Leicester Square Summer 2013
The UK has the fourth highest GDP per capita in the G7.
The US has the highest GDP per capita ($51,708) among G7 and BRIC countries, but UK GDP per capita ($36,333) compares well against the remaining G7 economies and is higher than all of the BRIC economies.
Footfall was up 2.6% on last year with out of town having done well. Consumer confidence has roared back at the fastest rate for 36 years.
Clothing and footwear retailers are doing particularly well with sales up 10% for non-food retailing.
“Super-shoppers”, says research by Deloitte commissioned by E-bay, are behind 70% of total UK retail spending, who comprise only 18% of all customers and who spent more than £200 billion in 2013. Those spending are 25-44 in professional or managerial jobs.
On line sales do not affect sales from shops in the fashion sector, as 95% of online sales are in addition to High Street sales. They are twice as likely to shop by tablet/phone with click and collect.
Online sales of non-food products grew by 17% during May when they accounted for 18.7% of all UK retail sales, according to the latest British Retail Consortium’s latest Online Retail Sales Monitor. A year earlier, sales in May 2013 grew by 9.9%.
Online, the clothing and footwear categories showed particularly high growth, respectively turning in their strongest performance since Christmas and December 2012. Helen Dickinson, director general of the BRC, said broader ranges also underpinned online growth.
“This month sees the highest growth in online sales of clothing for five months and the proportion of purchases we are making online has grown several percentage points in a year. This also represents the highest penetration ever recorded for clothing since the inception of the online monitor. Footwear is telling a similar story where great websites and good online service have led to the second-highest proportion of footwear sales online ever recorded by our monitor”.
We see that it is clear most retailers are downsizing and focusing on better located and less stores as sales are more and more linked to internet shopping.
Most retailers now accept that their High Street stores must be easy to find too from internet browsing and located in familiar locations browsers will find on line. This especially applies in London for international visitors shopping.
Grocers suffered a 2.3% decline due to their price war and grocery shoppers now shop 3 times a week rather than a weekly or less frequently which has produced a wave of small local supermarkets of 2500/3000 sq ft.
This is due, we consider to the higher population density in towns, more discerning eating patterns and working customers wanting convenience food. Internet grocery sales mean bulk food can be delivered.
And future retail trends?
The internet will continue its rapid growth for retail sales now accounting for about 25% of all retail sales and may well rise to 50% of sales within the next 20 years. Successful retailers will ensure they use it as a tool for increased sales and brand promotion.
Price sensitivity will always be present as shoppers can more readily compare. Click and collect will be established everywhere amongst the retail survivors.
One has seen a trend of certain goods no longer being viable to sell on the High Street and as a result only the brands themselves will be able afford to have showrooms, where their product can been seen for real. Multi brand stores are the past, outside Department stores.
The Landlords will have to become more flexible on lease terms if they want new start companies and retailers will come to expect 5 year lease breaks outside London.
London
The pressure from international retailers to get into the West End has made London a landlords market for many years and the pressure to be in the world’s best retail City is such that what were secondary Streets, have now become prime.
The Key West End luxury fashion locations
These are now Bond Street, Dover Street, Albermarle Street and Mount Street with Sloane Street and Brompton Cross in the Knightsbridge area.
The super-rich (100 billionaires in London) and rich, more than any other world city has led to a large increase in luxury purchases.
This is shown by rents growing in especially luxury fashion Streets like Albermarle Street from about £50,000pa to £250,000 pa over 10 years and Mount Street 25 years to £350,000 pa plus a normal £3M premium.
Bond Street is set to double in value in all likelihood in some parts with rents now at £1200 per sq ft Zone A (30ft) and maybe going to £2000 within 5 years.
Premiums in the street range south of Brook Street from £3.5M to £10M for a standard shop.
Among the luxury retailers opening shops La Perla have opened at 9 Bond Street having paid about £5M premium.
