retail income strategy in rail (uk)
TRANSCRIPT
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Consumer Focus
o
Navigate
Find
Decide àFacilitate the shopper journey
àTailor the range to shopper needs
àSimplify the buying process
Traffic in itself never buys anything, it is traffic investing time that becomes shopping.
H.Sorensen
Macro space & assortment:
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Retail Landscape Competition
Financial performance Trading patterns
Consumer Profile & Needs
Combined Approach
Station Strategy:
àmacro space split by super-category
àspace allocation by category
àlogical adjacencies
àbrand selection
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Base Rent + Turnover % lever
method
Strategic
↓CAPEX None
Station Strategy
Tenant Mix Revision
Performance Improvement
cost ↑CAPEX
Income Drivers
Space
Brand
Sales
Multi-unit Single-unit
Turnover %
Operational
Landlord’s perspective • Space—redevelopment of property asset, creation of new retail units: new space, new brand Brand—swapping out of under-performing tenants for stronger alternatives: same space, new brand Sales—driving turnover increase in specific units through operational improvement: same space, same brand Consumer focus permeates all three income avenues. • Brand route is the most profitable for the Landlord. The size of the opportunity is impressive—Liverpool St generates £16m in income on just 20%
participation rate. The consumer is there 129m times a year. The challenge is to put forward the right retail offeràStation Strategy
• Limitations: operational constraints, time-frames, restrictive covenants such as protected leases
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Manchester Piccadilly
Ground Floor Balcony
Casual Dining
Pub
Bar
+14% Income Tenant Mix Revision
• Manchester Piccadilly station--second most affluent station
across the estate, 40m annual footfall, 42% participation rate, 80% ABC1, long dwell, infrequent visits, predominantly leisure, no strong competition in immediate vicinity.
• Key aspects: ensure the brand selection matches consumer
profile & needs, maintain clear zoningàDining/Retail/Grab’n’Go, “sign-post” locations.
• Six initiatives—Hotel Chocolat, Accessorize, Sainsbury’s, Natwest, Oliver Bonas and James Martin’s Kitchen.
• Tenant mix revision with little Landlord capital outlay set to deliver incremental £677k in annual station income.
• Importance of consumer focus in tenant mix planning.