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Can local shopping centres co-exist?

10 February 2017 by William Ogle

Westfield Stratford City in Central London could be considered as a wonder of modern retail.

Opened by the Westfield Group, it was the first major step in an attempt to rejuvenate the area in the build-up to the Olympic Games the following year. For many, it has been seen as a rousing success.

But its inception and opening didn’t come without criticism. At the time of opening and in the months that followed there was a clear split in how this towering glass fortress was viewed.

Will shopping centre blog.pngWestfield Stratford City. Source: LDC

"If you go over to Westfield, it's heaving with people," one shop owner in the neighboring Stratford Centre was quoted in January the following year. "Quite clearly, we are going to be destroyed. We haven't got a long-term future.” His store closed six months later.

lan Goldman of Catalyst Capital (Owner of the Stratford Centre) had a different view: "The Stratford Centre provides a convenience and value offer and they (Westfield) offer more lifestyle shops. We think the two schemes work well together. People will go look across the road and I suspect they will then come back again to what they know.”

Will shopping centre blog 2.pngThe Stratford Centre. Source: LDC

Five years on and I’m pleased to tell you that the Stratford Centre is still standing. Defying the doomsayers, it has stood its ground and refused to become a walkway of vacant units like so many other similar shopping centres and arcades.

Using LDC’s location insight data, we can compare the two centres side-by-side:

Westfield Stratford City opened in 2011, has 352 units and a vacancy rate of 6.6%. The Stratford Centre, however is a much older centre which opened in 1974, has 61 units and a 4.9% vacancy rate (as of December 2016).

Let's compare the two centres side-by-side:

Infographic (12).jpgFigure 1 Openings and Closures Activity for Westfield and the Stratford Centre. Source: LDC

Openings in Westfield over the past 12 months included Beverbrooks The Jewellers, Typo and Misguided and closures included As Nature Intended, Jones Bootmaker, Forever 21 and Sweatshop. Openings in the Stratford Centre included Gadcet and Prime 5D Centre (which also closed in the same 12 month period), and closures included Thomas Cook and Reed.

Infographic (13).jpg
Figure 2 Percentage of Premium, Value and Mass Retailers. Source:LDC

The Stratford Centre almost matches Westfield in the percentage of Mass retail, but does not house one Premium retailer within its walls.

Infographic (10).jpgFigure 3 Percentage of Multiples vs Independent Businesses

From this data we can see that the Stratford Centre has fewer units, fewer luxury retailers but a similar mix of multiple and independent retailers.

Yet based on the last 12 months, it appears to be the more stable shopping centre.

Fewer closures and a lower percentage of vacant units.

The Stratford Centre has survived (admittedly, not entirely unscathed) because it knows its market. It may have roughly the same percentage of mass retailers and have duplicates of several shops (Holland & Barrett, McDonald’s, and KFC just to name a few), but unlike Westfield that contains almost quarter premium/luxury retailers, one-third of its tenants are value retailers.

There is no Prada, no John Lewis, no Apple Store. It has a Poundland instead of a Waitrose, offers a Shoe Zone instead of Russell & Bromley and a CeX instead of GAME.

CeX.jpgCeX in the Stratford Centre. Source: LDC

The Stratford Centre has defied public expectation. It has shown that shopping centres in close proximity CAN coexist.

But how have they done it?

  • From what we’ve seen, the size of a shopping centre not always equate to its footfall, popularity, nor to the amount of churn of retailers.
  • Focusing on their strengths and appealing directly to a clear demographic is key in ensuring longevity.
  • Location can play an important factor. Although Westfield Stratford City is the end of multiple transport routes, Stratford Centre is a main connecting walk through between the high street and the transport hub.

 So, 1-0 to Stratford Centre? Based on the data, it seems that way.

But relative stability is a double-edged sword. If left unchecked, it can lead to stagnation. Whether we like it or not, change is important. With occupancy, a higher amount of churn isn't always necessarily indicative of something negative. Consumers can be fickle and, especially amongst the key millennial demographic, brand loyalty does not last.

So, flipping the statistics in this view, Westfield can afford to experiment with retailers and pop-ups, even if it results in having more empty shops. It still has more than enough on offer to draw people in. The Stratford Centre, being a smaller and a more focused offer, doesn’t have that luxury.

It’s a sombre thought to consider, but hope is on the horizon. Plans for the development and creation of a “Stratford Island” are in motion. The aim is to increase the number of retailers, but keep its core ethos of value for money.

With an increase in housing developments and in turn, increasing populations, the demand for what both centres offer is increasing. This coupled with an increase in transport connections could be the key to each centre finding it's place in the market. Going forwards, survival of these centres may fall down to the Stratford centre offering convenience to consumers and Westfield offering the 'destination' shopping experience.

The Stratford Centre hasn’t forgotten that, in reality, it is only competing against itself, not its heavyweight rival and this may be the key to its survival.

William Ogle is a Researcher in the Property Sector at LDC and has been with the business since July 2010. 

Download the 2015 Scottish Retail Report  

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