Shopping centre owners insist market is stabilising

Posted by Drapers on 4th Aug 2015

The owners of some of the UK’s largest shopping centres have painted a positive picture of trade over the past few months despite the wider trend of declining footfall. 

However, while the larger and more prime centre owners insist footfall and sales are stabilising, some secondary malls are still suffering. 

Data from research firm Springboard and the British Retail Consortium shows footfall declined by an average of 2.4% per month between April and June across the 132 UK shopping centres it monitors. From February to April it was down 1.2% on average. 

At the prime end of the market, Hammerson, which operates centres including the Bullring in Birmingham, Silverburn in Glasgow and Cabot Circus in Bristol, reported a “strong improvement” across all regions during the first half. Sales increased by 2%, while footfall was up 1.2%. 

In an update issued on August 3, it said the start of the school holiday season drove sales up a further 2.9% in the four weeks to July 18. 

Chief executive David Atkins said: “With consumers now feeling the benefit of continued low inflation, meaningful wage growth and low food and commodity prices, confidence is at levels not seen since the 1990s. 

“For shopping centres in particular, consumers are increasingly using them to socialise. They are going shopping then staying for a meal or the cinema.” 

Regional shopping centre owner and developer Intu’s footfall was up 1% across its 15-strong portfolio, which includes the Trafford Centre in Manchester, Metrocentre in Gateshead and Lakeside in Essex, in the six months to June 30. Store sales were up 3.4%. 

Chief executive David Fischel told Drapers: “Footfall was steady, but we use footfall as a guide – it’s not necessarily the most important number. We look to dwell time and we’re really focused on the customer experience. 

“We have sales of £5.5bn across our centres and the average customer stays for 100 minutes, so if we can encourage them to stay for another 10 minutes, that’s an extra £500m in the tills.” 

He added: “I think little by little things are improving and people are getting a bit more confident.” 

Land Securities, which owns Bluewater in Kent and Buchanan Galleries in Glasgow, among others, saw footfall rise 2.5% in the three months to the end of June. Sales were up 3.8%. 

During the same period, footfall rose 0.9% and sales by 3.3% across British Land’s portfolio, which includes Meadowhall in Sheffield and SouthGate in Bath, as well as retail parks, department stores and supermarkets. 

Stephen Springham, head of retail research at estate agent Knight Frank, said: “I think things have stabilised; the market is improving. It’s better than the corresponding six months last year.” 

However, Diane Wehrle, marketing and insights director at Springboard, pointed out that the increases in footfall were only “marginal”. She added: “Many of these are prime centres that people naturally gravitate towards, with a digital strategy to engage with shoppers. 

“The larger centres are stabilising slightly because people want an experience when they go shopping, but in the sub-prime shopping centres we are seeing real drops in footfall. I think [the prime shopping centre owners] are putting a positive spin on it.” 

Mark Robinson, investment director for Ellandi, which owns 22 shopping centres in secondary locations such as Eastleigh in Hampshire and Chatham in Kent, said: “I think there has been improvement across the board; consumer confidence is at a high, which has to improve performance even when you account for a certain amount of spend drifting into ecommerce.

However, within the secondary market there is an increasing segmentation. Those bought by us, NewRiver Retail and some of the other specialists will be seeing an improvement in performance because we’ve investing in the customer experience, but there’s still a huge amount of secondary malls that have been under the same ownership for a long time and are underinvested.”

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