Patek Philippe paid £10M to Watches of Switzerland to take 16 New Bond Street while Chanel paid £6M to extend their store.
Swatch paid £8M and Victoria Secret about £3.5M to also extend their store they only too last year.
It must say something about the profits and sales these retailers are making.
Globe-Trotter, the exclusive luggage brand has now opened in Albemarle Street and Victoria Beckham’s first UK store is to open nearby on Dover Street.
Luxury handbag firm Mulberry says it will introduce lower-priced products after an attempt to move further upmarket hit sales and profits and have pledged to win back customers with a £500 to £800 handbag range after failing to break into the top end of the luxury goods market. Profits for the year to 31 March fell to £14m from £26m the previous year.
Dolce & Gabbana opened its fourth London store at 53/55 New Bond Street and Prada now have 5 shops in Bond Street.
Armani the luxury Italian fashion brand is understood to be one of a number of groups battling to take a long lease on the famous Foyles bookstore at 111-117 Charing Cross Road. A very odd move if it happened, but the store would be near Crossrail’s new Oxford Street Station. This location is only suited to a new mid-market High Street concept in our view, which maybe in their mind.
Other activity in London
Footfall in Westfield, Shepherds Bush, in January were 23.7% up and 6.6% up in Stratford. John Lewis Stratford’s sales were up 29.6%.
Free People, the fashion line in bright colours from the US, with 78 stores are looking for 1800/3000 sq ft in London from Marylebone High Street to South Molton Street.
FashionLuxx are after 600 sq ft in Clapham Richmond and Wimbledon.
Essential, the offbeat affordable luxury Belgium Antwerp ladies fashion brand with 24 in Belgium and France with multi brands in 35 Countries the offbeat affordable luxury fashion brand is to open in London of about 1000/2500 sq ft targeting Covent Garden West End Chelsea and Soho.
Argos, now calling themselves the leading digital retailer, want some 24 stores in the London area of 1500 to 5000 sq ft.
Kelly Hoppen interiors are after 2500/5000 sq ft in Brompton Cross to Kensington.
Outside London
Over the last year there has been much increased retail demand across all towns except those badly suffering being the likes of some towns in the North East such as Redcar and Corby in the Midlands as examples.
Deals with landlords are still available outside London but the days of several years rent free are long gone unless the landlord is unfortunate enough to be in a sinking town.
Fashion sector
There is a lot of activity in the market generally and Anthroplogie with 179 stores in the US and 6 in Europe are after more in and around London and Leeds,Glasgow and Manchester.
Mothercare have been forced to renegotiate banking terms only after 7 months after refinancing due we think to online shopping and too large an Estate.
ABF made £298M profit in the 6 months to March with Primark accounting for 33% of that
US private equity firm TA Associates is said to be in talks with a small number of overseas bidders about selling Cath Kidston, known for its colourful floral prints. Their latest UK openings being in Westfield Shepherds Bush and Piccadilly
Potential buyers are understood to include Uniqlo as well as L Capital, the buyout group backed by French luxury goods group LVMH. The group is thought likely to fetch about £250million and is keen to expand further overseas.
French Connection sales rose by 9%.
Zara, part of the Spanish Inditex group and the largest clothes retailer in the world which includes Pull Bear, Bershka and Massimo Dutti, sales rose by 3% but were hit by exchange rates depreciation and refit costs.
Next has effectively overtaken M&S in profitability with pretax profits of £695M to January.
Sanpower, a non-state-owned Chinese conglomerate which is listed on the Shanghai stock exchange, acquired the rest of House of Fraser’s shares in the 165-year-old department 60 store chain through its Nanjing Cenbest subsidiary.
Discount Retailers continue to expand with B&M Retail, Poundland and 99p stores all insatiable for more space. There is no shortage of takers for large space now in the UK.
Boux Avenue lingerie rose 20% for its 21 stores and Robert Dyas had a 8% turnover increase both owned by Theo Paphitis while Officers Club are after 1500/3000 sq ft in northern towns.
