The Rent Review Specialist
Stoop to Conquer
28/05/2015
Despite evidence that many shrewder landlords are selling up while the going is good, the booming market in retail property investments is showing no overt signs of abating. Money to invest is one thing, but money to provide a return on capital is another so it is time to wonder how those tenants that are just about keeping their heads above water are going to manage when their own rents come up for review. For further reading, please visit LandlordZone.
Appraising High Streets
24/10/2014
My work takes me travelling all over England and Wales so, apart from work for regular clients, I never know in advance where each new instruction might be. Long-distance travelling is not as demanding when… For further reading, please visit LandlordZone - click here
Supermarkets at War
29/09/2014
The Tesco bookkeeping announcement on 22 September 2014 is a useful reminder of what can happen when a retailer becomes so big that the cost of keeping up appearances might lead to all manner of shenanigans. For further reading, please visit newsletter 28 on LandlordZone
High Street carnage
01/09/2012
All this carnage on the High St must be causing problems for internet companies - where are people going to go in the future to look at stuff before they buy it?
A rare opportunity for landlords
01/06/2009
Now the credit-crunch has settled, landlords have a rare, possibly unique, opportunity to determine the future of retailing, for good.
As I see it, a lot of hard-working decent honourable tenants, good at what they do, have found their property costs inflated as a result of the legacy of a bunch of irresponsible retailers who, operating in splendid isolation, behaved like drunken idiots by throwing their weight around when they could borrow lots and go on a spending spree, but are no longer full of confidence now the money-tap is turned off. Indeed, with balance-sheets hung up for all to see, it is interesting just how many retailers are heavily indebted. Which makes one wonder where all the money went.
Let’s face it, an awful lot of multiple retailers are not as good as they like to think, and many were struggling before recession arrived. It’s also fascinating how many multiple retailers think the world owes them a living. And how fond they are of blaming rent, rates, the economy, for their loss-making. The truth is a failure to address operational difficulties. It’s easy to manage without coming unstuck in times of change, so not getting the formula right is tantamount to gross negligence at the highest level. It is not as though there is no money about. You only have to look at turnover figures to see how much is spent.
Every retailer thinks it has a unique selling proposition, but, actually, there is hardly any originality, and copycat merchandise is in overdrive. The shopping public is doing its bit by not spending indiscriminately, and supermarkets are making life hell for those that think themselves so heavenly wonderful but are no earthly good, but landlords are in a position to accelerate change. One might think failing retailers are helping too, using pre-pack administration and CVA to prune branches, but pre-pack is about yesteryear directors out for whatever they can get.
You may think I’m off my rocker, or living on another planet, but this is no ordinary downturn. Things will never go back to how they were. It’s a shift, to a entirely different set of values and way of doing business. Which is why, in my view, landlords should seize the opportunity to rid us of all the retailers that have got us into this mess, and instead re-let the shops, even if it means lower rents, to those that understand the difference between running a business and managing for long-term consistent success.
As I see it, a lot of hard-working decent honourable tenants, good at what they do, have found their property costs inflated as a result of the legacy of a bunch of irresponsible retailers who, operating in splendid isolation, behaved like drunken idiots by throwing their weight around when they could borrow lots and go on a spending spree, but are no longer full of confidence now the money-tap is turned off. Indeed, with balance-sheets hung up for all to see, it is interesting just how many retailers are heavily indebted. Which makes one wonder where all the money went.
Let’s face it, an awful lot of multiple retailers are not as good as they like to think, and many were struggling before recession arrived. It’s also fascinating how many multiple retailers think the world owes them a living. And how fond they are of blaming rent, rates, the economy, for their loss-making. The truth is a failure to address operational difficulties. It’s easy to manage without coming unstuck in times of change, so not getting the formula right is tantamount to gross negligence at the highest level. It is not as though there is no money about. You only have to look at turnover figures to see how much is spent.
