Opinion: What's really happening in West End retail?

There seems to be significant confusion following a turbulent year with an increased amount of retail property becoming available.

Many find this concerning, highlighting the number of stores now available as if to signify the end is nigh for bricks and mortar.

As always, we see commentary that these stores in and around Oxford Street, Regent Street and Bond Street lose money and are purely vanity flagship projects.

It seems strange to me that world-class retailers would buy more than one store in the same area if the first store lost money.

What is true is that the fixed occupational costs in the West End and the way they are increasing has a massive impact on store profitability.

This has always been the case, and now is one of those times when costs are causing retailers to re-evaluate their store portfolio across the district.

I’ve seen it happen at least three or four times before.

“All of this change is a good thing. It keeps the retail market in the West End interesting exciting and vibrant.”

David Kenningham, Kenningham Retail

The market regularly reaches these watersheds in central London when store performance dips below an acceptable return, prompting retailers to look at their portfolios and how to improve their performance.

The property market is imprecise, rents periodically become overinflated, the valuation methods are archaic and third-party costs such as rates exacerbate the situation. It is forever thus – and the property market is stricken by an inertia to change.

It is during these times that a retailer will consider turning five stores into three. But equally, others may see an opportunity of turning two into four.

Often it’s not as straightforward as selling or buying an extra shop.

In this type of market, a retailer will review the performance of all its stores. That could lead it to sell two stores and buy one to create the right sort of balance across the wider market.

Others will see the opportunity of securing the best space and out position keen market rivals with a view to getting better performance as the market strengthens.

All of this change is a good thing. It keeps the retail market in the West End interesting exciting and vibrant, all of the things that appeal to its customers.

So what does the future hold?

“There will always be new retailers, both international and domestic, creating quality flagship stores in central London as they are a prize worth having.”

David Kenningham, Kenningham Retail

I see a period of stabilisation as retailers fine tune their portfolios and new retailers enter the fray.

There will always be new retailers, both international and domestic, creating quality flagship stores in central London as they are a prize worth having.

The West End is now one of the world’s leading retail destinations and we are fortunate that some farsighted individuals created the New West End Company, whose role in aligning all the owners and retailers has had such benefits across the wider West End market.

It is easy to forget how much the West End has improved in the last 17 years, before which it would never have featured in a world retailing top 10.

As we enter an exciting new phase in the area’s development with the Elizabeth Line opening in December 2018, there is a real sense that exciting changes are on the horizon.

The West End is always evolving and the anticipation of a significantly improved retail environment – particularly on Oxford Street with significant reductions and hopefully removal of buses – is an exciting one.