The Fall and Rise of Localisation in Town Centres15th July 2021
The Asset Management team here at Sovereign Centros has seen a positive increase in local and independent tenants within the shopping centres we manage. This increase helps provide diversity in centres where historically most of the retail space was occupied by large multiples, interspersed with large F&B chains – giving somewhat an ‘identikit’ feel to town centres.
Alongside the traditional dominant multiples, we are seeing an increased localised feel to our tenant line-up with the presence of smaller local businesses, pop-ups, leisure usage as well as community organisations and arts projects. This is a move that will have undoubtedly accelerated due to the Business Rates Relief brought in by the Government to combat the effects of Covid-19 on the retail economy making these spaces more affordable in the short term. However, it was already happening before the Pandemic as shoppers diversified how and where they purchased goods.
What is abundantly clear is that there a number of benefits accrued from introducing local business to our centres. Not only do they add a point of difference to the tenant line-up but once they have a proven track record, these business can be particularly robust especially when looked at in the context of some former household names such as Top Shop, Debenhams and BHS which were previously deemed to have extremely strong covenants.
Identifying affordable units within a centre enables this activity as the tenants usually need a flexible arrangement initially to see how the business goes and they need quite a bit of help from the centre’s marketing team to improve their brand awareness. However once established, we often convert them to permanent leases which significantly reduces the risk usually associated with smaller businesses.
There are other benefits though. Local businesses add to a centre’s identity, increasing footfall and supporting the local economy. This all improves perception, customer loyalty and drives positive PR which ultimately makes the shopping centre a more viable long-term proposition. Here’s a great article talking about exactly what effect this can have on a town.
Ensuring these businesses have the right look and feel for a sophisticated shopping centre is also important and as some of these enterprises will have less experience in this area, we often provide design advice to ensure these tenants look their best.
We have been working with the local community at a number of our shopping centre assets across the country. Here are just a few examples which exemplify this new approach to asset management.
In Telford, we’ve been trialling the Something Different concept where we have a unit occupied by several independent businesses trading together. We have also been working with a local company called Planet Doughnut. They initially took a trial store which they have now converted into a permanent lease, and it is proving extremely popular with the centre customers.
Over at Corby, we have let a new restaurant/bar concept as a second venture for a successful existing independent tenant. We have converted an independent giftshop’s initial trial lease to a more permanent agreement and we have provided space for a Covid-19 vaccination centre which is run by the independent pharmacist located opposite.
In Basildon we are working with the Eastgate Gallery to take the vacant Topshop unit. They will also be bringing in a Banksy piece as well as various other pieces. Plus, they are currently in conversations regarding Government-funded art classes too.
We are also working with Things Made Public who work with a number of local projects and businesses. One of the projects will take occupation of a void unit for 8 weeks this summer. Here the concept is that part of the rates savings are reinvested into the business to support local operators.
Finally, the Metrocentre in Gateshead has been involved in an initiative around upskilling local people to work in retail, which we are looking to continue later on this year.
Moving forward, while it is still important to have the big retailers in shopping centres, there does need to be a healthy mix which includes F&B, leisure, local businesses (including pop-ups – we recently supported a fashion accessories retailer in Preston) as well as arts.
Balance is key, a good mix of national and international occupiers will always be important, but a centre can only be strengthened by a complimentary mix of local and smaller companies adding a point of difference to the tenant mix.
Customer behaviour will continue to change, and we believe that shoppers will be looking for a more interesting blend of retailers within our centres. That is why we are working closely with local authorities plus the centres’ own management teams who often have in-depth knowledge of what’s hot and what’s not in the local community.
For us it’s very much about investing not only in the shopping centre asset itself but in the community it serves.