Every retailer thinks it has a unique selling proposition, but, actually, there is hardly any originality, and copycat merchandise is in overdrive. The shopping public is doing its bit by not spending indiscriminately, and supermarkets are making life hell for those that think themselves so heavenly wonderful but are no earthly good, but landlords are in a position to accelerate change. One might think failing retailers are helping too, using pre-pack administration and CVA to prune branches, but pre-pack is about yesteryear directors out for whatever they can get.
You may think I’m off my rocker, or living on another planet, but this is no ordinary downturn. Things will never go back to how they were. It’s a shift, to a entirely different set of values and way of doing business. Which is why, in my view, landlords should seize the opportunity to rid us of all the retailers that have got us into this mess, and instead re-let the shops, even if it means lower rents, to those that understand the difference between running a business and managing for long-term consistent success.
Recession: a time for transformation
01/06/2009
As I say time and again, essentially, a problem is a fault in direction which, when left to its own devices, may fragment into seemingly different problems, so as to attract attention. It is not enough to resolve a problem: it must be transformed. Finding a solution simply dilutes the problem, until it is bearable. It is not enough to alter perception: when symptoms are merely relieved, the problem will crop up again.
Transformation is a thorough, possibly dramatic, change in underlying attitude. In my healing experience, such as it is, few people are adept at transforming problems into commercial opportunities as they go. Mostly, people metaphorically brush problems under the carpet, ignore them and hope they’ll go away. They don’t. The problem waits for an opportunity to arise again, often in different guises. When you have an unresolved problem, you will not progress. You, your business, are stuck.
A problem at micro-level becomes a macro large-scale. In CR (QC06) December 1985, I said “Costs in the property industry have reached record levels. The actual amount of money involved in day-to-day transactions imposes constant pressure to meet critical financial targets. Any attempt to question or stop is met by a barrage of vested interests intent upon maintaining momentum. The cost of error is rapidly reaching the point whereby individual foresight will be crushed by the weight of uncontrollable dynamism. In the prime shop market, the corporate income of some retailers is inextricably bound up with the consumer’s willingness to keep on spending on credit. It only needs a few months’ lull for the structure to crack under the weight of operating costs. ”
And in CR50, June 1998, “When retailers get carried away and form the wrong impression of reality, the knock-on effect is destabilisation. Flat demand is caused by an addiction to competition. ”
Generally, retailers don’t care where the money comes from. As long as it does. As long as the business plan is approved by the bank and facilities can be renewed, as long as customers can be persuaded to spend more, as long as the lust for more shops can be satisfied, as long as landlords can be dumped or treated like any other supplier, that’s all that matters. Operating in splendid isolation, indifference to the wider long-term consequences cannot be appeased by giving to charity: playing power-games, bullying tactics, is completely the wrong approach for long-term consistent success.
Not only retailers, but also landlords and surveyors have fallen down the slippery slope. Indifference to repercussions of pro-active asset management, over-developing, over-estimating values, manipulating rents, it all fuels the get-rich-quick mentality, and the greed has so rotted the core that they’re going cap in hand to shareholders and banks for more money to feed the cravings.
It’s not the market’s fault. That is akin to admonishing customers, the source of spending-power. It’s not that the market suddenly turned, or no one could have foreseen. The direction had been changing for years. It merely needed to tip the balance. It was foreseen, but warnings went unheeded. Views like mine are not what most people want to hear. In December 1985, I said “success in retailing today is too dependent upon the availability of credit. Credit enables retailers to control the concept of what represents value for money. “ As I said in June 1998, “the cost of prejudice: a preference for conformity. It is thinking problems are normal. “
Credit interferes with the law of balance. It increases the money-supply artificially. You cannot blow something out of all proportion and expect it to stay there. A time must arrive when it bursts, a point at which it is so fed up it cannot contain itself. In my opinion, the bubble was about to burst in mid-2004, but greed gave it a final blow. In April 2008, as I put in my blog “in my opinion, the sub-prime crisis was deliberately orchestrated by some very shrewd operators who have made trillions of $ or whatever out of the debacle. ” Be that as it may, the credit-crunch has highlighted just how much pretentiousness exists.
