Retail Destination's Looking Ahead to 2024
Thoughts shared with Retail Destination from several of our clients, about their expectations for 2024.
All published by Retail Destination on 18 December 2023.
Janine Constantin-Russell, Managing Director of Outlet Shopping at The O2 and the Entertainment District
“We’ve experienced our best year ever at Outlet Shopping at The O2; one which has seen us break records and continue to drive consumer and brand interest. A key factor to this success has been resonating with our consumers. For example, Wetherspoons was a brand our visitors wanted, so we made sure to deliver. Similarly, in response to the huge customer demand for athleisure, we knew that there was a great opportunity for Under Armour to thrive and elevate our offer further.
“In parallel, maintaining strong relationships with tenants, keeping them informed and ensuring a collaborative approach is upheld, is absolutely key. Four brands have upsized this year because of the strong relationships we make sure to nurture. We understand that it’s not just the destination that has business goals but our retailers do too, so it’s important to acknowledge these, weave them into leasing and marketing efforts and deliver opportunities when they arise.
“A lot of our planning is geared towards remaining agile. Diversification is also key and incorporating more service-led operators alongside Aatma Aesthetics and Better Brows, as well as enhancing the range of beauty, jewellery and accessories on offer will play a role.”
Chris Jukes, Director of Liverpool ONE:
“2023 was a milestone year for Liverpool ONE. In addition to the usual leasing activity, we completed a major asset management initiative with the transformation of the former Debenhams into a next generation anchor store, home to Gravity MAX’s flagship and M&S’s latest concept. Alongside these noteworthy deals, Liverpool ONE welcomed 32 new openings and facilitated 27 renewals. As significantly, the city played host to the Eurovision Song Contest, and we celebrated Liverpool ONE’s 15th anniversary.
“The big question for 2024 is how do we follow that? And the answer is by continuing to innovate, to evolve and to contribute to the city centre and wider Liverpool City Region.
“A key focus for us in the year ahead will be to harness the true value of insight and data to make even more informed decisions about every aspect of Liverpool ONE.
“On a personal level, I am now one year into this role. Having experienced a full year in the life of Liverpool ONE, I am excited at the prospect of applying what I have learnt, working with the team to continue to drive and amplify Liverpool ONE’s success and impact.”
Alex McCulloch, Director at CACI:
“It’s hard to imagine 2023 being remembered with fondness. Economic uncertainty, the rising cost of living and geopolitical instability all combined to create a sense of insecurity. The best that could be said was that as the year progressed, we started to see stability: consumer confidence ‘rose’ to -30 from the depths of -50 last Christmas, and that is demonstrated in behaviour. Everyone has been watching their festive spend, but while 64% remain concerned about the cost of food and drink, last Christmas it was 81%.
“Thriftiness has extended into fashion, with Vinted overtaking heavyweight retailers such as H&M in our Brand Dimensions data. This is an age of sustainable consumption; bargain-seeking, upcycling, recycling, and pre-loving our way across the retail landscape.
“I remain an optimist, and am latching onto the most exciting news of 2023 – the explosion of Generative AI. Next year is when we will start to see AI improve everyday consumer experiences. More personalisation on websites, authentic interactions with avatars and an increasing blending of high technology in traditional spaces.
“Think of an AI personal shopper, curating your in-store experience based on a few keywords from you and your emotive response. This isn’t fanciful. We are already using AI extensively to create consumer segmentations; our latest Acorn is driven by a neural network and increasingly brands are segmenting and personalising customer experience, even in response to real-time behaviours. But don’t be alarmed, the human element remains essential.”
Kevin Duffy, centre director, centre:mk:
“Bestowed city status in 2022 and named the nation’s most competitive city based on its business attractiveness in 2023 we are confident 2024 will bring Milton Keynes further growth.
“However, we are part of something bigger, a wider, regional community and a key contributor to the economy. For centre:mk to expand its dominant regional position, understanding our strengths and ensuring their fit with evolving consumer demands remain our priority.
“Consumers continue to value centre visits, when the depth and breadth of range provides convenient access to the brands they want to see, experience and shop. As centre:mk nears full occupancy, understanding how we fine-tune that mix over time requires an insight-driven focus on guest experience, communication and adaptation of ESG initiatives and this remains our priority.
