Westfield Derby: The eagle has landed

It has been seven years since Westfield entered the UK property market through its purchase of MEPC’s shopping centre portfolio. It may be the biggest shopping centre brand in the world, but it has been a long wait for the UK retail community to discover what the Australian developer would deliver with its first scheme here.

So, while it may not be the most glamorous location, a huge amount was riding on the redevelopment of Derby’s Eagle Centre, which was completed last week. Retail property sceptics haven’t been afraid to question how the£340 million scheme would fare and whispers about whether the scheme was too big for one of UK retail’s second-tier cities and whether it would open half-empty, have been rife.

Those in doubt got their answer last Tuesday and were emphatically proven wrong. Westfield Derby, as the centre is now known, opened 98 per cent let and six months ahead of schedule. With a handful of exceptions including Moss Bros and Phones 4U, all the stores were trading on opening day and the centre was jam-packed with 150,000 visitors.

“There were a lot of detractors – people saying it’s too big, saying they don’t know what they’re doing,” says Steven Lowy, group managing director of Westfield and son of the group’s legendary founder Frank Lowy. “But we didn’t come down in yesterday’s rain shower. Because of our international experience we were bolder – I don’t think another of our UK peers would have built such a big scheme,” he says.

The significance of the event was shown by the calibre of those who showed up for the opening. Marks & Spencer chief executive Stuart Rose and marketing guru Steven Sharp were touring the stores, as was Debenhams boss Rob Templeman and Next chief executive Simon Wolfson. Based on the first morning’s trade, the feeling among the retailers was that they were happy with what Westfield had delivered and pleased with the quality of the centre.

Even retailers that were not in the scheme were there as Westfield pulled out all the stops to showcase its UK debut, chartering the Orient Express to take London-based retailers to Derby to see the scheme.

They included Jeremy Collins, development chief of John Lewis, with which Westfield has signed a deal to open a store in its Stratford development in East London, and Harvey Nichols chief executive Joseph Wan – not that he would consider opening a store in Derby. It is not a glamorous place and, judging by the shoppers there on opening day, the prevailing demographic is more CD than AB. The tenant mix is, therefore, decidedly mid-market – anchored by M&S, Next and Debenhams and with all the main young fashion players, such as River Island, Topshop and H&M also well-represented. “What was important for us is that the development was appropriate for the market in which it sits,” says Westfield UK and Europe managing director Michael Gutman.

PROVING PEOPLE WRONG
Many in the property industry expressed concerns about whether Derby was big enough to support a 1 million sq ft (92,900 sq m) scheme, but the success of the letting campaign and the opening day footfall suggest otherwise. Westfield claims that the 1.3 million customers in Derby’s catchment area have a collective annual spend of more than£5 billion and Gutman says that, based on its experience of developing shopping centres around the world, the developer had no such concerns.

“When we first came to Derby, we saw 20 million people passing through this place a year and we couldn’t understand what they were doing here. In the US or Australia, a city the size of Derby would have four major shopping centres.”

Despite the concerns of some in the UK retail industry about the volume of space to be delivered over the next few years, Gutman has no such worries. “We believe retailers in the UK are underserved with quality space. That was the fundamental premise of us coming here.”

While the mix is very midmarket, the design of the scheme ensures that the stores rise above the mundane, with double-height frontages that lend them a dramatic impact. The consensus among the retailers present was that Next’s store stole the show, with a flamboyant interior based on the Meadowhall prototype (last week), which made the most of the shopfront height.

Zara also wowed the shoppers with a new, more sophisticated shop, designed to differentiate it from its fast-fashion rivals. The store featured a lower density of stock and very discreet point of sale material in an attempt to portray a more upmarket image, designed to appeal to the 30- to 40-year-old career woman. Inditex stablemate Bershka, which has had mixed results in the provinces, is next door and has a bold shopfit designed to appeal to younger shoppers.

Debenhams’ giant 127,000 sq ft (11,800 sq m) store was busy and lacked the usual mountain of promotional activity. As is customary for Debenhams these days, the fashion floors are dominated by very high fixturing, promoting its clothing brands and, according to operations director Nigel Palmer, trade started well. The restaurant looked particularly impressive.

The surprise was the M&S store, which looked utilitarian, lacking the flair of its recent refurbishments and featuring a drab, white rubber floor that looked and smelt overpowering.

As well as the national fashion brands, the centre also features a range of local independents and smaller fashion multiples, with 100 new retailers coming into the city. In what is a sign of the way in which shopping centres are moving today, the focus is very much on fashion. The scheme has no new entertainment retailers – although there are plenty of mobile phone shops and jewellery giant Signet chose the centre for a striking new look for its Ernest Jones brand.

The catering offer is also bold for such a mid-market centre, with eat-over counters serving different types of cuisine and restaurant operators such as Pizza Express taking units, although, on opening day, KFC seemed to be the dining option of choice for the locals. Also, National Amusements will open its first UK Cinema De Lux there next spring.

The centre is a huge improvement on what was there before. Prior to redevelopment, the Eagle Centre was infamous for being one of the grottiest examples of 1970s shopping centre design. As part of the extension, those parts of the existing centre that Westfield controls have been brought up to the same high standard.

However, the developer doesn’t control the whole site and those areas that have remained untouched look decidedly shabby. Those retailers that remain in these areas, including Bhs, Clarks and MKOne, will have their work cut out to keep drawing in shoppers.

Westfield Derby is the first in a series of schemes set to transform the retail offer of the East Midlands’ larger cities. Hammerson is advancing well with its plans for the rejuvenation of Leicester, while Westfield itself is working up plans for the long-mooted, badly needed redevelopment of Nottingham’s Broadmarsh – another tired scheme it inherited from MEPC.

But the impact of Westfield’s arrival in the UK spreads way beyond the Midlands, with a series of schemes across the country that has enabled it to gain real leverage with UK retailers. Just a week before Westfield Derby’s opening, it secured a hat-trick of deals with M&S for its schemes in Stratford, Nottingham and Bradford; the latter two schemes will also be anchored by Debenhams. “It’s all about repeat business,” says Gutman.

The real test, however, is Westfield London. The development, still known by most as White City, will change the face of retailing in the capital when it opens next autumn and, with the scheme almost 70 per cent let, Gutman says he is confident it will be a success.

While some indigenous shopping centre owners, notably The Mall, have worked hard to build a UK brand, most UK shoppers still don’t recognise shopping centres by their owners’ brand.

Lowy is confident that Westfield can change that and that there is real value in a centre’s brand. “In the US, there was no such thing as a shopping centre brand until Westfield showed up,” he says. “It means something to the consumer, to the retailer, to the staff, and to the investment community.” The Westfield brand will become more visible when the centres the company has inherited, such as Merry Hill in the Black Country, are upgraded.

Coming three days after the cocky Australian team were sent packing from the Rugby World Cup by England, Westfield’s almost entirely Antipodean senior management endured a day of ribbing about England’s triumph. But on the evidence of Westfield Derby’s success, they are one Aussie team that won’t be returning down under with their tails between their legs.