Current trends in retailing and the future of retail property Andrew - PowerPoint PPT Presentation

Current trends in retailing and the future of retail property Andrew Bolitho - Property, Energy, Planning and Transport Policy Advisor

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BRC Membership

The BRC is the authoritative voice for retail recognised for its powerful campaigning and influence with governments and as a provider of excellent retail information. The BRC represents Over 80% of the retail sector 30,000 small and medium sized retailers Over 75 major retail members Over 190 fascias wide range of large to small, out-of-town to high street, Located in London, Brussels and Edinburgh

Economic overview

-3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Source: ONS 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2

Claimant count 000's 1,000 1,200 1,400 1,600 1,800 200 400 600 800 0 Source: ONS Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Consumer Confidence Source: ONS & GFK -45 -40 -35 -30 -25 -20 -15 -10 -5 0 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 Consumer spending May-09 Sep-09 Jan-10 May-10 Sep-10 Consumer confidence Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% Consumer spending % change

Source: Bank of England

Rolling 3-month average 6% 5% % change year-on-year 4% 3% 2% 1% 0% -1% -2% Total sales LFL sales -3% -4% 2009 2010 2011 2012 2013 Source: BRC

% change year-on-year Source: BRC 10% 12% 14% 16% 18% 20% 0% 2% 4% 6% 8% Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Online

% change year-on-year (3 month average) Source: BRC 10.0% 12.0% 14.0% 16.0% 18.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Aug-10 Oct-10 Dec-10 Online non-food sales Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Total non-food sales Dec-11 Feb-12 Apr-12 Jun-12 Non-food (excl. online) Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13

21% 18% Greater London 15% Vacancy rates South East East Midlands 12% Scotland South West 9% East West Midlands 6% North & Yorkshire Wales 3% Northern Ireland Weighted UK Average 0% Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Source: BRC

2013 £bn as per cent of total Source: BRC

Source: Bank of England

 Rise of online retailing  Expansion of the supermarkets into non-food products and lines  Leases and renewals  Recognition that there is too much retail space  Increase in level of exports

Sir Phillip Green: [on closing 260 “Do you need to build hypermarkets in the UK stores] “All the landlords may turn up with completely different deals, when the internet is taking so much growth in based on the market being a very electricals, in clothing, in general merchandise?” different place. ” Statement: November 2011 Philip Clarke, CEO, Tesco, January 2012 Ten years ago, larger retailers would have Sean Gillies, head of retail at Savills, the needed stores in about 250 places in the UK property consultancy, says the contraction is being caused by “structural and cyclical to reach customers in most of the country. “Now, with the surge in online shopping, and change. The cyclical part is the economic with the larger centres getting stronger, many side, and the structural change is the retailers can cover the country with stores in growth of the internet and multi-channel 100 centres,” says Mr Dalgleish. retailing. There is also an ageing Retail Week: April 2012 population profile. ” Financial Times: April 2012

% of total retail sales 10 12 0 2 4 6 8 Source: ONS Aug-07 Dec-07 Apr-08 Internet sales as a % of total retail sales (LHS) Internet retail sales, £ millions (RHS) Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 0 100 200 300 400 500 600 700 800 900 £ million

Source: Eurostat

155,000 150,000 145,000 140,000 135,000 130,000 125,000 120,000 115,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e Source: Verdict

Floor space and shop numbers 2010 2020 559 559 527 527 246.6 221.2 Floorspace (million sq ft) Shop numbers (000s)

In Town and Out of Town 2010 2020 30,000 20,700 7,000 6,860 In-town Out-of-town

Source: Bank of England

Technology - Commerce • • e-commerce • m-commerce • Social media (f-commerce) • Technology - Marketing and Advertising • QR codes • Near Field Communication (NFC) • Interaction digital advertising • Wi-Fi • Technology - Supply Chains • Efficient sourcing • Inventory management

Seamless integration across the multi-channel platform E-commerce • Sales growth of 20% per annum • Accounts for 10% of all retail sales (c. £30 billion) • Online retail searches growing by 40% M-commerce • Sales growth of 150% per annum • Accounts for 5% of online spend (c. £1.5 billion) • Online mobile retail searches growing by 214% • NFC – mobile wallets “Quick Tap” Social media (F-commerce) • ASOS first retailer in Europe to open Facebook shop

Retail searches breakdown by device Total 10% 10% 100% 100 Mobi bile Desktop 109% 109% 23% 23% 77% 77% -3% Tablet Smart rtphone Proportion Growth YOY 43% 43% 288% 288% 57% 57% 102% 102% Source: BRC

Future Developments 3D Printing Retailers • Tesco is assessing the possibility of printing 3D products in-store, with its technology team currently testing 3D printers to explore future in-store applications. • Amazon has launched a section of their website that sells 3D printer and supplies. • Staples has plans to set up a new service called "Staples Easy 3D“ that will allow customers to upload their designs to Staples' website, then pick up the printed objects at their local store. • Sainsbury’s is preparing its 3D printing strategy to be revealed later this year. • We have even seen this technology used to create 3D chocolate faces at FabCafe in Japan and by ChocEdge in the UK. Fujifilm • In 2012, Fujifilm discussed introducing 3D printers using the established kiosk model that's been successful for digital photo printing. Kiosks would be placed in retail store and a catalogue of objects would be available for purchase, with the products on offer occasionally rotated to provide variety. Food • NASA and a Texas-based Systems & Materials Research Corporation are exploring the possibility of using a "3D printer" on deep space missions to make food in space. 3D printing of food may be revolutionary for the food industry - tissue engineering reduces CO2 emissions with no animals, land use, chemicals or transport and is also heralded as a solution to food shortages.

Future Developments Rise of the robots Hointer, a US mens fashion retailer, is leading the way to robots running some of our retail stores. • The store has no salespeople, confusing signs, or stacks of clothes to riffle through to find the right size. Instead, lines of clothes in hundreds of styles hang for you to browse through. • When you find something you like, you scan the QR code on the tag, pick your size on the Hointer app with your smartphone, and your selection is automatically delivered to the changing room via a chute from the German robot-operated stockroom. • To pay, you put your items in a bag, checkout by swiping your credit card at a station, and walk out the door. • The store even offers free automated alterations It’s as close to the ease of shopping online in the physical world as you can get.

Burberry Regent Street in London brings their online marketing in-store, to create 'Burberry World Live', which claims to offer customers the physical expression of the brand's most innovative digital launches in recent times. • The store’s features include a 22ft-high screen, 500 hidden speakers and a hydraulic stage. • It also showcases RFID microchips on clothing and accessories, so when customers try on clothing the mirror transforms into a screen, which shows the garment on the catwalk. Related catwalk footage is also triggered when products are taken near video screens throughout the store. • There is also a digitally enabled clothing gallery.

Source: Bank of England

 Rise of online leading to changes in distribution ◦ Higher concentration of warehouse vs brick and mortar stores ◦ Delivery to door and click and collect  Enhancing the customer experience ◦ Innovation in retail technology ◦ Multiple consumer offers in store i.e. coffee shops, childcare, health and education  Managing the decline of retail on our high streets ◦ Providing solutions to oversubscription of retail space