Our Thoughts

A Christmas cracker? A look at the retail winners and losers of the festive period

The 2018 Christmas shopping period provided the usual mix of winners and losers and an abundance of discounted stock.

It did not, as usual, provide a perfect barometer with which to measure the state of play in the UK retail sector, however it did offer a number of lessons for both retailers and landlords.

Generally speaking, the winners of previous years won again, while the losers continued feel the pain. With so many factors clouding the overall picture, including the ongoing uncertainty surrounding Brexit, the growth of online retail and the unseasonably warm weather, it can be quite difficult to see the wood for the trees. However, there are a couple of factors which have emerged seem as key determinants of success.

This year’s winners – Selfridges and Nike, to name a couple – have a clear and defined identity, which allows customers to feel like they belong to an exclusive group. Shopping there means you are buying products which define the kind of person you are, or the type of person you would like to be perceived as.

The second factor, employed particularly well by brands like Uniqlo, is giving the consumer a level of service and originality that isn’t replicated in other high street stores. This could include in-store events, free tailoring services or collaborations with designers and celebrities. Conversely, the retailers who have performed poorly tend to be mass market, with operators having lost their way in an extremely competitive market.

The picture for overall UK sales was unsurprising, given the strong headwinds currently faced across the sector. Total sales were flat, showing 0% growth, and represented the worse December sales growth since 2008, according to the British Retail Consortium (BRC). That said, research from Barclaycard was slightly more positive, although it did shine a light on the current level of caution among UK consumer.

Once again, the high street failed to attract as many new visitors despite frequent discounting in the run-up to Christmas, and footfall fell marginally by 0.1% compared to the same period in 2017, while online retail continued to grow. For many, the idea of shopping on the high street in the weeks leading up to Christmas fills them with fear.

Instead, post rooms feel the pressure as shoppers made the most of Amazon Prime’s next day delivery service, freeing up time for the more enjoyable activities. That said, even retailers such as ASOS and Missguided, stalwarts of the online fashion market, reported less than impressive sales in the lead up to Christmas.

So what can the retail industry learn from this? From a landlord perspective, retailer woes have put creative asset management at the forefront of the agenda for the year ahead. An over-supply of retail space has created an opportunity for alternative uses or attractions to be housed within vacant retail properties, which in turn will drive traffic to struggling stores.

For retailers, the consumer experience can no longer mean shops merely filled to the brim with ‘stuff’ and shoppers willingly walking in to purchase. Instead, they must be lured in with quality service, experiences and, ideally, a product that is not available elsewhere.

Factory outlet centres provide a good example of how the relationship between landlord and occupier can work more effectively. Landlords have to consistently invest in the centre, creating an enjoyable place for consumers to visit, while retailers must provide an excellent in-store service to ensure they maintain performance. As retailers in outlet centres are on short performance-based leases, they must do well otherwise they risk being replaced. Given the trend towards shorter traditional retail leases, could this model could transfer to full price centres?

If landlords and retailers can work together encompassing areas such as these, the outlook for the retail sector in 2019 may not be the no-hoper that many believe it will be.

Rob Williams
Head of Retail Agency and Development
+44 (0) 20 7318 5153