Stores and food & beverage to play starring roles in 2025
Despite the ongoing challenges in the retail sector there are positive predictions for 2025 particularly for physical stores with food and leisure looking set to play an increasingly important role on high streets and within shopping malls.
This was a key underlying theme among retail property industry executives who gathered for MAPIC, the sector’s annual conference and exhibition, on the south coast of France in Cannes. According to Chris Gardner, head of European retail at CBRE, the sector has undergone a seismic reset among retailers and investors in property with positive outcomes.
Looking forward to 2025
“I can categorically tell you that retail will be better in 2025 than 2024. It will be an incredibly buoyant year after the last five years when it’s been tough. Covid-19 did us a favour. Online was great [during the pandemic] but then when physical retail opened again people craved the experience. [As a property company] we don’t sell units we sell emotion and feelings,” says Gardner.
A survey of retailers undertaken by CBRE found that 72% plan to expand, with 45% stating a preference for retail parks, but regardless of the type of outlet most agreed that physical retail will be at the core of their business strategies.
Niccolo Suardi, co-head of retail practice group for EMEA at Colliers, agrees with the positive outlook and suggests the stories about empty stores in the media are primarily linked to secondary markets. In contrast, he says the prime locations in cities have few vacancies. “Covid led to a rethink of customer service and brands are rethinking spaces and formats,” he says, suggesting that luxury brands are at the cutting edge of this activity.
Best getting better
This is fully reflected in the scenario at The Trafford Centre where occupancy is now over 99%. Russell Loveland, head of asset management at Pradera Lateral – that operates The Trafford Centre, says: “It’s definitely a case of the best getting better and the rest of retail [centres and high streets] are so varied. Next year the top 10 centres in the UK will be fully let.”
The Trafford Centre recently attracted Sephora, Lululemon and Space NK as part of its constant changing of the tenant mix. “There will always be churn as some retailers upsize, others will be downsizing, while some brands go as they change the way they operate. That’s reality.”
Pablo Sueiras, head of brand account management at Landsec, says he is very much aligned to this belief in biggest and best. He cites that in the UK market one per cent of the top locations account for as much as 30% of the total retail spend. “They are the ones we are focused on. We see a flight to prime and retailers are rationalising their portfolios into fewer but bigger stores,” he says.
Focus on city centres
City centre sites are the company’s preferred assets: “City centre schemes are best as you can leverage what is around you. You’re best placed to respond to trends. Crucially the offer needs to work in that [city centre] eco-system.”
Laura Thursfield, leasing director at The Crown Estate, is very much in the thick of the city centre action in London with Regent Street the primary thoroughfare in its portfolio. To keep things interesting for the 72 million people that make up the street’s annual footfall she requires retailers to typically open their UK or European flagships on the road. She cites Gymshark as an ideal tenant that was a DTC brand that took on a flagship. “It’s the ‘ask’ of all brands that they bring that to Regent Street, says Thursfield.”
Sueiras is also an advocate for actively changing the mix: “Consumers expect newness and change ever-faster as digital provides this. But physical retail finds it hard to keep up. There can be a tendency in the property industry to look for guarantees and sit on your hands. However, the best way is to act and have a determination to keep changing. You won’t always get it right but you will probably do so more often than not.”
Delivering greater experiences
Increasingly important for Sueiras is to create experience-led locations, with food & beverage integral rather than just playing the role of a stop-gap during a day’s shopping. “It has to be a destination in its own right. F&B and leisure makes things less transactional,” he says.
Loveland agrees and suggests the regular brands such as McDonald’s and KFC have to be supplemented with next-level operators in order to boost trade in the evenings and for occasions. He also reveals that some popular local Manchester brands – including Chit ‘N’ Chaat and Hello Oriental – are about to be introduced into the centre to appeal to urbanites in the 18-30-year-old age range who want something cooler.
Definitely at the cool end of the F&B market are the experiential restaurants run by Ephemera Group in France that involve a variety of themes including Under the Sea, Stellar and Jungle Palace.