Credit creates its own vicious circle of spiralling costs. Artificial growth, opening more shops, for than fair share, gives an impression of strong demand, thereby attracting competitors, which in turn increases pressure for performance. The terms of a loan can restrict the freedom to synchronise with reality: the direction in which customers are going. Businesses and properties exist to serve customers: not the other way round.
Borrowing is considered par for the course, but whereas it is okay to want a helping hand to begin with, there comes a point surely, when a business ought to stand on its own feet? In my opinion, for a business to consider itself successful it should have no need of debt. That is not to say it should not have any borrowing facility, simply it should rarely need to use it. The credit crunch shows just how much businesses that depend on borrowing have become a drag. In the aftermath of years of a booming economy, that few businesses have amassed cash confirms most directors are more interested in lining their own pockets and “living the life of Riley” than ploughing the profits into the business.
The money has to come from somewhere. To live off borrowings, assuming they would always be replenished on the strength of the business plan, is the result of allowing the art of avoiding challenging questions to run companies. It is a wonder of the pyramid, whereby the person in charge surrounds themselves with layers of management, so as to create the illusion that person must be very talented. Not realising the light at the end of the tunnel could be the train coming towards you can lead to a series of mistakes that start when someone is sold on an idea and there is no stopping them. By the time the idea is up and running, it is failing all over the place and costing a packet.
I think it’s sad, not to mention a waste of resources, that retailers and landlords are obliged to fail, and for shareholders to suffer, before directors will learn how to listen. Perhaps it’s hardly surprising: their contemporaries are on the same wavelength: standing firm and resolute on a massive psychological block A clean-sweep is necessary: to remove from positions of power those that need tangible evidence before they’ll act.
Fact is when you ignore the signs and don’t change willingly, change will be forced upon you. It’s as simple as that.
For long-term consistent success, to be progressive, to avoid coming unstuck in times of change, you have to think deeply and not allow superficial influences to cloud your judgement. As I say on my web site, “I think it important to have a feel for what you do, because then you can find your way around in the dark”. It is clear to me what is happening. It’s a shift, to living true to form and allowing business development to unfold naturally. In other words, “This above all: To thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man. “ - William Shakespeare, (1564-1616)
Transformation is a thorough, possibly dramatic, change in underlying attitude. In my healing experience, such as it is, few people are adept at transforming problems into commercial opportunities as they go. Mostly, people metaphorically brush problems under the carpet, ignore them and hope they’ll go away. They don’t. The problem waits for an opportunity to arise again, often in different guises. When you have an unresolved problem, you will not progress. You, your business, are stuck.
A problem at micro-level becomes a macro large-scale. In CR (QC06) December 1985, I said “Costs in the property industry have reached record levels. The actual amount of money involved in day-to-day transactions imposes constant pressure to meet critical financial targets. Any attempt to question or stop is met by a barrage of vested interests intent upon maintaining momentum. The cost of error is rapidly reaching the point whereby individual foresight will be crushed by the weight of uncontrollable dynamism. In the prime shop market, the corporate income of some retailers is inextricably bound up with the consumer’s willingness to keep on spending on credit. It only needs a few months’ lull for the structure to crack under the weight of operating costs. ”
And in CR50, June 1998, “When retailers get carried away and form the wrong impression of reality, the knock-on effect is destabilisation. Flat demand is caused by an addiction to competition. ”
Generally, retailers don’t care where the money comes from. As long as it does. As long as the business plan is approved by the bank and facilities can be renewed, as long as customers can be persuaded to spend more, as long as the lust for more shops can be satisfied, as long as landlords can be dumped or treated like any other supplier, that’s all that matters. Operating in splendid isolation, indifference to the wider long-term consequences cannot be appeased by giving to charity: playing power-games, bullying tactics, is completely the wrong approach for long-term consistent success.
