Why don’t malls work for retail’s emerging stars?

Despite common perception, there are some very successful up-and-coming retailers. The problem for landlords is that the big malls don’t work for them.

Last week Retail Week hosted a photo shoot for about a dozen of the most successful growing retailers which are defying the recession at the top of London’s Swiss Re tower, better known as the Gherkin. We were focussing on the group of retailers I describe, not entirely satisfactorily, as the Yummy Mummy set - White Stuff, Sweaty Betty, Steamer Trading and Oliver Bonas were among those attending, plus a smattering of pure-play etailers. You can see the feature in Retail Week in a couple of weeks.

All the businesses we asked along were companies which have managed to ride out the recession not by offering rock-bottom prices, but by having a clear niche, offering distinctive products, and high quality, personal service. Their stores look good and their customers are affluent. They should be shopping centre owners’ dream tenants.

The problem is they’d rather be in Bath than Broadmead, Witney than Westfield and Wilmslow rather than the Trafford Centre. While the retailers there have been courted hard by the big mall owners, and some have gone into them, big shopping centres don’t seem to work for these brands as well as high street shops in affluent areas.

The problem for them, and a lot of smaller retailers, is that they simply get lost in the big malls. When people make a trip to a Bluewater or a Westfield, it’s not to visit niche retailers - it’s John Lewis, House of Fraser or Marks & Spencer which are the destination. But it’s the specialist stores which are paying the rent and subsidising the anchors.

Contrast that with a high street in an affluent London suburb or a market town, like Witney, for instance, which was the subject of a bit of discussion on the day and happens to be David Cameron’s constituency. In these places, unlike the malls, pretty much everyone is going to be a potential customer for these brands targeted at the affluent upper-middle class, the rents are lower, and the range of retail and restuarant options creates an environment where better-off people feel comfortable spending their time.

Mall developers have tried to emulate this, but most haven’t been successful, although schemes like Princesshay in Exeter have come as close as any. For most shopping centre owners though, identifying their next generation of tenants remains one of the biggest challenges they face.