Jade Frommer, CEO of Ephemera Group, says it is a 360 degree experience with the “wow effect” coming from the video projections around the dining rooms. This is complimented with sound, visuals and bespoke décor including furniture alongside a menu that also reflects the theme. “We’ve six new openings in France over the next 18 months and the dream is to make amazing restaurants for everybody. We’re opening three new themes including Wonder Woods. After France then it will be the rest of Europe and the US for future openings,” she explains.
Driving inclusivity
Equally innovative is the Dans Le Noir concept that involves customers dining in the dark as they are served by visually impaired waiters. There are currently three permanent restaurants – including one in London – but the company also operates an ongoing global programme of pop-ups that are often housed in hotels.
Didier Roche, founder of Dans Le Noir, says the original idea came from his search to identify how blindness can help in projects: “I had this idea for dinners in the dark, initially with supper clubs, highlighting how visually impaired people are impacted.”
As well as creating an interesting experience for sighted diners the concept has also been incredibly beneficial in getting visually impaired people into work. He cites the figure that 60% of people in this grouping in France are unemployed. In some cities such as Bangkok the pop-ups have garnered vast media attention that has contributed to a different perception of visually impaired people in those countries. It is helping convey the message that this section of the community can play an active role in the workplace.
Dans Le Noir is definitely tapping into the growing appetite of people looking for connections that spark something on a deeper level. This has been fully recognised by Daisy Van Gend, innovation & development leader at Ingka Centres, who says the company is working hard to design spaces that go beyond shopping.
Reinventing the shopping space
“Eighty one per cent of customers expect more than just a transaction, they expect a story. We are locations where people come together and Gen Z’s crave physical memories the most and they will be the majority of our customers tomorrow so if shopping centres do not adapt then they will not have a future. When you re-purpose physical spaces then it should go beyond the transaction,” she suggests.
A key element of this major initiative to transform the business model is the Saluhall food halls concept. The first opened in San Francisco in April running across 2,500 sq m with seating for 450 customers who can enjoy a plant-forward offering from 10 different food providers that have been curated by partner Kerb.
Stéphane Keulian, food business leader at Ingka Centres, says the plan is to open further such food halls within Ingka Centres developments in the future: “We are confident and ambitious for a roll-out. We believe it makes sense commercially and strategically. The new locations in Europe will be smaller footprint, about half the size of San Francisco, and include some outdoor space.”
Unlike many such spaces Keulian says people do not have to eat in Saluhall but can simply use it to meet and for working, with the free Wi-Fi. He believes they will be a “magnet” for people to visit and to boost dwell time at Ikea stores that are the anchor tenants in Ingka Centres. With 38 such centres around the world the company is working on how best to develop the concept in order that it best suits these shopping centre environments. The second food hall is expected to open within the next 18 months although Keulian reveals it will not be within the forthcoming Oxford Street site or the existing Hammersmith development.
Experiential opportunities
Along with food halls the other area injecting some excitement into shopping environments are the experience-led operators such as State of Play Hospitality – that runs Bounce and Hijingo outlets in the UK – and Lucky Voice karaoke bars. They were both present at MAPIC where they highlighted their plans for expansion and the benefits they bring to shopping centres and high streets as these environments change.
Nick Jones, development director at Lucky Voice Group, says: “Over the past 20 years we’ve found landlords have changed their perspective – it was wet-led, late-night, but it’s changed. We don’t need to be in prime sites as 70% of customers have pre-booked. Our Devonshire Square outlet [in the City of London] was a driver of footfall for the whole scheme. It’s our best-performing site,” he says.
Nicola Blackford, chief commercial officer at State of Play Hospitality, agrees: “The trend is for people to look for different entertainment. It’s not just a pint in a bar or a visit to a restaurant. Our activities have broad demographic appeal – 25-45-year-olds but also kids and parties, along with corporate business. We’re just part of a night out, other businesses benefit too. We’re seven days a week trading, all through the day.”