“Our ongoing commitment and active management of the resources we use forms a key part of our ‘little things philosophy’ which highlights that one small change can drive a step change in positive behaviour and environmental/social impact.
“It was rewarding for the team’s efforts to be recognised with a GRESB 5 Star rating, BPA Park Mark Plus Award and Green Apple Awards but our commitment doesn’t stop there. We have developed our own internal targets and will continue to work alongside brands to realise these. Active asset and operational management remains at the heart of everything we do and with the support of accurate consumer insight we are excited to keep pushing the boundaries to provide a forward-thinking space to shop, dine and enjoy.”
Paul Carter, asset director at Gloucester Quays:
“Across Europe, the impact and relevance of outlets has grown significantly, with turnover doubling in the last 10 years. Gloucester Quays’ double-digit sales growth is mirroring this exceptional performance, highlighting the UK market is as much in love with outlets as its continental cousins.
“Consistently exceeding targets for footfall and sales has stimulated record leasing activity in the last 12 months, from new brands and existing operators seeking to upsize. Several international powerhouses have recognised the importance of outlets to UK consumers and Gloucester Quays success, adding to the quality and diversity of our line-up.
“Gloucester Quays is the best offer within a cathedral city, in historic warehouses and adjacent to a picturesque waterfront. Increasingly, visitors to Gloucester want to spend more time here. Capturing that longer dwell, while evolving the tenant mix to also keep local people engaged, has been a hallmark of our 2023 delivery.
“Alongside great retail, F&B and leisure are increasingly important, and our range of tenants will grow to deliver that complete, full-day experience.
“Last year, we became the UK’s first net-zero carbon outlet with UKGBC, following this up with a 3-star GRESB. Environmental advancements will carry through 2024, alongside an industry-leading events programme. Our unique location and extensive public realm create endless opportunities and given the sustained desire among visitors to have great experiences as part of their full day-out, we will position Gloucester Quays as the best place in the region for world-class, accessible events.”
Maria Averkina, asset and development manager at Railpen:
“For 2024, our focus will be continuing to deliver sustainable long-term returns, creating appealing and resilient destinations, and ensuring we make a positive contribution to the communities in which we are active.
“Reflecting on 2023 across the retail assets in our portfolio, we implemented a series of capital investment initiatives to ensure our assets remained relevant to brands and consumers, reflecting the importance of their interdependency on a destination’s performance.
“Caledonia Park, our premium outlet village in Scotland, is benefiting from a major refurbishment of the scheme’s units, overall appearance and public realm. This has helped facilitate the signing of a number of top-tier retailers in 2023, such as Tommy Hilfiger and Calvin Klein, as well as British favourites Hobbs and Phase Eight.”
Alistair Winning, asset manager at Sovereign Centros:
“The past year has had its challenges, but despite this, Merry Hill has gone from strength to strength, having evolved across all sectors.
“The creation of a leisure quarter meant Merry Hill has been able to attract Hollywood Bowl for an anchor space, alongside the likes of Wagamama, ASK Italian, and Wingstop. Having that family-friendly offer during the day, transitioning nicely into the evening, is exactly what Merry Hill needed to continue on its positive trajectory of rising footfall, spend and dwell time.
“On the retail side, we’ve continued to attract
globally renowned brands like Nike Unite and Rituals, while Phase Eight and Hobbs have recommitted to the destination through an upsize. A testament to the great community of visitors and tenants Merry Hill has.
“Looking beyond new brands, we’ve worked hard to support existing tenants too in the face of rising energy costs. In late 2023, Merry Hill completed the installation of nearly 2,500 solar panels, providing 25% of the centre’s electricity requirements. This has also helped us work towards our ESG targets, and as 2024 progresses, so will a few more environmental programmes.
“For 2024, it’s important that we maintain momentum, continuing our efforts to deliver the best experience possible for our visitors and tenants alike. There are some exciting deals in the works – including a unique, comprehensive solution for the former Debenhams space – and plenty going on behind the scenes to make sure Merry Hill remains a top 10 UK destination, in more ways than one.”
Robin Heap, CEO of Zest:
“With 32% of ICE drivers and 84% of EV drivers planning to purchase an EV as their next vehicle, the role that Zest will play over the course of 2024 is crucial. Backed by the government-sponsored £420m Charging Infrastructure Investment Fund, we’re helping to bring new charge points to a diverse array of locations across the UK: from large destinations like Metrocentre and Merry Hill, to more rural counties throughout the UK, to the roll-out of thousands of chargers with Hackney, TfL and Brent in London. Continuing this, 2024 will be the year we make real headway in rolling out abundant EV charging for everyone.