Headmasters hair, with 47 saloons, want more in London and the South and Jo Jo Maman Bebe (56 stores) have opened in Balham, Guernsey, Cambridge and Dublin and want more shops in the South and West Country.
Bon Marche (261 stores) and are opening new stores in Coventry, Newcastle, Nottingham and Stevenage and require more stores.
Not to be outdone, the Charity Sector constitutes to thrive with Scope looking for 600/800 sq ft shops across the UK and Shelter 3000 sq ft for furniture, to add to British Heart’s requirements for 5000 sq ft units.
Urban Outfitters with 194 stores and 36 in Europe continue to expand
Non -Fashion sector
Hadelsbanken, the Swedish lender, have opened 10 branches making 171 in the UK and Metro Bank opened its 22nd stores in Cheapside with more targeted in London and as far as Sevenoaks.
Vodaphone are one of the few mobile phone shops expanding into 1000 sq ft shops across the UK.
Cardzone Ltd T/A Paper Kisses with 67 branches need more northern stores.
Farrow & Ball, the beloved retailer of fashionable paints with 25 shops are expanding abroad as well as looking for shops are after 750/2000 sq ft from Aberdeen to York.
Cycling remains de rigeur for many now with Evans Cycles wanting 36 new towns being the largest and after more London and provincial stores of 2500/4000 sq ft and Cycle Republic looking to break into the market in London with 3/6000 sq ft stores.
Food Sector
BHS intends to open 50 food stores within its BHS stores of about 3400 sq ft starting in Staines, Warrington and Romford. 140 out of the 175 BHS stores have sought planning for food.
It is ironic that BHS used to have food counters 40 years ago. All the first supermarkets like Sainsburys and Tesco had 1500 sq ft stores but in the 70’s moved to 100,000 sq ft superstores and are now back 40 years later to 2500 sq ft stores!
As they say in France plus ça change, plus c’est la même chose!
All the large supermarket groups have thus abandoned large stores to chase small convenience stores and this has made US Hedge Funds start to look at UK supermarket Groups for takeover to break their Estates up.
Starbucks still have most of their most expensive London shops for sale leaving 549 branches (down by 44) but opened 38 franchised stores. Café Nero (550 cafes) are too trying to expand in London.
Jessops are looking for 1200 to 3000 sq ft in certain key UK towns from Exeter to Canterbury.
Morrisons Local, having acquired 100 local stores now want 100 within the M25 of 2800 sq ft.
All the other groups continue Waitrose, Co-op, Sainsbuys (600) and Tesco (1600) taking virtually anything on main roads near towns and in town centres too.
Dominos Pizza continue their drive for new space as to McDonalds more for out of town restaurants though.
Eat have started a new effort to expand and Costa continue their dominance in this sector.
Downsizers
Frock Horror, as the Sunday Times called M&S profits fall to £623M, due to a drop in clothes purchases for the third year in a row. The drop in clothing sales was offset by growth in food.
Aldo seem to be suffering selling Watford, Glasgow & Kingston and Fat Face is disposing of 3 London stores.
Viyella/Austin Reed/CC seems to be having a clear out with 18 shops on the market mainly the falling brand County Casual most in Wales.
Butlers Group closed its 6 stores and Laura Ashley profits fell by just under a £1M and sales dipped 0.4%.
Hobbs are selling of 11 stores across the UK. British heritage-style brand Hobbs is set to expand across the pond with five concessions in Bloomingdale’s opening in the US.
Hobbs has struggled in recent quarters to stand out from the fast fashion retailers claiming their stake on the high street. The label has been criticised for focusing too much on appealing to a younger shopper, and possibly neglecting its stronghold of UK customers while it focuses on expansion overseas.
Paul Simon 22 stores-home furnishings- collapsed into administration in April.
The Co-op announced it was to sell off all it pharmacies throughout the UK post the financial troubles the Coop Bank had got itself into through mismanagement.
