Shopping centre performance, a global snapshot

Recent reports highlight difficulties of trading in a global slowdown. Evidence shows UK and US markets in decline while Australia experiences growth. Contrast with emerging markets and the picture is no clearer, Turkey is expected to boom while once optimistic India stalls.

Westfield results

This month, Westfield reported sales figures that show mature market disparity. They report increased sales across its global portfolio of 0.3% for the three months up to 31^st March. 12-month rolling sales indicate robust performance considering global slow down; sales grew 2.8% to $20.9 billion across its 119 malls in the US, UK, Australia and New Zealand.

Australia buoyant, US sinks, UK treads water

Steady results are principally attributed to strong performance – 6.7% growth – in Australia, a market contributing 45% of Westfield’s income.

With the US market described as “very challenging” – specialty retail sales down 8.4% and retail occupancy down to 90.1% – and UK sales down 0.7%, overseas sales are likely to remain flat.

Optimism in London

Despite a decline in UK sales, Westfield London, its flagship £1.6 billion, 43-acre site in central London is set to exceed its first year annual target of 20 million visitors. Encouraging news but Westfield needs visitors to become consumers.

Turkish delight

While global retail sector struggles there are bright spots. Reuters reports that Turkish shopping mall sector expects to increase revenue by 25% (US$ 12.5 billion). The organized retail sector expects dramatic growth despite an expected 2009 recession. The driver for investment from foreign developers – Germany’s Prime Development plan to invest US$ 1.5 billion in retail development – is Turkey’s large, young and increasingly prosperous population.

India caution

Market conditions in Turkey sound familiar. India’s organised retail sector expected turbo charged growth based on these same factors. To date these plans have flattered to deceive, DLF, India’s largest real estate developer recently announced last quarter net profit down 93% to $32 million.  

With footfall and revenue down India’s developers are forced to pay more attention to mall management, promotion and revenue sharing models.

India like the industry at large is being forced to face new market realities.

Empty high streets create opportunities

This week is the deadline for retailers to pay next quarter rent; reports suggest a new wave of cash starved retailers could be forced to shut their doors as a result.

Increasingly desolate high streets are showing visible signs of decline. Experian’s retail consultancy predicts the number of empty shops across the UK will hit 135,000 by end of 2009 – a record rate of 15% of the total. Of those chains that have closed administrators are only selling off a fraction of their estate, leaving a glut of empty stores.

Opportunities

With landlords under pressure, leasing deals can be done. With room for more negotiation, fledgling retailers or brands with aspirations to trial the high street may decide current market conditions present an opportunity.

Charities are getting in on the act.  “C@ Walk”, a fashion retail brand run by animal charity PDSA recently opened its doors in Northampton. Irrespective of your thoughts on the branding and design, the store – stocked with new not second hand ladies fashion – proves that market conditions suit some.

C@ Walk by PDSA

Pop up

While pop up retailing isn’t new, they are usually premium or exclusive affairs; Tyler Brule’s “Monocle” and “Eco Shop” in Westbourne Grove are recent London examples. Product brands like Pepsi, with “Pepsi Proper” have used pop ups to create brand experiences in LA and New York, forcing people to reassess the brand, due mainly to the brands that they partner with.

Pepsi Proper poster

Executed correctly, pop ups provide the means to create an event and sell on the high street. Brand awareness can be created and loyalty generated without having to invest in full retail fit out, permanent staff and all other operational costs. At the same time brands can bask in the glory of bringing energy back to an increasingly gloomy sector.

All that remains to be seen is whether retail brands and brand owners are flexible enough in thinking to give it a try.