Not only retailers, but also landlords and surveyors have fallen down the slippery slope. Indifference to repercussions of pro-active asset management, over-developing, over-estimating values, manipulating rents, it all fuels the get-rich-quick mentality, and the greed has so rotted the core that they’re going cap in hand to shareholders and banks for more money to feed the cravings.
It’s not the market’s fault. That is akin to admonishing customers, the source of spending-power. It’s not that the market suddenly turned, or no one could have foreseen. The direction had been changing for years. It merely needed to tip the balance. It was foreseen, but warnings went unheeded. Views like mine are not what most people want to hear. In December 1985, I said “success in retailing today is too dependent upon the availability of credit. Credit enables retailers to control the concept of what represents value for money. “ As I said in June 1998, “the cost of prejudice: a preference for conformity. It is thinking problems are normal. “
Credit interferes with the law of balance. It increases the money-supply artificially. You cannot blow something out of all proportion and expect it to stay there. A time must arrive when it bursts, a point at which it is so fed up it cannot contain itself. In my opinion, the bubble was about to burst in mid-2004, but greed gave it a final blow. In April 2008, as I put in my blog “in my opinion, the sub-prime crisis was deliberately orchestrated by some very shrewd operators who have made trillions of $ or whatever out of the debacle. ” Be that as it may, the credit-crunch has highlighted just how much pretentiousness exists.
Credit creates its own vicious circle of spiralling costs. Artificial growth, opening more shops, for than fair share, gives an impression of strong demand, thereby attracting competitors, which in turn increases pressure for performance. The terms of a loan can restrict the freedom to synchronise with reality: the direction in which customers are going. Businesses and properties exist to serve customers: not the other way round.
Borrowing is considered par for the course, but whereas it is okay to want a helping hand to begin with, there comes a point surely, when a business ought to stand on its own feet? In my opinion, for a business to consider itself successful it should have no need of debt. That is not to say it should not have any borrowing facility, simply it should rarely need to use it. The credit crunch shows just how much businesses that depend on borrowing have become a drag. In the aftermath of years of a booming economy, that few businesses have amassed cash confirms most directors are more interested in lining their own pockets and “living the life of Riley” than ploughing the profits into the business.
The money has to come from somewhere. To live off borrowings, assuming they would always be replenished on the strength of the business plan, is the result of allowing the art of avoiding challenging questions to run companies. It is a wonder of the pyramid, whereby the person in charge surrounds themselves with layers of management, so as to create the illusion that person must be very talented. Not realising the light at the end of the tunnel could be the train coming towards you can lead to a series of mistakes that start when someone is sold on an idea and there is no stopping them. By the time the idea is up and running, it is failing all over the place and costing a packet.
I think it’s sad, not to mention a waste of resources, that retailers and landlords are obliged to fail, and for shareholders to suffer, before directors will learn how to listen. Perhaps it’s hardly surprising: their contemporaries are on the same wavelength: standing firm and resolute on a massive psychological block A clean-sweep is necessary: to remove from positions of power those that need tangible evidence before they’ll act.
Fact is when you ignore the signs and don’t change willingly, change will be forced upon you. It’s as simple as that.
For long-term consistent success, to be progressive, to avoid coming unstuck in times of change, you have to think deeply and not allow superficial influences to cloud your judgement. As I say on my web site, “I think it important to have a feel for what you do, because then you can find your way around in the dark”. It is clear to me what is happening. It’s a shift, to living true to form and allowing business development to unfold naturally. In other words, “This above all: To thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man. “ - William Shakespeare, (1564-1616)
Supermarkets Visited
01/06/1985
Thinking I was immune from advertising, my first trip to what has now become my local grocers was to satisfy professional curiousity but standing in the car park at Tesco' s l00 tth superstore, I was comfortably aware of some magnetic presence which has brightened up Neasden.
