FSP - Widely regarded as the UK's leading business consultants http://www.fspretail.co.uk/blog/ fspretail.co.uk:blog:190 2012-05-17T00:00:00+01:00 You may have seen the FSP latest news that our Managing Director, Geoff Nicholson is retiring. It will be the end of an era, not least because his eponymous view has been the mainstay of SnapShop Monthly for many years. Back in the old days, before websites and blogs, FSP issued a Retail Update to roundup the news and statistics for its key clients. With the birth of SnapShop it was recognised that not just our corporate clients were in need of some wise words; everyone wanted a knowledgeable interpretation of the latest retail topic. Geoff’s View was born. I thought you would be very pleased to hear that Geoff is not just disappearing off into the sunset, with ne’er a care in the world, but will be devoting some of his precious time to penning more wise words for us. SnapShop Monthly will evolve, but the comment on the hot retail topics will still be sourced from one of the finest minds in retail property. You can catch up on Geoff’s historical Views on the FSP site here   http://www.fspretail.co.uk/en/blog/2012/05/190-snapshop-blog-geoffs-view-from-retirement/ FSPRetail fspretail.co.uk:blog:189 2012-05-14T00:00:00+01:00 I might do a little bit of flag waving when the England team plays, and maybe a little bit of jumping up and down (at least metaphorically, if not physically) when the England team score a goal, but beyond that my interest in football is negligible on any scale. From this uneducated perspective, I am aware of two types in football; those that support Manchester United and those that don’t. However, whatever the type, fashionista is not a term universally applied to football supporters. Football strip is slippery, primary coloured and in the most part, unflattering. Quite frankly it looks good only on, well, athletic premiership footballers. And even then only when there really is nothing else to wear. Arsenal supporters, who, by definition, are not Manchester United supporters, are presumably an untapped market of loose-walleted beings completely oblivious to the sartorial inelegance of the red and white kit. The club knows its market and is eager to please, relieving its fan-base of a little more cash in the process. In case you missed it, Arsenal Football Club has announced it is to open its first flagship store in a major retail location after securing a 2,270 sq ft first floor unit at Brent Cross Shopping Centre. According to Retail Week, the shop has been benchmarked against sports brands to produce trendy merchandise. In red and white presumably? Narrows the market a little! However, Brent Cross is, according to the Arsenal press statement, located in a traditional heartland of Arsenal support. Phew! Fortunately, Brent Cross has a substantial amount more to offer those who prefer their trendy merchandise in a delicate shade of blue or green. http://www.fspretail.co.uk/en/blog/2012/05/189-snapshop-blog-what-to-do-in-brent-cross/ FSPRetail fspretail.co.uk:blog:188 2012-05-09T00:00:00+01:00 In Pre-Acquisition Due Diligence for retail property, FSP deals with the critical question, “What is for sale?” The answer is in two parts, the value of the current business and the opportunities to which it provides access. Valuation of the current business is directly linked to rents, both actual and potential. However, the ability of retailers to pay rent depends on their sales and margins. FSP has developed analyses to determine the degree of risk involved for each retailer to pay the passing rent. These individual risks are then summed, to show the overall rental risk for the asset. The opportunities for a retail asset depend on the relationship of the catchment population demand for retail merchandise and the existing supply. Measuring this relationship, the size of the Trading Gap, is therefore very important. Time for due diligence is always limited, so FSP has a well-honed system rapidly to gather the essential information. In a recent project, FSP was able to generate within 4 days answers to both parts of the question. In this time, FSP was able to relate its estimate of catchment demand to the level of retailer sales and calculate the degree of retailer risk and the upside potential, as expressed in the Trading Gap.   http://www.fspretail.co.uk/en/blog/2012/05/188-product-focus-preacquisition-due-diligence/ FSPRetail fspretail.co.uk:blog:187 2012-04-23T00:00:00+01:00 Has the role of shops and the way they are run been fundamentally changed by internet shopping, smart phones and social media? The answer determines the appropriate retail asset management response to historically high vacancy rates. For those who believe that the internet merely provides another level of competition, it is reasonable to assume that the market will eventually recover. Under this analysis, there is little more to do than wait. In the meantime, living with a few more vacancies is an inevitable, if unwelcome additional cost. A closely associated strategy is to deal with high vacancy rates unit by unit. The task is to find an occupier who is willing to take on the lease at a rent that doesn’t damage the overall value of the asset. An interesting current example is Borough Parade in Chippenham. Mountgrange, working with PR company Halogen, is running a competition to attract new retailers by offering two units rent-free for 6 months and free of service charges and rates for 2 months. This has had the collateral benefit of providing some publicity for the Centre, when the offer was picked up in the press. However, if we are at the dawn of a new day for retailing, and the role of shops has been fundamentally altered, such a piecemeal response is sub-optimal. It will be more effective to reconsider the role of the whole asset within the new retailing paradigm that integrates on-line and mobile shopping and the impact of social media. Only by understanding who uses the asset and why, will it be possible to design an appropriate role for it and identify the occupiers able to deliver that offer. Filling gaps can be, at best, only a short-term patching up. Of course, FSP is not a disinterested observer. Providing insight to the motivation and aspirations of current and potential shoppers is our business. However, if there has been a dislocation of the market, a radical response is needed.   