An introduction - Real Estate, meet the Real World.
Posted by Morgan Garfield on 20th Mar 2018
Matthew Vincent writing in the FT opened a recent article with the following paragraph, which I love:
“Apparently, there are still people who buy things by travelling to large buildings called shops, viewing and selecting items and then handing over papery notes and metal discs. Amazing, eh? They probably still read newspapers. And don’t expect informed comment on the day’s business news to be written, edited and electronically delivered to them by 8am every morning. Who are these people? I rather like them.”
The reality is that hardly any of the 60 million people in the UK want to consume business news, period, let alone electronically or before 8am. Yet, if you are an FT journalist you are focused on those that do and you have a bias towards viewing the world through their eyes. This probably forces Mr Vincent to be at his laptop in the early hours to satiate the demands of the financial and business elite.
Whilst mingling with the elite of the property world in Cannes last week it occurred to me that our industry is similarly self-absorbed.
The most popular question we faced was “What is happening in retail? Nobody shops anymore it is all about Amazon.” For the wealthy few who can pass-off a week in Cannes as work, who shop from their desk for high value items unconcerned about delivery charges, this may be the case. But as with readers of the FT, the relatively wealthy who work in Real Estate do not represent the Real World.
The Ellandi portfolio gets 160 million visits from “normal” people across the UK. These people come to buy every-day essentials often from value and discount retailers. They rarely read the FT or visit Cannes. They typically have a limited budget and want to ensure that they get the best value for money for their families.
Our 2018 shopper survey shows that 76% visit our Community Shopping Centres at least once a week and that only 19% shop online as frequently.
The vast majority of the UK population choose to shop in their local centres as it fits around their daily lives and offers them value for money. It also gives people a social experience that many people enjoy, 43% of our shoppers state that this is a factor as to why they visit our shopping centres.
As Mr Vincent points out in his FT Article, selling a Primark t-shirt for £2 online is not economical and this applies to a whole range of lower value essential goods. It is neither economical for retailers or shoppers to facilitate low value orders on-line, the best channel for both sides is the shop.
There are challenges in retail but it is not all about Amazon. The squeeze on disposable incomes, as inflation outstrips wage growth for many “normal” people is of much greater concern to retail, property and society than the internet. Again, this impacts some more than others and is not reflected in the quantum of Amazon parcels delivered to gleaming offices across Central London. (Deloitte research shows that higher income consumers are 52% more likely to shop on-line.)
Real Estate performance is a derivative of what happens in the Real Economy. To understand what is happening in retail property requires that we make an effort to understand how real people shop, as most Real Estate professionals are not really exposed to the Real World. There are “…still people who buy things by travelling to large buildings called shops, viewing and selecting items and then handing over papery notes and metal discs.”
The great British public at large will not be reading this LinkedIn post, browsing the FT or going to Cannes but they are shopping at Community Shopping Centres across the country proving that there is still life beyond Amazon and a robust future for essential Community Shopping Centres.
Quoting Matthew Vincent in Financial Times on 26th February 2018: Opening Quote: Primark and Hammerson in sighting of "shoppers"