For those of us who thrive on fresh fruit and vegetables, it is paradise to be offered such a wide choice and although the quality may not always be up to Class I, the assortment easily compensates.
I gauge shops by the quality of the staff and my definition of service. Are they dressed nicely, do they smile when serving or look at the customer at the till? So used to staff indifference at the International, opposite my office, it came as a refreshing change to hear 'thank you sir' when having my vegetables weighed and priced. For the best service, however, I don't believe you can beat Waitrose. When I asked a supervisor at Waitrose Brent Cross for some help, she stopped what she was doing and promptly showed me to the stock. At Tesco however, the same situation was delegated by the supervisor so presumably she had more important things to do than serve a customer!
Living in the area means we are spoilt for choice amongst the supermarket majors. Asda Hendon is due open next year although it'll probably be as unimpressive as Park Royal. Gateway has just opened in far-away Willesden and there's Safeway, but we went there once and the getting any common sense out of the staff was clearly going to create problems. Sainsbury' s puts me off because, apart from never being able to find anything, their male staff can often be seen with their ties hanging off their collars which I think is sloppy. These may sound like little things but it's the little things that deter customers otherwise we'd all shop at the same place!
Returning to Tesco, the fact that the staff can be seen to like saying 'thank you' is sufficient recommendation although I do have my doubts whether they are as enthusiastic during the peak and horrific Friday & Saturday shopping periods.
The clear reduction in our weekly food bill in exchange for a wide assortment, easy parking and a relaxing shopping environment must be the recipe for future grocery retailing; I must remember to modify my remarks about people who shop at Tesco. It's blatantly obvious however that the store is only accessible to motorists but it's spending power that Tesco is after and not local convenience. Let's hope the staff travelling to work via Neasden Station don't, as is very likely, get mugged in the long friendless walk to the store. Even if you can resist temptation, it must be worth a detour off the North Circular Road to buy 4 star petrol at 192.3p a gallon
For those of us who thrive on fresh fruit and vegetables, it is paradise to be offered such a wide choice and although the quality may not always be up to Class I, the assortment easily compensates.
I gauge shops by the quality of the staff and my definition of service. Are they dressed nicely, do they smile when serving or look at the customer at the till? So used to staff indifference at the International, opposite my office, it came as a refreshing change to hear 'thank you sir' when having my vegetables weighed and priced. For the best service, however, I don't believe you can beat Waitrose. When I asked a supervisor at Waitrose Brent Cross for some help, she stopped what she was doing and promptly showed me to the stock. At Tesco however, the same situation was delegated by the supervisor so presumably she had more important things to do than serve a customer!
Living in the area means we are spoilt for choice amongst the supermarket majors. Asda Hendon is due open next year although it'll probably be as unimpressive as Park Royal. Gateway has just opened in far-away Willesden and there's Safeway, but we went there once and the getting any common sense out of the staff was clearly going to create problems. Sainsbury' s puts me off because, apart from never being able to find anything, their male staff can often be seen with their ties hanging off their collars which I think is sloppy. These may sound like little things but it's the little things that deter customers otherwise we'd all shop at the same place!
Returning to Tesco, the fact that the staff can be seen to like saying 'thank you' is sufficient recommendation although I do have my doubts whether they are as enthusiastic during the peak and horrific Friday & Saturday shopping periods.
The clear reduction in our weekly food bill in exchange for a wide assortment, easy parking and a relaxing shopping environment must be the recipe for future grocery retailing; I must remember to modify my remarks about people who shop at Tesco. It's blatantly obvious however that the store is only accessible to motorists but it's spending power that Tesco is after and not local convenience. Let's hope the staff travelling to work via Neasden Station don't, as is very likely, get mugged in the long friendless walk to the store. Even if you can resist temptation, it must be worth a detour off the North Circular Road to buy 4 star petrol at 192.3p a gallon
The Future for Secondary Shops
01/12/1984
The historic development of shopping centres makes fascinating reading. Originally, as people went to market, so came permanent shops. In the post-war housing boom, shops started going to the people and even today, new council housing estates boast a block of shops.