http://www.fspretail.co.uk/en/blog/2012/04/187-a-new-day-for-retailing/ FSPRetail fspretail.co.uk:blog:186 2012-04-10T00:00:00+01:00 More than half of shopping visits for comparison goods are driven by shoppers seeking clothing or footwear. The variety of retailers selling fashion is wide. Therefore, when recruiting new fashion retailers for a centre, it is as well to be able to identify the sort of fashion that interests the shoppers. In these post-Portas times, it is more widely recognised that the first essential for thriving shopping locations is that they satisfy the needs of their shoppers and visitors. Age, social class, lifestyle and life stage are useful predictors of fashion preferences. However, these four dimensions quickly generate an unmanageable number of market segments. Many years ago FSP conducted multiple consumer focus groups about fashion preferences. The result was the development of an attitudinal segmentation, FISH, which has proved robust and enduring. FISH posits that fashion purchasing behaviour is largely determined by the interaction of consumers’ self-perception of their own ‘thinking age’ e.g. “How young or old do I feel?” with the age-related values they seek to project. The “thinking ages” are sub-divided into: Young - Peer pressure to conform is strong and fashion is a powerful identifying statement   Assured - Young but no longer immature, or led by peer group pressure. They are able to make up their own minds, are sophisticated in their choices but do not adopt the attitudes, lifestyles or values typical of older self-perception groups   Family - Dominated by the financial considerations of running the home and caring for the family, therefore prudence comes before self-indulgence. Members can, and often do, ‘migrate’ temporarily to the Assured or Classic segments when spending on discretionary or ‘special occasion’ purchases. The frequency of this migration depends on how much is available after essential family spending   Classic - Typically, though not universally, Post-Family and includes ‘empty-nesters’. In self-perception terms, members have many similarities with Assured, differing only in possessing less self-confidence about the ‘rightness’ of purchase decisions, often expressed in terms such as ‘it’s a bit young for me’   Old - No longer want to make any positive statements about themselves through their purchases. Can typically be summarised as, ‘given up’ The four key image perceptions consumers hold about merchandise are: Fashionable – Attitudes are concerned with purchases that demonstrate the individual's fashionability – being 'up to the minute'. Adherence to peer group dress codes and other tokens of group identity are of overriding importance   Individual – Purchases that demonstrate enough 'savoir faire' to distinguish between transitory fashion and taste. The consumer knows what suits his/her lifestyle and is able to make up his/her own mind. It is important that the purchase should not be recognisable as being from a particular shop while branded goods must fulfil a clearly defined need. Style, individuality and exclusivity are important.   Safe – ‘Value for money' for merchandise with “good enough” performance. These include many mass market branded products, which do not make distinctive claims for performance, and goods recommended in “Which?” magazine. This is a particularly important area for those whose self perception is Assured, Family or Classic and who see themselves as having less discretionary spending and who play safe in their purchase decisions   Homely – These are purchases where the requirement is to project no particular values and items are bought purely for replacement. Price is important for goods whose main attribute is ‘utility’’ Not all the cells within this 20 cell matrix are valid – e.g. Old Fashionable – and several others, e.g. Young Homely, are not commercially viable. However, the matrix is an effective way to reduce the complexity of the fashion market to manageable proportions.   http://www.fspretail.co.uk/en/blog/2012/04/186-product-focus-fish-fashion-segmentation/ FSPRetail fspretail.co.uk:blog:185 2012-03-27T00:00:00+01:00 The BNP Paribas Real Estate retailer risk index for 2012 has used the BIS Wealth Creation Index to calculate retailer financial health. The retailer risk for individual fascia was then aggregated to give a risk score for locations. The report ranked the top 100 towns from the most to the least risky towns to invest in, using the BIS Wealth Creation Index for retailers trading in these towns, modified by the number of vacancies and charity shops. FSP has used this BIS index for several years and recognises its power. However, it has to be used with care since there is more than one reason for a low index. For example, retailers starting out (such as Hollister, with a BIS guide of Head Above Water) have huge set up costs and expenses. This will affect the Wealth Creation Index negatively, even though they may be trading well. FSP uses the BIS Wealth Creation Index to look at retailer health but finds more insight from the trend of the Index than from the score for a single year. Taken in isolation, the Index can be misleading. The whole picture must always be taken into account when looking at retailers and town centres whilst considering potential investment opportunities. You can access retailer information including financial health using SnapShop. SnapShop is FSP’s powerful & comprehensive directory of over 2,000 UK retailers, including: Contacts Accounts Stores Sales News Rent For more information on SnapShop, click here. For SnapShop membership information click here For more information or to discuss the BIS ratio, or any other related information please email fspretail@fspretail.co.uk or call 01494 474740   http://www.fspretail.co.uk/en/blog/2012/03/185-bis-wealth-creation-index-looking-at-retailer-sustainability/ Hpratley fspretail.co.uk:blog:184 2012-03-26T11:51:20+01:00 The three things that matter in retail property are “location, location, location”. The maxim may be well-established but it is made increasingly obsolete by on-line retailing. The new maxim is “customers, customers, customers.” How asset managers respond to this challenge will affect the attractiveness of their shopping centre or retail park to potential occupiers. Those who can identify and monitor the key shoppers in their centre will be able to help their tenants to trade more