PMA Conference 2015: The new retail normal adapt, …...PMA Conference 2015: The new retail normal...
Transcript of PMA Conference 2015: The new retail normal adapt, …...PMA Conference 2015: The new retail normal...
PMA Conference 2015:
The new retail normal – adapt, or die!
May 2015
Jonathan De Mello – Head of Retail Consultancy, Harper Dennis Hobbs
UK Retail Market Overview
After a long, deep recession, UK retail is very much in growth mode
• House Prices Rising
• Unemployment Down
• Growth in UK Economy
• Attractive Compared to Eurozone
• Majority Government
• Geopolitical Risks (Russia, ISIS etc..)
Retail
Sales
Conservatives vs Labour on key retail-related topics
HDH || Page 3
Topic Policy Best for
Retail
Corporation Tax
Conservatives: Rate remains at 20%.
Labour: Be the most competitive in G7.
Business Rates
Conservatives: Overall review but keep discount for small business. -Labour: Cut and freeze rates for small businesses (affecting 1,500
properties). -
Energy and
Infrastructure
Conservatives: Promote competition to keep energy prices down,
invest in road network, broadband, HS2, airport expansion.
On energy
Labour: Freeze energy prices until 2017, invest in broadband, HS2
and a “quick response” to airport expansion.
On
infrastructure
Homes
Conservatives: 200,000 starter homes. Right to buy.
Labour: 200,000 new homes per year. Public sector building.
Wages and Tax
Conservatives: No tax on minimum wage. Allowance increased to
£12,500. No change in VAT/NI. Further steps to eradicate
‘exclusivity’ in zero-hours contracts.
Labour: £8 min wage. New 10p lower tax rate. No change in
VAT/NI. Ban zero-hours contracts. Introduce tax rebates for
businesses that sign up to the living wage.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
LFL Profit and Sales Growth 2014
Profit
Sales
Retailer Results
There are both winners and losers in the current retail climate
Occupier Demand
The UK is very attractive to international retailers
Corporation Tax Rates
The UK has comparatively low corporation tax rates
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
United States
Japan
France
Italy
Australia
Spain
Germany
Netherlands
Denmark
Sweden
United Kingdom
Singapore
Corporation Tax Rates 2014
The UK has Further Potential for Retail Development
The UK has lower retail floorspace/capita than other mature retail markets
0
2
4
6
8
10
12
14
16
USA Norway Australia Sweden Holland UK
Shoppin
g C
entr
e S
q F
t per
Capit
a
Shopping Centre Sq Ft per Capita 2014
UK Pipeline Developments
Retail Development is back!
0
5
10
15
20
25
30
35
40
Russia Turkey Ukraine France Poland Italy Germany UK
Shoppin
g C
entr
e D
evelo
pm
ent
Pip
eline
(Million S
q F
t)
Shopping Centre Development Pipeline Westfield London Extension, 800,000 sq ft
Westfield Croydon, 1,500,000 sq ft
New Retail Quarter, Sheffield, 600,000 sq ft
Westgate, Oxford, 800,000 sq ft Bradford, 570,000 sq ft
HDH Retail Centre Vitality Ranking
Size is not the only barometer of retail success
Suitability of Retail
Vacancy RatesGood Quality Tenants
Undesirable Tenants
Vitality Ranking – Most Vital
Westfield London
Guildford
Leeds
HDH Vitality
RankingRetail Centre
HDH Vitality Score
(0-400)
HDH Retail Spend
Potential Rank
1 Westfield London 312 13
2 Chelsea 290 98
3 Knightsbridge 261 128
4 Canary Wharf 254 149
5 Brent Cross 246 36
6 Richmond 244 195
7 Cambridge 240 39
8 Bluewater 236 17
9 Kensington 208 116
10 Bath 208 50
11 Guildford 205 47
12 London West End 201 1
13 Kingston upon Thames 201 14
14 Westfield Stratford 200 18
15 Cribbs Causeway 197 62
16 Islington - Upper Street 193 293
17 Edinburgh 191 12
18 St Albans 186 164
19 Trafford Centre 180 24
20 Harrogate 180 96
21 Chichester 179 121
22 Brighton 176 23
23 Meadowhall 175 26
24 Oxford 173 41
25 Chester 171 29
Vitality Ranking – Least Vital
Bootle
St Austell
Dudley
HDH Vitality
RankingRetail Centre
HDH Vitality Score
(0-400)
HDH Retail Spend
Potential Rank
476 West Bromwich 24 190
477 Bournemouth - Boscombe 24 266
478 Long Eaton 24 306