The radical change in socio-economic patterns, and the real decline in the cost of transport, means that today, people go to the shops and the goodwill generated by the major operators in all sectors of the retailing market is sufficiently established to influence the prosperity of shopping centres.
When the idea of Brent Cross Shopping Centre was conceived in 1959, it would probably not have been anything like as successful a concept that it is today. In the early 1960' s, shopping development was confined to traditional shopping centres, and precincts, such as the Arndale Centres, were built on land fronting the High Streets. The first suggestion that people might be persuaded to shop away from the traditional pitches was introduced when the·second-generation food supermarkets, such as Tesco and Sainsburys started to move to fringe positions so as to provide on-site parking and loading facilities for their customers.
The need for food is the common link between all people. As it is a perishable product, with people having limited facilities for bulk storage, shopping for food is the main reason why most shopping centres attract daily pedestrian flow. If you take away the food shops, technically known as convenience traders, you also remove the spin-off for durable and service traders.
It is clear that the future of food retailing lies in the free-standing purpose-built supermarket located in an accessible position and offering excellent parking and loading facilities. The strength of buying power for and competition between the major operators means that retail prices are particularly keen. The independent grocer has seen his market share decline gradually since the 1950s and butchers, greengrocers, off-licences, fishmongers have all been hit hard. The ubiquitous confectioner, tobacconist, newsagent only survives because the major wholesalers of newspapers operate retail CTN outlets themselves. The private retailer with expansion ambition knows that the future for retailing must be to take units in busy positions, which are not completely dependent upon the whims and loyalties of local custom.
The importance that the presence of a food supermarket has on shopping positions is still underestimated. The closure by the Co-Op of many neighbourhood supermarkets has had a devastating effect on many local centres. Like cigarette brands, people are loyal to their favourite supermarket group and even if the old 'Tesco' is replaced by an individual grocer, offering the cliches of personal service and flexible opening hours, the damage is done. Local grocers won't survive for ever on people buying a pound of butter at 10 pm. The key to establishing some hold on the market is to contain costs, as there is always scope to participate in automatic local potential, especially as not everyone wants to shop at a superstore. In fact, the major groups are generally pleased that corner and local shops continue because they operate in different markets and, of course, it would be political suicide to admit to their extinction. However, the products are still the same and most shoppers are price conscious.
The top supermarket operators invest in research. They plan well-ahead and commitment to a development programme involving millions of pounds allows for the short term hurdles in favour of long term success. In the same way that the institutional and major landlords are actively selling secondary shops, so the major and multiple groups are actively vacating obsolete trading positions.
Apart from the food groups, the other' enemies within' (so far as the secondary market is concerned) are the DIY, furniture and electrical groups, such as MFI, Harris Queensway, Payless, Texas Homecare, Do-It-All, Comet, B & Q, Homebase, etc, etc. Clamour for revision of the Sunday trading laws adds fuel to a fire which has already devastated the small retailer and is now creeping into the entire secondary centre. This year's CBI-FT figures for Christmas trading predictions mention the local shop's expectations, for the first time. Any trip around secondary shopping centres this year would have indicated the noticeable absence of extra pedestrian flow. In my opinion, 1984's Christmas trading period will mark the beginning of the secondary trader's dread of this traditional time. In the past, all shopkeepers used to look forward to the seasonal upturn, but the rot started last year when shoppers spent a fortune in the High Streets and superstores and this year will prove no exception.