effectively. Charlie Mayfield, chairman of John Lewis Partnership, is quoted as saying that retailers are increasingly reliant on the most loyal customers who generate most sales and who shop across all the retail channels. “This will change significantly the way money is made in the retail sector.” Jack Wills in Chichester trades from a converted Georgian townhouse, set back from the high street and some distance from the main shopping parade. For Jack Wills’ customers, this location, although well off the Prime pitch, works well. Why should other retailers with a very particular client group not prosper in similar, unconventional retail property? On-line retailers focus relentlessly on current customers because it is more economic than recruiting new ones. While conventional retailers expand by opening new shops or opening in major regional centres, on-line traders grow most effectively by moving existing customers from “Trialist” to “Repeat Purchaser” to “Loyalist.” To do so, they need thoroughly to understand the particular requirements and preferences of individual customer groups. The process is not unlike that for the traditional independent retailer who knows personally his key customers. The internet, through social media, provides a host of potential points of contact. But it takes effort and investment to use the new channels effectively. Similarly, effort and investment is required to identify shoppers in shopping centres and retail parks. New technology enables managers to go beyond simply counting and tracking movement to measure other, more immediately relevant visitor metrics. If knowing your customers is of paramount importance, it is worth investing to discover who they are.   http://www.fspretail.co.uk/en/blog/2012/03/184-geoffs-view-changing-retail-maxims/ FSPRetail fspretail.co.uk:blog:182 2012-03-08T00:00:00+00:00 Leasing Support Outside the Top 100 locations, letting shops is not what it used to be, thanks to the growing impact of on-line sales, smart phones and tablets. Increasingly, it is not enough to have to have a clean, suitably sized unit at a good rent. Many towns have lost their traditional roles and need to find a new story, a new raison d'etre. Prospective occupiers need to be convinced that the new role is consistent with their own market position and of sufficient size to be worth tackling. They need evidence that their turnover will be sufficient to give them an adequate ROI (Return on Investment). Letting teams therefore need to know the story for the town, how to estimate the retailer's likely turnover and the ROI attached to that turnover. It is FSP's role to assist letting teams by presenting the profit opportunity to target retailers. FSP has at its disposal research expertise, extensive databases and hands-on senior retail experience. Advising you on all crucial issues relating to retail strategy, occupier performance, asset management and implementation, our expert team will Focus on opportunities to increase value Identify target retailers to deliver increased sales/rent based on retailer fit Provide data and benchmarking to present to retailers Provide turnover and profit estimates for target retailers With FSP, you will find clear, concise information for retailer recruitment. Mark Phelps, Letting Agent with Wilkinson Williams said: "The FSP research helped our understanding of the Park’s shoppers and provided information that assisted our discussions with target retailers. The bespoke reports provide key benchmark statistics and quantify the profit opportunities to retailers. They also help illustrate to landlords the scope for future growth and can formulate part of an asset management strategy" http://www.fspretail.co.uk/en/blog/2012/03/182-product-focus-leasing-support/ FSPRetail fspretail.co.uk:blog:183 2012-03-08T00:00:00+00:00 What’s New? Retail Pulse now contains information on the month’s Retailer Births and Deaths. Retail Pulse and SnapShop will both be revamped over the next few months. If there is anything you would like to see included, or can’t cope with out, let us know. To sign up to Retail Pulse email fspretail@fspretail.co.uk To become a SnapShop member and receive SnapShop monthly, click here.   http://www.fspretail.co.uk/en/blog/2012/03/183-retail-pulse-now-contains-retailer-births-andamp-deaths/ FSPRetail fspretail.co.uk:blog:181 2012-02-22T00:00:00+00:00 The ONS retail figures for January were better than expected. The explanation seems likely to be local, relating for example to the ONS seasonal adjustment factor or the digital switchover in London, rather than a fundamental change to the longer term outlook for the industry. Assuming this to be true, that the outlook for 2012 trading continues to be difficult, retailers will look more closely than ever to cut non-essential costs. The emphasis of any investment is likely to be towards internet-enabled sales. Reductions to the cost of the store network will be attractive. Leases coming to their end provide an obvious opportunity to get rid of unprofitable outlets and to drive hard bargains on the others. The broad implications for asset managers are fourfold: 1. The importance of understanding the true profitability of the stores in their centres. A well-grounded grasp of the financial situation of each tenant is a pre-requisite for developing an effective tenant mix strategy. Asset managers need to know which retailers trade successfully and will contribute to the future success of the centre 2. The increased need to be more professional and proactive in presenting the centre trading opportunities to prospective occupiers. The necessary precursor is to understand the occupier’s customer profile and their presence amongst the centre shoppers 3. “Can Talk, Will Talk” was the title that summarised the FSP/twentyretail research with senior figures in UK retail property in 2010. In the aftermath of the 2008 crisis, the importance of on-going dialogue between asset managers and their customers was then front-of-mind. The interests and success of both are closely bound together, so co-operation is more effective than conflict. After the easier conditions of the last two years, the lessons from 2008 may have somewhat faded from memory 4. Competition between shopping centres and locations is likely to sharpen. As both the number and size of outlets required to service the market reduce, retailers will be ruthless in favouring asset