479 Letchworth 24 320
480 Retford 23 354
481 Ilkeston 23 273
482 Dewsbury 23 238
483 Rotherham 23 176
484 Wallasey (Liscard) 23 375
485 Arnold 23 350
486 Newport (Wales) 23 111
487 Stockton-on-Tees 22 205
488 Edinburgh - Leith 22 414
489 Aldershot 21 201
490 Folkestone 21 218
491 Stoke-on-Trent - Longton 20 381
492 Ramsgate 19 317
493 Stroud 19 332
494 Brighton - London Road 17 380
495 Bristol - Bedminster 16 385
496 Dover 13 284
497 Ellesmere Port 12 372
498 Morecambe 9 402
499 Llanelli 8 304
500 Dudley 5 196
HDH & ICSC European Retail Rankings
Rank Retail Centre Country 2013 Market Size
1 London West End UK £8,493,485,515
2 Paris France £7,745,406,304
3 Madrid Spain £4,926,451,871
4 Rome Italy £4,622,860,453
5 Munich Germany £4,444,971,145
6 Milan Italy £4,318,948,547
7 Moscow Russia £4,291,854,148
8 Berlin Germany £4,284,490,711
9 Zurich Switzerland £4,281,277,446
10 Istanbul Turkey £4,279,179,768
11 Barcelona Spain £4,277,636,903
12 Amsterdam Netherlands £4,212,777,818
13 Glasgow UK £4,198,475,372
14 Birmingham UK £3,533,037,026
15 Lisbon Portugal £3,472,789,928
16 Manchester UK £3,433,894,721
17 Hamburg Germany £3,131,461,847
18 Copenhagen Denmark £3,113,604,763
19 Stockholm Sweden £3,112,895,469
20 Vienna Austria £3,112,011,588
21 Oslo Norway £3,111,237,394
22 Saint Petersburg Russia £3,108,344,516
23 Leeds UK £3,071,126,314
24 Liverpool UK £3,037,856,442
25 Lyon France £2,971,179,362
26 Cologne Germany £2,962,266,596
27 Marseille France £2,961,774,210
28 Turin Italy £2,947,904,701
29 Frankfurt Germany £2,947,731,752
30 Dublin Ireland £2,943,855,526
31 Nottingham UK £2,935,465,883
32 Cardiff UK £2,750,065,854
33 Newcastle upon Tyne UK £2,743,580,472
34 Rotterdam Netherlands £2,667,924,672
35 Lille France £2,657,420,832
36 Brussels Belgium £2,650,917,613
37 Prague Czech Republic £2,624,905,610
38 Naples Italy £2,570,792,603
39 Valencia Spain £2,541,774,639
40 Düsseldorf Germany £2,515,945,202
41 Helsinki Finland £2,487,036,493
42 Stuttgart Germany £2,483,413,603
43 Antwerp Belgium £2,481,335,432
44 Bordeaux France £2,375,163,268
45 Toulouse France £2,346,104,046
46 Edinburgh UK £2,300,131,321
47 Strasbourg France £2,269,303,188
48 Warsaw Poland £2,265,834,768
49 Nuremberg Germany £2,189,154,013
50 Gothenburg Sweden £2,188,905,882
Physical retailers with successful online platforms
• Apple• Argos• John Lewis• Next• Estee Lauder Companies
£0
£200
£400
£600
£800
£1,000
£1,200
2008 2009 2010 2011 2012 2013 2014
Joh
n L
ewis
Dir
ect
Sale
s (m
)
John Lewis Direct Sales
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%
Physical Only
Online Only
Online and Physical
% Unique Customers % of Total Transaction Spend
Retailer X: Online vs Physical Transaction Numbers
Customers who shop from online and physical channels have higher average transaction values
Shopper TypeAvg Physical Spend Per
Transaction
Avg Online Spend Per
Transaction
Avg Spend Per
Transaction
Physical Only £63.2 £63.2
Online Only £117.2 £117.2
Online and Physical £79.8 £137.9 £95.4
Total £65.1 £135.7 £68.3
Estée Lauder Companies: Bobbi Brown
Bobbi Brown have a large and profitable retail ecosystem
Concession/
Wholesale
Online
Free-standing
store
Bobbi Brown trades from concessions
or wholesale outlets in specialist
beauty retailers and department
stores
Bobbi Brown trades from
permanent free-standing
stores in a number of locations
Where suitable,
Bobbi Brown also
operates pop-up
stores – such as in
London’s Canary
Wharf
Bobbi Brown trades online, from both its
own website and those of other routes to
market, such as department stores
= Maximisation of brand equity and
profitability across all channels
The Retail Ecosystem
Store NameStore Sales Growth
(2007 to 2013)
Online Sales Growth
(2007 to 2013)
US Store 1 118% 70%
US Store 2 70% 45%
US Store 3 69% 60%
US Store 4 52% 18%
US Store 5 50% 26%
US Store 6 47% 41%
US Store 7 34% 30%
US Store 8 34% -9%
US Store 9 33% 10%
US Store 10 29% 39%
Average Growth by Top 10 Stores 53% 33%
US Store 211 6% 0%