Supporters of the relaxation in Sunday trading laws claim more consumer choice and new jobs. But it is blatantly obvious that the small retailer will be squeezed out by the major operators. Important shopping areas, like Oxford Street, will benefit but the axe will fall on the rest. The new growth area for unemployed will be the self-employed retailer whose business is totally dependent upon pedestrian flow generated by the goodwill of others. Few local retailers actively market their stock; they are inter-dependent upon the collective benefit generated by being in a successful shopping cen tre and without the presence of national companies, generating national advertising and goodwill, there will be little incentive for local people to shop, except for the occasional item.
The future for the secondary shop will rest upon the retailer's personal ability as a retailer, highlighting the fact that few shop-keepers are retailers. The double glazing showrooms are a good example of a modern approach to retailing. They are shops for the visible storage of goods sold by the operator, through advertising and direct marketing. Too many shopkeepers have become complacent; they are used to people walking in automatically instead of actively attracting their interest. If secondary centres do become the equivalent to an overcoat for shoppers - only needed when absolutely necessary - then the future expectations for investment growth must be limited.
In establishing the future importance of a secondary centre, close attention should be paid to the size of the premises occupied by the supermarket operator to ensure it meets modern requirements and also upon the identity of the operator, as this defines the nature of the catchment area. It is important to monitor the locations in which the major operators take sites for their new stores. Most pop up in local and secondary areas because that is where land is most available. The benefit to the surrounding centres, however, will be dependent upon each individual retailer's ability to capitalise on the presence of the extra pedestrian flow by gearing his corporate image to the needs of the people.
Landlords have a role to play in maintaining the balance of trade in a secondary centre. On receipt of applications to change the user, the landlord should refuse consent if the proposed user appears to be in direct competition with established traders.
It comes as a shock to many individual shopkeepers to be told that the rent for the premises is not calculated by reference to their ability to pay it. The level of rents in many secondary centres has already reached a peak at which, combined with the effect of rates, ever increasing overheads and declining revenue, they are now seriously affecting the stability of the centre.
Careful choice for investment is fast becoming essential. There will always be opportunities for growth, but a blanket assumption that all secondary areas will continue to prosper is a fallacy. I predict that investors who expect the percentage increases in rents applicable in the five year period from 1979 to 1984 to be repeated for the latter part of this decade are likely to be very disappointed despite the
The radical change in socio-economic patterns, and the real decline in the cost of transport, means that today, people go to the shops and the goodwill generated by the major operators in all sectors of the retailing market is sufficiently established to influence the prosperity of shopping centres.
When the idea of Brent Cross Shopping Centre was conceived in 1959, it would probably not have been anything like as successful a concept that it is today. In the early 1960' s, shopping development was confined to traditional shopping centres, and precincts, such as the Arndale Centres, were built on land fronting the High Streets. The first suggestion that people might be persuaded to shop away from the traditional pitches was introduced when the·second-generation food supermarkets, such as Tesco and Sainsburys started to move to fringe positions so as to provide on-site parking and loading facilities for their customers.
The need for food is the common link between all people. As it is a perishable product, with people having limited facilities for bulk storage, shopping for food is the main reason why most shopping centres attract daily pedestrian flow. If you take away the food shops, technically known as convenience traders, you also remove the spin-off for durable and service traders.
It is clear that the future of food retailing lies in the free-standing purpose-built supermarket located in an accessible position and offering excellent parking and loading facilities. The strength of buying power for and competition between the major operators means that retail prices are particularly keen. The independent grocer has seen his market share decline gradually since the 1950s and butchers, greengrocers, off-licences, fishmongers have all been hit hard. The ubiquitous confectioner, tobacconist, newsagent only survives because the major wholesalers of newspapers operate retail CTN outlets themselves. The private retailer with expansion ambition knows that the future for retailing must be to take units in busy positions, which are not completely dependent upon the whims and loyalties of local custom.