“EV ownership is growing, as is the demand for better and more accessible public charging. We will be focused on delivering the volume and breadth of charge points the country clearly needs, emphasising along the way the huge benefits the infrastructure brings.
“The provision of EV chargers encourages customers to travel further and stay longer, increasing their trip value by up to 41%. Add to that the positive impact they can have on asset value, plus new revenues, and you have cast-iron evidence of the power of EV infrastructure as a placemaking catalyst. Higher footfall, longer dwell, greater customer satisfaction.”
Abi Labbett, senior director at CBRE, speaking on behalf of Longmartin Properties:
“The absence of tax-free shopping continues to influence both the UK’s growth and global reputation in retail and leisure, and the cost-of-living crisis continues to dampen consumer spend.
“Positively, however, the sector is displaying resilience in the face of economic challenges. Footfall has exceeded pre-pandemic levels and there has been a wave of new openings in Covent Garden. There continues to be strong demand for stores in prime locations and the rebasing of rents in less prime areas has helped to attract more independent retailers to London.
“Three areas that are important for future-proofing destinations are providing the right level of choice, investing in your environment and knowing your customers, both current and target is essential. With a condensed amount of real estate in central London, the consumer has a myriad of choices, so to curate a destination which appeals to your target market is essential. Over the past five years, Longmartin Properties has invested c.£15m in doing just that and we’ve seen the significant benefits of this at The Yards, Covent Garden. Through investment in our office space and bringing in new occupiers, we’ve also attracted a new demographic for our tenants at ground floor and this continues to evolve the estate and drive footfall.”
Louisa Butters, head of retail asset management UK at CBRE Investment Management:
“From a rocky 2022, the occupier market in 2023 has held up surprisingly well. Leasing at our schemes has been ahead of expectations, stabilising and, in many cases, growing NOI. The market has provided opportunities to diversify our income – through the introduction of co-working/flex space, health and beauty services, click and collect stations – ultimately improving assets and their community relevance. There have been some significant headwinds, including rising construction costs, while the investment market has seen some of the lowest transaction volumes since the global financial crisis. Occupiers have been feeling the pinch too; we’ve worked hard to build collaborative, open
and trusting relationships with our tenants. There’s still work to do, and we look forward to having the open-book partnerships that my European colleagues enjoy.
“In 2024, we’ll continue to invest in creating places where people and occupiers want to be, to ensure sustainable income streams. Tenant curation, greening, marketing events and placemaking, such as our work at Angel Central in Islington and the evolution of the Ashley Centre in Epsom, are great examples of where this will continue, albeit paying close attention to service charges and operating expenses. Investors should get ready to mobilise; within CBRE Investment Management, retail delivered some of the best sector level returns in 2022*, income streams have since rebased and stabilised, and there may even be potential for growth throughout 2024. Notwithstanding increased finance costs, liquidity returning to the debt market should put retail atop an investor’s shopping list and we’ll be ready with our underwrites.”
*CBREIM EMEA Quarterly Composite, MSCI Q2 2023
Hannah Grievson, Property Director at Sloane Stanley
“As part of our long-term strategy plans we have diversified our offer by encompassing childrenswear, beauty and F&B. The demand for coffee shops is also not waning with the recent arrival of Fabrique and Kiss The Hippo, and we are also celebrating the increased return of high-end fashion to the King’s Road. We have seen a resurgence with exciting brands such as Aspiga and Marfa Stance fitting comfortably within our tenant mix. We are continuing to deliver our flexible leases with an emphasis on converting those into long-term lets. The success of this style of lease is echoed by the now permanent tenant of Chinti & Parker, which had a run of successful pop-ups over the last few years.
“Sustainability remains a key focus for us, and this very much carries through into the tenants we select and their brand ethos for this area, for example, Aspiga’s B-Corp status, Farm Fetch’s food sourcing from small and independent farmers in Europe, and Antique Modern Mix offering a seamless designer exchange business. We are seeing a steady rise in demand for retail and F&B returning for King’s Road and we will continue to channel the very best creative and innovative independents.”