A few thoughts on business models and alternative use of space
Structural change in Retail – long clicks, short bricks…
- Boohoo and Asos’ share prices speak for themselves but traditional retail has had a much tougher ride of late.
- The department store sector is shrinking and the only winner is John Lewis.
- When a newer, fresher rival is taking share in a contracting market, that spells big problems for the incumbents (Debenhams, Marks & Spencers, Next, House of Fraser).
Evolution and obsolescence:
- Franco Manca has opened a unit in Debenhams’ site at Westfield Shepherd’s Bush.
- This joins French Connection and Sports Direct concessions as Debenhams seeks to better utilise space.
- M&S is closing 75 of its stores and is pivoting towards food.
- House of Fraser has warned of a ‘volatile trading environment’ that is unlikely to change; distressed debt vultures have been snapping up its high yield bonds in Luxembourg.
- This all begs the question: in today’s digital world, would you build a department store from scratch?
- The answer is no.
- Similarly, for Game Digital (aka. Game Physical Shops) –would you build an estate of 580 high street stores to sell digitally downloadable games?
- The answer, again, is no.
Excess pub space
- Meanwhile over in the pub sector, Punch Taverns is looking to unlock value in its estate.
- This has so far involved tie ups with Boparan’s Harry Ramsden fish and chip shop brand.
- It is on record, along with Enterprise Inns, as saying it has underutilised space.
- Think car parks, beer gardens, upper floors that could contribute more. Young’s has tackled this with its Burger Shack, for instance.
- Langton has written of a capacity problem before; even with new sites slowing there is still plenty of slack in existing units.
- As markets and consumers change, physical estates must be proactively managed.