The importance that the presence of a food supermarket has on shopping positions is still underestimated. The closure by the Co-Op of many neighbourhood supermarkets has had a devastating effect on many local centres. Like cigarette brands, people are loyal to their favourite supermarket group and even if the old 'Tesco' is replaced by an individual grocer, offering the cliches of personal service and flexible opening hours, the damage is done. Local grocers won't survive for ever on people buying a pound of butter at 10 pm. The key to establishing some hold on the market is to contain costs, as there is always scope to participate in automatic local potential, especially as not everyone wants to shop at a superstore. In fact, the major groups are generally pleased that corner and local shops continue because they operate in different markets and, of course, it would be political suicide to admit to their extinction. However, the products are still the same and most shoppers are price conscious.
The top supermarket operators invest in research. They plan well-ahead and commitment to a development programme involving millions of pounds allows for the short term hurdles in favour of long term success. In the same way that the institutional and major landlords are actively selling secondary shops, so the major and multiple groups are actively vacating obsolete trading positions.
Apart from the food groups, the other' enemies within' (so far as the secondary market is concerned) are the DIY, furniture and electrical groups, such as MFI, Harris Queensway, Payless, Texas Homecare, Do-It-All, Comet, B & Q, Homebase, etc, etc. Clamour for revision of the Sunday trading laws adds fuel to a fire which has already devastated the small retailer and is now creeping into the entire secondary centre. This year's CBI-FT figures for Christmas trading predictions mention the local shop's expectations, for the first time. Any trip around secondary shopping centres this year would have indicated the noticeable absence of extra pedestrian flow. In my opinion, 1984's Christmas trading period will mark the beginning of the secondary trader's dread of this traditional time. In the past, all shopkeepers used to look forward to the seasonal upturn, but the rot started last year when shoppers spent a fortune in the High Streets and superstores and this year will prove no exception.
Supporters of the relaxation in Sunday trading laws claim more consumer choice and new jobs. But it is blatantly obvious that the small retailer will be squeezed out by the major operators. Important shopping areas, like Oxford Street, will benefit but the axe will fall on the rest. The new growth area for unemployed will be the self-employed retailer whose business is totally dependent upon pedestrian flow generated by the goodwill of others. Few local retailers actively market their stock; they are inter-dependent upon the collective benefit generated by being in a successful shopping cen tre and without the presence of national companies, generating national advertising and goodwill, there will be little incentive for local people to shop, except for the occasional item.
The future for the secondary shop will rest upon the retailer's personal ability as a retailer, highlighting the fact that few shop-keepers are retailers. The double glazing showrooms are a good example of a modern approach to retailing. They are shops for the visible storage of goods sold by the operator, through advertising and direct marketing. Too many shopkeepers have become complacent; they are used to people walking in automatically instead of actively attracting their interest. If secondary centres do become the equivalent to an overcoat for shoppers - only needed when absolutely necessary - then the future expectations for investment growth must be limited.
In establishing the future importance of a secondary centre, close attention should be paid to the size of the premises occupied by the supermarket operator to ensure it meets modern requirements and also upon the identity of the operator, as this defines the nature of the catchment area. It is important to monitor the locations in which the major operators take sites for their new stores. Most pop up in local and secondary areas because that is where land is most available. The benefit to the surrounding centres, however, will be dependent upon each individual retailer's ability to capitalise on the presence of the extra pedestrian flow by gearing his corporate image to the needs of the people.
Landlords have a role to play in maintaining the balance of trade in a secondary centre. On receipt of applications to change the user, the landlord should refuse consent if the proposed user appears to be in direct competition with established traders.
It comes as a shock to many individual shopkeepers to be told that the rent for the premises is not calculated by reference to their ability to pay it. The level of rents in many secondary centres has already reached a peak at which, combined with the effect of rates, ever increasing overheads and declining revenue, they are now seriously affecting the stability of the centre.
Careful choice for investment is fast becoming essential. There will always be opportunities for growth, but a blanket assumption that all secondary areas will continue to prosper is a fallacy. I predict that investors who expect the percentage increases in rents applicable in the five year period from 1979 to 1984 to be repeated for the latter part of this decade are likely to be very disappointed despite the