managers who can be flexible and take a longer term view. The danger is that the competition will be based on price alone. It looks as though it’s going to be an interesting year!   http://www.fspretail.co.uk/en/blog/2012/02/181-geoffs-view-2012-outlook/ FSPRetail fspretail.co.uk:blog:180 2012-02-13T00:00:00+00:00 The Local Data Company (LDC) has said the number of empty shops on UK High Streets is set to rise in 2012. The increase is expected to happen due to weak consumer confidence, rising unemployment and growing online sales. The British Retail Consortium (BRC) said vacancy rates were "worryingly high" in many parts of the country and called on the government to reduce business rates, which are set to rise by 5.6% in April. With the failing high street being a hot topic in 2011, and the government bringing in Mary Portas to create a rescue plan, will empty shop numbers continue to rise in 2012? It has been said that the Portas review is the 'Right Diagnosis but the Wrong Prescription'. Graham Shone’s blog, reports that Phil Wrigley of LXB Retail and Majestic Wines has insisted that if the government adhere to the recommendations of Mary Portas' review, the high street will continue to plunge into further decline. Wrigley's recommendation for town centres to avoid further decline is to encourage increased conversion of high street premises to housing. As discussed in FSPs blog Town Centres - Best Practice and Squeezed Middle -three old, but relevant retailer sayings are useful when thinking about the reinvigoration of failing town centres: 'Every Place is Different' - Our greatest problem and perhaps also the solution can be found in the tremendous diversity of towns across the country. What is right for Aberdeen will not be right for Wandsworth. ‘Retail is Detail’ - We often spend too much time focusing upon the symptoms and not the cause. It is easy to blame the internet or supermarkets but the problem is really the fundamental disconnect between the consumer and town centres which has driven shoppers to these alternative channels. ‘Sales are vanity, profits are sanity’ - For many retailers 20% of locations produce 80% of the profits, and the reality in numerous town centres is that a good number of the stores are trading unsustainably. Unprofitable businesses are unlikely to have the spare cash to invest in a new shop fit or new merchandise lines - but unfit, crumbling and empty shops are well known as one of the greatest disincentives to shoppers. Until we address the fundamental problem of low profitability we cannot expect to nurse sick town centres back to long term sustainability. Few of the participants, landlords, tenants, planners or local authorities are prepared to focus together on the two areas which will truly make a difference – more sales and lower costs. The investment case for town centres is not easy to make given their complexity and the need for co-operation and co-ordination. But in truth, TINA rules again – There Is No Alternative.     Related Blogs: Arresting the Decilne of the High Street Town Centres - Best Practice Squeezed Middle BCSC Retail 2020 Seminar – Too much space or simply not enough of the right space? panel session summary Talking Shop - Retail Trends and Predictions for 2012 http://www.fspretail.co.uk/en/blog/2012/02/180-will-empty-shop-numbers-rise-in-2012/ Hpratley fspretail.co.uk:blog:179 2012-02-09T00:00:00+00:00 FSP is delighted to sponsor Fashion Accessories at the inaugural Hammerson customer service awards ceremony - We Love Retail 2012. The glittering event will take place on 15th February at The Royal Opera House, Covent Garden to celebrate good customer service within the Hammerson estate. The awards are based on the results of independent mystery shopper surveys in each of Hammerson’s 10 shopping centres across the UK. Anonymous researchers visited all the retailers trading in Hammerson centres and scored their experiences. Retailers with the best scores will receive the awards which span all areas of retail, from fashion to catering. TV Presenter Jenni Falconer will host the event http://www.fspretail.co.uk/en/blog/2012/02/179-fsp-sponsors-hammerson-customer-service-awards-we-love-retail-2012/ FSPRetail fspretail.co.uk:blog:178 2012-01-26T00:00:00+00:00 The economic outlook is not encouraging. Don Williams, BDO Head of Retail and Wholesale, was far from pessimistic at the Predicting 2012 seminar but suggested 2012 retail sales growth would only be 2.5% by value and 0.7% by volume. In such a low growth environment, controlling costs is more important than ever. With so much of their cost in the shops, retailers necessarily want to identify which are non-performing. For this, a reliable and insightful measure is vital. There are many ways of measuring the profitability of investment. For example, many businesses calculate the Internal Rate of Return (IRR) and Payback Periods. Given that the criteria for successful investments using these measures can vary dramatically between occupiers, the yardstick used by FSP is ROTA - Return On Trading Assets, a retail version of ROCE, Return On Capital Employed. The Return is the Net Profit made at the branch level expressed as a percentage of the Trading Assets in the branch. Trading Assets are the cost of the stock used to generate the turnover and the average cost of the branch fixtures and fittings. Branches can then be ranked by ROTA and there is a case for reviewing all those ROTAs below the company average. Equally, in taking on new outlets, the projected ROTA should in normal circumstances also be greater than the company average. The achieved ROTA can, of course, be set against standard benchmarks. One such, derived from observation of long-term survival rates amongst retailers, is that 25% ROTA is required. Asset managers are probably less directly interested in the occupier’s ROTA than the Retailer Risk, expressed as the chances of either going bust or getting out of the lease obligations. The former risk is a problem at corporate level, helpfully illuminated by the Wealth Creation Index. Pioneered by the old Department of Trade and Industry (DTI) and sponsored until the recent Government austerity measures by the Department for Business, Innovation and Skills, this measure has proved, in experienced hands, to be a useful guide to Corporate Risk. At the unit level, risk is measured by the relationship between Sustainable and Passing rent. The Sustainable rent is that which, given the turnover and other operating costs, enables a 25% branch ROTA. FSP has invested much time and thought into the relationship between ROTA and Retailer Risk and is always ready to talk about its relevance to individual situations.   