What has Land Securities been up to lately and what are your immediate plans?
Most specialist retail companies in the UK today do only a limited range of investment, but Land Securities still has a wide range of activity. We think that this is important because retailers want to manage different channels, and this helps us to form a deeper relationship with them. Recently we bought £750 million pounds worth of leisure property and we are the UK’s biggest leisure landlord, with 20 people in the company working exclusively in leisure: cinemas, restaurants, bowling alleys, casinos and hotels which now constitute 31% of our portfolio. The biggest advantage of this field is that it is growing and it has less competition from the Internet. It is an industry where you have to physically be there to experience the product, while in retail you do not have to physically be there anymore.
We are also building quite a bit at the moment. We are building the first major shopping center in Oxford, an internationally famous and vibrant student city, we are redeveloping and extending our Buchanan Galleries shopping center in Glasgow, and we have just been named as the preferred developer of Guildford town center, which is the richest commuter town around London.
Are your leisure developments connected to your shopping centers?
About half% are stand-alone leisure parks, and the rest of it is embedded into our shopping centers. When you look at Bristol or Leeds they will often have 25 or more different restaurants and a cinema. Such users typically generate 20-25% of the income. In the old days shopping centers used to have a few restaurants or coffee shops, but their use and often location was seen as secondary to the retail function. Today in Trinity Leeds we have dedicated a whole floor just for leisure and catering called Trinity Kitchen, positioning it as a massive anchor.
Do you think that developers today focus on their leisure offer as a way to attract customers and boost retail sales?
Leisure helps increase sales, but it is also a strategic move. The UK, America and Korea have some of the highest internet penetration rates in the world; we have even reached the point where you can have some products delivered to you on the day. Therefore, what we need to do is to make sure that our centers are not just places where you go to buy things; they are places where you actually want to be and have an experience. We’d like to make people want to be in our schemes, not to have to go there to make a purchase. What you find today is polarization: the top locations really see strong growth while other locations become stagnant.
Do you agree with the view that going forward, there will be a few big flagship stores and gradually smaller stores will become extinct?
I think there will be more convenience stores, so when people need to get something quickly those convenience stores will do very well. The fashion retailers want bigger and bigger stores now. We have a 6,000 m² flagship store in Glasgow for Forever 21; you can’t put that in a secondary shopping center. The question is: what do the secondary shopping malls have to offer? If they have food and convenience goods, they can survive. If they don’t they could get stuck in the middle.
Do you take advantage of technological developments in your shopping centers?
Yes, technology and data is an important focus for us. Trinity Leeds, which opened in March, is the most digitally enabled mall in the UK -we have a mobile application and we are very active in social media, but I think the key is the engagement it affords us. We are excited about the fact that we have 100,000 Facebook likes and we constantly produce a lot of content to get people engaged, because that is crucial nowadays. We are also very keen on loyalty programs because the future is about giving people the reason to come back again and again. We are trying to develop more bespoke marketing techniques, using technology where we can target a particular customer and tell them what they need to know —that’s the future of marketing.
In Trinity Leeds we have added a large number of digital screens providing entertainment, commercialization, competitions and interaction. In the future, people will want buildings which respond to them, instead of just sitting there and being passive. We recently hired new digital experts in the company and increased our expenditure into this sector. Sometimes it can be very scary for traditional retailers and property people, so you need to involve lots of Generation Y and tech-savvy people in your team - ensuring you have many different views, otherwise you will be left behind.
Is it all about the experience then?
Yes, and it is all about making it personal and relevant. Consumers are all getting more demanding; we want better brands, better service, more relevant advertising. In a way, retail property is becoming a service industry, so at Land Securities we have a big operations team whose job is all about customer service. I think that shopping centers can learn a lot from outlets, airports and department stores, which are generally more adaptable and changeable. In the old days, you would let 100 stores and you would actually want them to stay there forever. Now you want to change them regularly. Stores have to be attractive and well fitted-out, with the best store managers and customer service so that they can drive sales in your center.
Do you have any experience with pop ups?
We have conducted some trials with some of our own pop-ups and they were really successful. In Trinity Leeds we actually have pop-up restaurants, where we bring street food vendors inside the building with their mobile kitchens, and they can cook street food as if they were out in the open air in the street.
Pop-ups are not always about making money, but rather about adding an added dimension and vibrancy to a center and getting the social media and chatter going. Big, established brands have already started launching pop-ups, trialing new concepts - and this will become part of the brand experience. So if you own a center or leisure scheme with a strong reputation and brand, then brands will want to get associated with it, and they will pay for screen advertising or pop-up shops. This sort of exposure will become really important because these days it is too easy to avoid brand exposure, so advertisers still need mass market locations to find people and interact with them, and shopping centers can do this better than anyone.