Government to do more to protect the industry from unjustified rate increases.
Leahy also had advice for retailers facing a rough ride over the next year. While he was forthright about the harsh conditions on the way, he also urged a positive, straightforward approach as a way to survive.
He said: “This economic challenge is the most severe many of us will ever have experienced. Tesco has weathered many storms before – here in the UK in the early 1980s and early 1990s, and in Central Europe and Asia. The lesson we have learnt is very simple: keep your eye firmly on the customer.”
Another big change over the past six months is the state of the Eastern European market. It was not long ago that this was being touted as the most recession-proof and resilient area of the Continent, and that it would keep surging ahead despite the woes in the West. Now the credit channels have all dried up so rapidly this region is also beset by severe problems.
Even so, there remains demand and plenty of developers with big plans for growth. Many of the landlords at Mapic were being presented with requests to enter into partnerships and supply funding to the developers in the East who have bags of ambition but lack the cash to carry through their plans.
The conferences are also the time to take stock of the changes in the way retail is done. According to Esprit head of retailing for Belgium, the Netherlands and Luxembourg Katrien Maes, one of the biggest challenges facing retailers that are expanding is to keep the brand fresh.
Maes believes retailing will become more challenging in the future because an increasingly tech-savvy generation of shoppers is becoming more demanding. She says: “What is important is that everybody has their own identity. The young generation wants lots of choices and their tastes change very quickly. You need strong branding and to change stores regularly.”
Nobody would deny that there was a distinctly muted feel to both BCSC and Mapic this year. Many would argue that the good times were allowed to roll for too long. It might be a bitter pill to swallow, but a period of downturn may well correct a lot of the wrongs in the economy.
The next 12 months are likely to be a long, tough slog for retailers. But when the property conference season comes around next year, a much clearer picture of the health of the industry will have emerged. One sobering thought is that, sadly, not all the names at BCSC or Mapic, be they retailer or developer, will be at next year’s party.
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