http://www.fspretail.co.uk/en/blog/2012/01/178-measuring-branch-performance/ FSPRetail fspretail.co.uk:blog:177 2012-01-24T15:36:27+00:00 The retail story of 2011/12 Christmas is less about sales and more about survival. Sales generally were better than in snow-struck ’10/11 but the number of retailers going into administration has been the highest since the ‘08/09 crisis. Few of the failures have been a surprise and sadly there is still a queue of struggling retailers. The hard work and ingenuity of retailers maintained sales over Christmas but at the cost, at least in some cases, of squeezed margins. Financing the investment in the new technology that is driving market development and growth is challenging for all retailers, but especially for those struggling to service their existing debt. The threat of pure on-line to physical retailing is turning out to be less than envisaged a few years ago. On the other hand, the importance of all retailers having an effective on-line offering becomes ever more apparent. Meanwhile, the knock-on effect on retail locations is still unclear. Retailing will continue to thrive beyond the 30 to 50 UK locations of interest to global retailers but its format and nature are not yet clear. That ultimately will be driven by the nature and scale of local demand. The challenge for asset managers is to be able to identify which of their occupiers is at risk, either corporately or because the rent to turnover ratio is unsustainable. Knowledge is indeed power and using that power effectively will mark out the best managers. http://www.fspretail.co.uk/en/blog/2012/01/177-christmas-sales-commentary/ FSPRetail fspretail.co.uk:blog:176 2012-01-17T00:00:00+00:00 Peacocks, on the verge of administration, would be the biggest failure since the Woolworths collapse of 2008, which preceded a Christmas of Horrors for a host of retailers. This year is showing similar tendencies, but with all around them failing, or at least flailing, White Stuff has a reason to smile. Accounts filed in December for the year to April 2011, show White Stuff continues its trend of not only increasing sales, but increasing profits too. This headline information is supported by FSP accounts analysis, which shows strong financial health ratios just getting stronger. The best retailers know, however well you’re doing, there is no time to sit back on your laurels. The directors of White Stuff are fully aware and “remain cautious”. Sally Bailey at the helm, recognises a dual focus which works: happy customers and happy staff. “We continued to focus our efforts into making our customers happy”, she said, whilst the company had improved its ranking in the Times Top 100 Best Companies to Work For last year. We at SnapShop like that. Meanwhile, White Stuff is capitalising on eCommerce and cross-channel selling, as well as the launch of the large format Emporium store and a dipping of toes into the international pond. Who would have thought the Boys from the White Stuff could pull off such a coup on the High Street?! http://www.fspretail.co.uk/en/blog/2012/01/176-snapshop-blog-all-white/ FSPRetail fspretail.co.uk:blog:175 2012-01-11T00:00:00+00:00 NPS differences between Peak and Regular shoppers In January, retail commentators turn their attention to the Christmas sales results and at FSP, we are no different – Christmas Sales Report 2011 However at FSP, it is not just the sales figures that we are interested in but also the perceptions and attitudes of those most vital to the Christmas sales – the shoppers. One measure of customer satisfaction FSP employs The Net Promoter Score (NPS). This is a measure of customer loyalty, where respondents to a shopper survey are asked how likely they are to recommend a Shopping Destination to a friend on a scale of 0 to 10. The Net Promoter Score is the percentage of Promoters (scoring 9 or 10) minus the percentage of Detractors (scoring 0-6). Those scoring 7 or 8 are classed as Passive and are excluded from the calculation. The resultant score indicates the level of satisfaction a shopper has with a centre. At a time of year on which many retailers and shopping centres depend, it is as vital as ever to understand not only the wants and needs of the core (Regular) shopper, but also those of the less frequent Christmas (Peak) shopper. The term “Christmas shopper” creates various stereotypes, each with a different attitude to shopping. Be it the hard core shopper given an even better excuse to exercise the credit card, the male shopper doing the last minute dash for presents or the grandparent stocking up on presents to treat the grandchildren. All will have different reasons to be shopping and all are likely to spend more than at any other time of year. Analysis of shoppers at larger centres in Peak periods compared to Off Peak periods, throws up a few common trends; the average spend is higher, whilst visit frequency is lower. Shoppers are prepared to travel further to destination centres, whether for the big Christmas shopping celebration or more reluctant shoppers anxious to get the shopping over and done in one fell swoop. However, not all trends are universal, most notably the levels of satisfaction amongst Peak shoppers. FSP has used the Net Promoter Score to analyse the satisfaction levels of Peak shoppers who live outside the Off Peak catchment area. In some Centres, levels of satisfaction amongst these Peak shoppers has gone through the roof, whilst in others it has sunk to new depths. The opinions of Peak shoppers are as diverse as the shoppers themselves (and a lot more varied than the stereotypes outlined above). However, one trend is clear - a satisfied shopper at Christmas spends an average of 50% more than a dissatisfied shopper. Given that average spend of Christmas shoppers is almost double that of Off Peak shoppers, the rewards for satisfying Christmas-only shoppers is great. By comparing Christmas and Off Peak shopper surveys, you can better understand your customers and how they change at different times of year. Knowing to whom and when to target your marketing effort will ensure that next year you, or more comfortably your centre, will