Shopping centres
Strategy shopping centres
In three countries Wereldhave focuses on shopping centres: Belgium, Finland and the Netherlands.
Wereldhave focuses on dominant shopping centres in countries with restricted retail planning. Actively managed shopping centres that are dominant in their catchment area pre-eminently offer possibilities for rental and value growth. In quality shopping centres, occupancy is generally high, while rents fluctuate less than in other segments.
Wereldhave has a preference for shopping centres where value can be added by redevelopment and extension. Refurbishment strategy aims to create more prime retail space and to optimise the tenant mix. Leading (inter)national retailers will be added to raise the attractiveness and competitiveness of the centres.
Trends
In 2011, the conditions on the retail market remained difficult. Lower economic growth restrained purchasing power growth. Consumer confidence has suffered from negative news in the media, slow job markets and the prospect of further belt-tightening. Across the board, food stores (including supermarkets) continue to perform well but non-food sales are losing ground. In the Netherlands, where consumer purchasing power declined for the third year in a row, retail sales have not really recovered from the crisis and retail sales values entered on a downward track from the second quarter of 2011. In Belgium and the United Kingdom declining confidence and moderate inflation translated into slower retail sales growth after the summer.
Demographic changes
Demographic changes, such as migration, population ageing and ongoing urbanisation, are occurring in each of the four retail countries albeit regional differences exist within each country. In general, urban areas still experience population growth, while many rural and border regions see declining populations. This means that retail sales are more concentrated in central, urban areas. This effect is strongest in Finland and the Netherlands. Wereldhave’s strategy is to invest primarily in growth centres.
Internet and cross-channeling
As customers increasingly incorporate internet in their purchasing behaviour, internet sales are gaining market share in the retail market. In 2011 internet commerce grew approximately 20%. It is estimated that in 2011, 7% of consumer purchases in Europe was made online ranging from 5% in the Netherlands to 12% in the United Kingdom. This puts pressure on turnovers and profit margins of physical stores. Wereldhave believes that the future of retailing is in cross-channelling, where the physical shops and websites re-enforce one another. This means that internet threatens low quality retail space, while it can re-enforce good retail space. The use and function of shops may change in the near future. Shops will function more like showrooms, brand profiling and pickup-and-return points, while the actual purchase will increasingly be made online or through terminals in the stores.
In 2011 Wereldhave developed an inclusive internet and social media strategy to combine the best of offline and online retailing. This strategy aims to increase shopping centre footfall and turnover.
Shopping patterns
Consumer shopping patterns are also changing. The shift from efficient ‘convenience shopping’ to leisurely ‘experience shopping’ is slowly progressing. Wereldhave anticipates this shift by expanding its conveniently located shopping centres, giving more room to leisure, fashion and experience shopping. This offers the possibility to add value through actively managing the retail environment, the retail mix and the marketing of a shopping centre.
