I have spent a large amount of time on planes recently, supporting the wider JLL business and ICSC on the launch of the research on Food and Beverage and its impact in shopping centres. You can download the report here.
First of all I found myself in Austin Texas, participating in the “Food for Thought” conference run by ICSC. It was a fantastic 2 days, with lots of debate, discussion and some great presentations on what is happening in the world of retail and F&B. There were some really painful moments when it was quite clear that our industry is facing further massive structural change. The attendees at the conference were very keen to get as much assistance and insight as they possibly could from the speakers and contributors. Clearly F&B was leading in the discussions, but there was also talk of the shuttering of department stores, the levelling of turnover and rents and the “new world” of Lease flexibility.
I then found myself in Dubai, for one of our JLL Foodservice events at Inked, a super cool venue in the Arts district that attracted and entertained over 30 clients for the evening around foodservice training, some kitchen and bar skills and a great dinner. The same topics came up as well as the rise and rise of “experience and play” as part of the shopping place.
No sooner had I got back to England and I was off to Warsaw to support our Head of Research and Strategy, James Brown, with the launch of the ICSC report at the European conference. A great panel session with engaged and interesting speakers kicked the report off well in the European arena. That night, the discussions were very much the same. Obviously the growth in F&B, the role that old and news “anchor” stores have to play, the development of leisure and family and the need for really proactive management of the asset. All good in my view and a clear priority list of things to get on and do in shopping world.
So finally, I join the GCSC study tour to Hong Kong and Shanghai, picking up a load of extra meetings with JLL colleagues, operators and brands on the way, as our world has now got so global, it isn’t possible to sit in one place and really get what’s going on. Guess what? In both the presentations from the JLL Hong Kong and the JLL Shanghai office, the same points were raised and “called out”, as major changes in the global shopping place market. 5 different locations around the world, 5 different groups of industry professionals and experts and 5 different views all coming to the same conclusions.
I thought it would be rather useful to “put them out there” for debate and discussion and for very good reason. We joined JLL in 2014 because we wanted to be part of a larger organisation that can support and assist our growth and to provide our mutual clients with a broader range of quality services. Working together, our business is fit and ready to deal with the “Magnificent 7” listed below, that have arisen from the disrupted world of shopping places. We believe we are better placed than anybody to get this right, so here they are:
- Continued growth in F&B
It’s going to carry on, the percentages will vary, but it will continue to grow. It’s getting more sophisticated, it’s more complicated and the operators are more demanding so get with the momentum and use it to your benefit.
- Re-purposing Department Stores
For those stores that are no longer needed, effective or operating, a whole new sub-set of activity is developing for the re-purposing of department store space. All around the world the price and brand competition is changing the need for this type of anchor space and nimble and agile thinking is needed to get these boxes working again for the wider asset.
- The levelling of rents and realistic turnovers
Rental growth is going to be patchy, and certainly in retail, it’s still under pressure from other channels. “Click to brick” is happening and physical stores for online players are on the way up, but it’s different, very different.
- Value, Experience and Play
There seems to be a trend globally to much more experience, activity, play and value in shopping places, partly due to diminishing retailer demand and partly due to guest requirements. Our shopping places are becoming much more our “community” places and a whole raft of new occupiers are coming forward.
- Proactive Management
The big message for me, from all the meetings, all the discussions, presentations and panel sessions is that you CANT AFFORD TO WAIT. Proactivity is paying off, asset plans are needed now and options, proposals and alternatives are all essential to keep driving value from these retail assets.
- Lease “Fuzziness”
Even in the Far East, the incredibly short and some would say inflexible Lease terms are getting a little “fuzzy”. Landlords and developers are having to be flexible, cannot always expect and get the same fixed terms and need to be attractive to the right Tenants.
- Temp or Perm
The final point that resonated for me, all around the world on my recent travels, was the need to try things, test things and avoid costly and painful long term commitments, by trialling through “pop-up”. More and more tests are being carried out, to see if the retailer or operator works with the shopping place guests and community.
To be fair, I am only an “F&B guy” and so it is best that this is in a Blog and not one of the great pieces of research that comes out of JLL. The ICSC report, carried out by JLL, is packed full of good insight, guidance, logic and facts. I am not talking about that, I am going on “gut feel” and the fact that the same discussions around these “Magnificent 7” points were repeated in cities around the world. I am lucky, I get to do this for a living, but if you own a shopping place, then I am certain these 7 points are way up your agenda and if not, I believe they should be.
Those of you that know me, know I like to end with a quote. In the 2016 re-make of the Magnificent 7, Sam Chisolm, played by Denzel Washington said “what we lost in the fire, we found in the ashes”. There are going to be a lot of Phoenix projects in the next few years, as we re-purpose and re-define what our guests want from us. Good luck.