US Store 212 1% -12%
US Store 213 0% -26%
US Store 214 -3% 40%
US Store 215 -5% 11%
US Store 216 -7% 16%
US Store 217 -10% 37%
US Store 218 -32% 25%
US Store 219 -49% 50%
US Store 220 -81% 47%
Average Growth by Bottom 10 Stores -18% 19%
Top
10
Sto
res
By
Sale
s G
row
thB
ott
om
10
Sto
res
By
Sale
s G
row
th
E-commerce Growth
E-commerce growth is slowing, and competition is increasing
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
£0
£10
£20
£30
£40
£50
£60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mark
er
Share
of
all R
eta
il S
ale
s (%
)
E-c
om
merc
e S
ale
s (£
bn)
Growth in the UK E-commerce market
E-commerce Sales (£ bn) Market Share of all Retail Sales
Major online players experimenting with physical
• Amazon• ASOS• Ebay• Google• Net a Porter
Kindle Pop-up San Franciscob store Asos pop-up
The eBay Inspiration Shop, New York
Pure plays with successful physical outlets
• Athleta• Bonobos Menswear• Oak Furniture Land• Pro Direct• Rapha• Simply Be/Jacamo
Pure Play Fashion Retailer X: Case Study
Retailer X
Customers
Index Vs UK
(UK=100)
1 Wealthy Urbanites 8.9% 217
2 Maturing Affluence 17.2% 346
3 Prosperous Families 28.8% 241
4 Settled in Suburbia 17.9% 122
5 Mixed Neighbourhoods 8.0% 92
6 Average Families 7.6% 52
7 Students and Graduates 2.5% 46
8 Struggling Workers 5.0% 32
9 Poorer Families 3.1% 29
10 Borderline Poverty 1.1% 11
CAMEO Group 0 50 100 150 200
Pure Play Fashion Retailer X: Case Study
BrandCorrelation with Retailer X
Customers
Jo Malone 91%
Toast 88%
The White Company 85%
Space NK Apothecary 82%
L.K.Bennett 79%
Jigsaw 78%
Anthropologie 77%
Phase Eight 77%
Noa Noa 76%
Mint Velvet 73%
East 73%
Le Pain Quotidien 72%
Maje 69%
Sandro 68%
Department StoreProportion of Top 4
GroupsCorrelation with Retailer X
Customers
Debenhams 35.7% 5.9%
Fenwick 50.5% 75.8%
Harvey Nichols 50.4% 65.7%
House of Fraser 41.8% 38.1%
John Lewis 51.2% 89.8%
Selfridges 36.8% 10.8%
UK (%) 35.7% 12.7%
Rank Score Retail CentreWeighted Spend
(£m)
Count of Consumers in
the Top 4 CAMEO
Groups
Proportion of Consumers
in the Top 4 CAMEO
Groups
Most
Relevant
Brands to
Retailer X
JLP Or Fenwick Presence
1 3,539 Chelsea £795.3 70,590 63.4% 11 Peter Jones
2 3,071 Bath £1,289.3 98,077 46.3% 8
3 2,794 Guildford £1,365.5 130,696 63.6% 9
4 2,472 Cambridge £1,465.2 148,334 64.6% 7 John Lewis
5 2,254 Kingston upon Thames £2,127.4 192,270 61.7% 6 John Lewis
6 1,734 Westfield London £2,265.5 194,885 57.9% 3 John Lewis (2017)
7 1,658 Richmond (London) £413.2 36,332 59.8% 5
8 1,582 Leamington Spa £818.3 82,532 65.0% 2
9 1,561 Oxford £1,445.0 136,182 55.9% 4 John Lewis (2017)
10 1,521 Kensington £701.9 67,578 71.3% 3
11 1,483 Cheltenham £889.9 63,933 45.0% 4
12 1,447 Bromley £1,673.2 123,280 50.7% 1
13 1,361 St Albans £499.0 41,653 54.6% 4
14 1,357 Winchester £410.7 39,869 61.7% 2
15 1,304 Canterbury £972.6 73,873 44.2% 1 Fenwick
16 1,293 Islington - Chapel Market £245.4 19,006 48.8% 6
17 1,231 Chiswick £261.1 21,986 55.6% 1
18 1,217 Solihull £1,050.1 68,303 35.0% 3 John Lewis
19 1,186 Chester £1,644.2 113,324 40.1% 5
20 1,149 Harrogate £815.7 69,732 55.2% 7
Pure Play Fashion Retailer X: Case Study
Pure Play Fashion Retailer X: Case Study
Retail Centre Phase
Chelsea 1. London Flagship
Chelsea 2. London Concessions - John Lewis
London West End 2. London Concessions - John Lewis
London West End 2. London Concessions - Fenwick
Kingston upon Thames 2. London Concessions - John Lewis
Bath 3. Regional Priorities
Guildford 3. Regional Priorities
Bromley 4. London Stores
Richmond (London) 4. London Stores
Kensington 4. London Stores
Isl ington 4. London Stores
Leamington Spa 5. Regional Stores
Canterbury 5. Regional Stores
Cheltenham 5. Regional Stores
St Albans 5. Regional Stores
Winchester 5. Regional Stores
Westfield London 6. Regional John Lewis Concessions
Cambridge 6. Regional John Lewis Concessions
Oxford 6. Regional John Lewis Concessions
Solihull 6. Regional John Lewis Concessions
PMA Conference 2015:
The new retail normal – adapt, or die!
Questions?