Hammerson this week set out how its shopping centre strategy had changed as the shape of retail tilts further towards multichannel selling.
It said consumers’ growing use of both in-store and online channels, and growing interest in shopping from middle-class tourists, meant that both retailers and consumer brands were demanding stores in large, high footfall locations that attract shoppers to a cluster of stores, dining and leisure activities. Competition between retailers and brands meant rents are growing at those sites – although retail sales were down by 2.7% across its UK portfolio, and footfall rose by 0.4% during the year. Store retail, said Hammerson, needed to be frictionless as "time-short lifestyles and multichannel retail increase expectations for faster access to goods and services." That means good transport connections, and convenient service at sites where it is easy to find products. To that end it has focused on retail design, consumer experiences, and on digital initiatives including a Style Seeker machine-learning based product search tool. It has also focused on hands-free shopping.
The property development and management company, which owns centres including Bristol’s Cabot Circus (pictured), said that in recent years it had rebalanced the weighting of its portfolio to "high footfall destinations" in major UK and European cities, and that a strategy of creating "the space that today’s retailers need to showcase their brands" had seen it achieve its highest level of letting than in its 75-year-history. Occupancy stood at 98.3%.
"Not all retail is equal and not all locations are well placed to support the future needs of brands," said chief executive David Atkins. "But with 44m visitors a year, our unrivalled consumer insight and relationship with retailers ensures we target the next generation of brands, as we proactively rotate retailers and expand winning formats. In this evolving retail marketplace, winning retailers increasingly choose our exceptional destinations to achieve their growth potential and so, our role as an expert operator of retail property is more significant than ever."
The update came as Hammerson reported rising income and profits in the year to December 31. Net rental income of £370.4m was 6.9% up on the same time in the previous year, while reported profit of £388.4m was 22.4% up on last time. Hammerson also said the value of its portfolio stood at £10.56bn on December 31 2017, up by 5.9% on last time.
Hammerson is expanding through its acquisition of intu, which will see it double the value of its portfolio to £21bn, with a presence both in the UK and Spain - and is set to complete in the final quarter of this year.
It said its UK shopping centres had proved "relatively resilient" despite challenging markets. It said that while retail sales at its centres were down by 2.7% overall – slightly ahead of the UK benchmark of a 3% fall – they increased by 3% when new extensions at its Southampton and Leeds centres were added in. Footfall growth of 0.4% across its centres was ahead of the benchmark of -2.8%. It also said that "significant additional online sales" were generated through the halo effect of flagship destinations, an aspect that "continues to grow strongly".