stand at the top of the Christmas sales tree http://www.fspretail.co.uk/en/blog/2012/01/175-nps-differences-between-peak-and-regular-shoppers/ FSPRetail fspretail.co.uk:blog:174 2012-01-06T00:00:00+00:00 Once again FSP brings you an early insight into the UK Retail industry over the Christmas period. The first Christmas Sales Report is available here. With informed comment from our Managing Director, Geoff Nicholson, along with an analysis of the trading reports so far, this report will be updated regularly throughout January, showing how each sector has fared, and how retailers have performed against previous years. The FSP Christmas Sales Report, along with SnapShop Monthly, is a benefit of SnapShop Membership. Future editions will be issued to SnapShop Members. Membership is available from as little as £96pa.   http://www.fspretail.co.uk/en/blog/2012/01/174-christmas-sales-report-2011/ FSPRetail fspretail.co.uk:blog:173 2011-12-23T00:00:00+00:00 It's that time of year again! With all the much publicised news regarding sales over Christmas, FSP will be issuing the first Christmas Sales Report on the 6th January, with regular updates throughout January. The Christmas Sales Report includes information for the following areas… All Retailers 3 Year Comparisons Department Stores Clothing & Footwear Personal Goods Household Goods Leisure goods Grocery Restaurants Online Sales See last year's report here. The first report will be sent to all, however further updates throughout January will only be sent to SnapShop Members. If you would like to receive the further updates, you can subscribe for SnapShop Membership online for as little as £96pa. http://www.fspretail.co.uk/en/blog/2011/12/173-christmas-sales-report-2011-available-january-6th-2011/ FSPRetail fspretail.co.uk:blog:172 2011-12-15T00:00:00+00:00 Christmas reminds us of the human need for hope. In the depths of winter, our ancestors needed to know that new life would come. We are not fundamentally different. As evidence, the current ads from Coca Cola, “Holidays are Coming”, and John Lewis have been singled out in research as powerfully and positively evoking traditional values of hope. Does the Mary Portas report provide the necessary positive long-term vision and hope for our industry? Some have dismissed it as typically female, too touchy-feely to be man enough for the task. It is easy to dismiss her recommendations as a pea-shooter in the face of a tsunami. However, her report contains some real clues to the way forward. The underlying principle is that humans are social creatures. To be healthy, we need to interact with other people. It is the reason why most people live in towns. The Portas report rightly emphasises the need to combine local initiatives with changes to planning and taxation. If town centres are really to be centres for their communities, every one will be different to reflect the individuality of the place. The “Town Teams” proposed by the Portas report will work well in some circumstances and fail horribly elsewhere, but that’s the cost of decentralising responsibility. The conclusion is therefore that while the individual proposals may be inadequate for the task or even misguided, the under-lying logic is sound. The decline of the High Street has had a long gestation. We need not be surprised that finding a new role will also take a good while. The Portas review correctly identifies the cause of the decline as the rise of the out-of-town supermarkets that now have a substantial non-food offer to rival the High Street. The supermarkets have been successful because they satisfy shopper needs better than High Streets, and give a better return to the retailers. The challenge is for the High Streets to create an offer and environment that is equally, but differently attractive and for this challenge similarly to be embraced by planning authorities. It will take a long time to establish but that is no reason not to start. It may also be helpful to set this particular clash within a wider context as described by Martin Luther King Jr., “Power properly understood is nothing but the ability to achieve purpose. It is the strength required to bring about social, political and economic change. … What we need to realise is that power without love is reckless and abusive, and love without power is sentimental and anaemic. It is precisely this collision of immoral power with powerless morality which constitutes the major crisis of our time.” Let’s wish all those involved the vision to observe the scale of change required and the strength of will to deliver it. On that note, may I wish you a very Happy Christmas and a hopeful New Year.   http://www.fspretail.co.uk/en/blog/2011/12/172-the-reason-for-the-season/ FSPRetail fspretail.co.uk:blog:171 2011-12-08T00:00:00+00:00 The principal role of marketing is to increase sales and profitability. Marketing managers use a variety of tools to accomplish this purpose but the aim is singular. It is simple to describe and much less easy to achieve. Increased sales can come only from two sources – enabling existing customers to spend more or attracting additional, new customers. In most cases, the former, getting more from existing shoppers, is easier than the latter. Therefore, the first requirement is to know as much as possible about the existing customers – a good checklist is generated by asking, who, what, where, why, when, how often, where else? Establishing this baseline information is vitally important. Fortunately, once described, the customer profile, in the absence of major local shopping developments, remains stable for a number of years. Budgetary constraints will determine how best, and how quickly, the customer profile can be developed. There are various workable approaches but it is worth taking professional advice before setting out on your own. Research can look simple but when poorly designed or executed, it not only wastes time and money but can produce seriously misleading results. Many shopping centres have a reasonably good understanding of the profile of their existing customers. What is much less common is any understanding of how well the centre is meeting shopper requirements. What proportion of their spending occurs in your centre? How does that compare with spending in comparable centres? Only by quantifying this Market Share Gap and measuring its changes, can the effectiveness of marketing be truly measured. Having agreed a target to reduce the Market Share Gap, it is then possible to develop relevant marketing collateral. Marketing budgets in shopping centres are rarely very generous but in brand marketing, the 70:20:10 rule has been successful. 