Retail property developers British Land and Land Securities this week both reaffirmed their belief in the continuing importance of stores to today’s shopping environment, despite the growing popularity of online shopping.
Both have moved towards a strategy of selling smaller units and second-tier shopping centres while focusing on top level destinations, which for Land Securities means Bluewater, Trinity Leeds and Westgate Oxford and for British Land means centres such as Sheffield Meadowhall (pictured). Larger centres, said British Land in its full-year results, give it the opportunity to use its “placemaking expertise to drive value”.
“The way people shop and spend their leisure time continues to evolve, with technology lying at the heart of this,” said British Land in full-year results out this week. “It has become increasingly clear that while online sales continue to grow, physical space remains at the heart of how people shop. But today, successful destinations need to be about more than just shopping – they are more mixed use, often with food, drink and leisure, and are more embedded in the communities where they are located. Our strategy in retail is to focus on creating outstanding places for modern consumer lifestyles, places for people to shop, eat and be entertained.”
The property developer and retail operator’s strategy has been to focus on larger, multi-let retail property, while selling off its smaller units. These larger sites, it said, give it the opportunity to use its “placemaking expertise to drive value”.
The comments came as British Land said revenue came in at £590m in the year to March 31 2016, 6% ahead of the £556m reported at the same time last year. Pre-tax profits of £1.3bn were 25% lower than the £1.8bn reported last year, but underlying profits of £363m were 16% ahead of the £313m last time. Half (50%) of British Land’s property holdings are in retail.
Chief executive Chris Grigg said: “We have delivered another strong set of results with performance underpinned by strengthening rental growth across our business. We are focusing the business around long term trends and continue to see the benefits of the investments we have made in recent years. While we are mindful of the impact of market uncertainty, our high quality portfolio, flexible development pipeline and robust financial position continue to mean that our business is both resilient and well placed for the long term.”
Meanwhile, Land Securities, in full-year results published today, said: “Shopping is more and more about spending time as well as spending money. People want to enjoy a fantastic day out in a place that offers great brands, food entertainment and atmosphere. While cost and convenience continue to drive growth in online retailing – at the expense of physical stores – the most successful shopping destinations offer a unique experience. And the best retailers need to be in those locations.”
Chief executive Robert Noel warned that a vote to leave the EU, in the referendum to be held on June 23, would lead to business uncertainty and that this in turn would slow decision-making, driving down demand in its market. But, he added: “This is a decision for the British people, not businesses. it is up to individauls – including those amongst our customers, communities and partners – to decide what’s best. As guardians of shareholder capital, our responsibility is to position the company so it can thrive whatever the outcome. That’s what we have done.”
The company reported a drop in pre-tax profits, which came in at £1.3bn in the year to March 31, down 45% from £2.4bn at the same time last year. Revenue profits of £362.1m, which include contributions from joint ventures, were 10% ahead of the £329.1m reported last time.
Both sets of figures came as British Retail Consortium figures suggested a continuing decline in visitors to stores, with overall footfall for April 2.4% down on the same time last year. The decline, said the BRC-Springboard Footfall and Vacancies Monitor, was consistent with flat sales growth and “slowing economic growth expected by major forecasters”.
Visitor numbers fell by 4.7% on the high street, and by 0.7% to shopping centres. Retail parks continued to see growth, up by 1.1%.
BRC chief executive Helen Dickinson said the figures would make “sobering reading for retailers battling to attract customers into their shops”. She added: “Ultimately these are clear examples of the challenges that UK retailers face at the moment. Taken together today’s figures tangibly demonstrate the impact of the structural change happening in our industry. It’s clear that retailers, local authorities and the Government need to redouble their combined
efforts to mitigate the impact of this change on our high streets and town centres.”
Diane Wehrle, marketing and insights director, Springboard , said: ““April’s footfall figures certainly echo the high street decline seen over recent months, which can be attributable to the poor weather for this time of year, but with digital sales and retail parks also slowing down it signifies something more at play. The rise in unemployment and economic
uncertainty in this pre-EU referendum period has undoubtedly adversely impacted consumer activity. We know that cuts in retail spending are the first line of defence against threats to household budgets when consumer confidence is knocked.”