70% of the budget is spent on tried and trusted channels. 20% is spent on channels used successfully by parallel brands but not previously employed. 10% of the budget is reserved for experimental, new channels. In this time of rapid change, where 18 months ago QR codes were still in their infancy, experimentation is likely to become increasingly important. With a less than buoyant economic outlook, budgets will need to be more precisely targeted. What is the evidence will you have that your target has been achieved?   http://www.fspretail.co.uk/en/blog/2011/12/171-product-focus-the-marketing-challenge/ FSPRetail fspretail.co.uk:blog:170 2011-12-07T00:00:00+00:00 It is gloomy news for retail and the high street at the moment, with news that customers are not and will not be spending as much as last year. A GfK study backed this up saying that 36% of consumers claim they will be cutting back this Christmas; this was up 10% compared with last year. The British Retail Consortium reported that for November retail sales fell by 1.6pc on a like-for-like basis. Retail sales only grew 0.7% in November, which was the weakest growth since May. With the unseasonably warm weather in November, clothing and Health & Beauty retail sales were both down. Clothing sales were down year-on-year for the sixth month in a row and Health and beauty suffered its first year-on-year fall for two years. Food and drink sales however did increase. The poor sales performance is also affecting jobs, with 39% of retailers reducing employment this month and just 13% of retailers increasing employment. Experian Footfall, reported that there were 4.1% fewer consumers out at shopping centres and high streets at the weekend, compared with the same period last year. The GfK NOP Consumer Confidence Index stood at -32 in October. Nick Moon, Managing Director of GfK NOP Social Research, commented "The latest index shows consumer confidence at its 10th lowest figure since it began in 1974. In fact, it is only the third occasion in its history that it has breached -32”. With consumer confidence down and economic uncertainty December looks likely to follow in Novembers footsteps with lower than predicted sales figures and the high street continuing to struggle. Last year’s FSP January sales report however showed that even with similarly gloomy retail news in November and December of 2010, January produced surprisingly strong retail trading results. The best retailers were those who recognised that UK retailing had changed. The rise of edge of town and out-of-town retailing had a far greater effect than on-line sales. Retailers that failed to develop an effective out-of-town format were over-represented amongst the strugglers. Others, such as HMV, found their product superseded Every January FSP produces the Christmas sales report for the previous year. To see the actual Christmas sales results with FSP analysis for 2011, FSP will be issuing the Christmas Sales Report on Friday 6th January, with regular updates throughout January. You can see last year's report here.   http://www.fspretail.co.uk/en/blog/2011/12/170-november-retail-sales-fall/ Hpratley fspretail.co.uk:blog:169 2011-12-06T00:00:00+00:00 The Justice Minister Alan Shatter is expected to make an announcement on the rents issue this week. It is not clear whether this will include set proposals or merely outline a timeframe for the launch of rent reform plans next year. Recent research conducted by Retail Excellence Ireland with 1,418 leasehold retail stores nationwide found that between 2009 and 2011, rents were reduced by an average of 3.83%, while over the same period retail industry sales decreased by 30% and around 50,000 jobs in the sector were lost. Average rents decreased by 3.16% in 2009, 4.39% in 2010 and 4.4% in 2011. According to REI chief executive David Fitzsimons, the study “is clear proof that the vast majority of commercial landlords have no intention of adjusting rents and are desperately holding on to Celtic Tiger lease agreements. Every other cost faced by retailers has decreased over the past three year with the exception of rents. What is most concerning is the fact that new market entrants can command rent at rates 50% lower that legacy tenants, thus many long-established professional retailers are being forced out of business. However, rent is only one element of occupancy costs – new tenants will have to invest in shopfitting whereas established tenants have already invested in their units. Unfortunately, there are doubts over the constitutionality of the Government’s planned Landlord and Tenant (Business Leases Rent Review) Bill 2011. The potential difficulties revolve around: 1. The lack of a provision governing compensation to landlords in the event that tenants are unable to afford a court-determined rent agreement 2. A planned provision that directs landlords to pay compensation to tenants that have made improvements to their property could also be subject to a constitutional challenge http://www.fspretail.co.uk/en/blog/2011/12/169-upwardonly-rent-reviews-in-ireland/ FSPRetail fspretail.co.uk:blog:168 2011-11-25T00:00:00+00:00 In the wake of a 38% fall in annual profits and a 4.4% drop in like-for-like sales in the most recent 12 weeks, Arcadia has announced that it is closing more than half the 450 stores due for lease renewal in the next few years. While this is not good news, it certainly does not spell the end of high street retailing. Tucked away in the statement is news that the three fascia for younger customers, Topshop, Topman and Miss Selfridge, have traded positively through one of the warmest autumns on record. While store sales last year dropped 3.4%, e-commerce sales rose 27%. Even when all the threatened shops have been closed, Arcadia will still trade from well over 2,200 stores. Many of the closed fascia will continue to trade in the same towns but now from within BHS. The change in the retail market is being driven by the development of technology. The impact of the mobile internet and the rise of social media have enabled customers to better satisfy their well established shopping requirements – a great range of choice, value for money, a satisfying experience, convenience and a sense of community. These changes are quite independent from and long pre-date the current economic difficulties. The low, or no, growth economy merely embroiders a change with roots that go back at least 10 years. The challenge is to exploit and benefit from the exciting possibilities created by the new technology. The high street will look different in 10 years but there is every reason to believe that many, perhaps most, will be thriving.   http://www.fspretail.co.uk/en/blog/2011/11/168-arcadia-to-close-over-250-shops/ FSPRetail fspretail.co.uk:blog:167 2011-11-17T00:00:00+00:00 2011 is the centenary of the publication of The Principles of Scientific Management. The author, Frederick Winslow Taylor, was the first to recognise that measurement is the key to improving the efficiency of repetitive tasks. That insight is still being developed. For example, it is now possible to measure the number of new and repeat customers in a shop, their dwell times and the window conversion rate – all for £125 a month. The increased use of measurement impacts how retailers take new shops. The traditional approach, to go and “kick the bricks”, is still a valid part of the process. However, in best practice it is combined with more rigorous measurement of the number and composition of the shoppers and of competing retail offers. It is also true that for many retailers, the alternative is no longer simply another UK location. It may be an opportunity in faster growing economies elsewhere in the world or indeed, the development of the retailer’s on-line offer. In this context, the asset manager and leasing team have to provide the target retailer with more than an attractive looking shop. The retailer needs solid evidence of the profit opportunity on which to build the investment case for Board approval. With 80% of the UK population falling within the catchment of just 28 shopping locations, for some high profile international retailers the UK will justify only a handful of shops. However, to provide an outlet for 80% of UK shoppers, 230 shops are needed. Leasing teams working on assets outside the top 30 locations often have to put in more effort than those letting the top centres and, because of lower rents, get less well rewarded. They have to identify and develop an angle for the centre which may not be to do with the sheer size of its shopping population but its particular appeal. Knowing what to measure and how to measure it and to set the results within context is a particular skill. Frederick Winslow Taylor could do that but he seems almost entirely to have lacked inter-personal skills. He repeatedly fell out with those he worked for and with. He is now remembered not for his effectiveness but for the brilliance of his insight. Measurement of activities and behaviours can claim to be the foundation of modern business management. For those who follow in his footsteps and wish to be effective, some flexibility, humility and readiness to co-operate are also needed.   http://www.fspretail.co.uk/en/blog/2011/11/167-the-impact-of-measurement-on-retail-management/ FSPRetail fspretail.co.uk:blog:166 2011-11-09T00:00:00+00:00 The demand to understand the future course of UK retailing has grown sharply. A joint FSP and twentyretail research project published in Estates Gazette in 2010 continues to be up-dated and is proving prescient. The need to know what lies round the corner is driven by unease within the UK retail property market. The fall of DTZ, articles such as Property Week’s “Retail’s Exiled Agents”, unprecedented levels of shop vacancies in some locations and record rents in others, are a few indicators of the dislocation of the UK retail property market. The change is embroidered by the current economic conditions but is driven by consumer desires. Shopper preferences have not dramatically changed. It is the means to satisfy them that have been transformed. The impact of new technology is growing exponentially. The impact of the mobile internet is 80 times greater than on-line retailing at an equivalent stage of development. CSC can testify to the power of social media. An over-zealous security guard inappropriately enforced a no photography rule and within 3 days a Boycott Braehead Facebook site had attracted 20,000 supporters. Meanwhile, its IPO valued Groupon at $12.7bn (£7.9bn) reflecting the consumer appetite to drive a bargain by acting in concert. And technology still has far to run. There is serious talk of internet-enabled contact lenses that will allow users to look at a product, for example a pair of jeans being worn in the street, and order a similar pair for themselves. On-line shopping, once seen as a major threat to the existence of shops, is providing many benefits. Increased information about customers enables retailers to improve the relevance of their offer. Shopper demand for value for money and for convenience goes some way to explain the apparently inexorable rise in the Non-Food market share of the supermarkets. However, “value for money” is a multi-dimensional concept. This is evident when John Lewis (Never Knowingly Undersold), Ikea and Ryan Air are all perceived to offer good value. The rise of Groupon speaks to the shopper appetite for a bargain. In a recent Kelkoo survey, 1500 UK shoppers were asked to identify which, of 10 possible reasons, was the most influential when choosing where to shop. The second largest response (17%) was Offers and Deals. Shoppers love a bargain. The implications of these changes for retail property are various and profound. FSP has calculated that since 2008 across the UK retail space equivalent to three times all the space in the West End has fallen vacant. Not all of this is likely ever to be used again for retailing. The transition to alternative uses, so necessary to revive the communities thus blighted, is delayed by the unwillingness of lenders and landlords to recognise their losses. Any change creates opportunities and threats. It is easier for new players, un-burdened by legacy investments, to seize the opportunities. However, to thrive again, existing investors and retailers need also to identify and take the opportunities. This in turns requires an understanding of what now and in the immediate future is driving the retail market.   http://www.fspretail.co.uk/en/blog/2011/11/166-retail-pulse-product-focus-the-medium-term-outlook-for-uk-retailing/ FSPRetail