Introduction
Nick Bubb, Retail Consultant, commented “it seems like only yesterday that the Bull Ring shopping centre opened next to New Street station in Birmingham, but it’s actually 12 years ago and the fact that this development, with its iconic Selfridges department store, has stood the test of time shows that there is a future for well-conceived shopping centres in a digital age.”
Figures from CBRE confirm this view highlighting that investment in UK shopping centres was at its highest for 10 years in 2014 – so, as Martin Newman, CEO, Practicology, noted “the money men are confident of future returns.” Property developers should therefore feel comfortable with the notion of building shopping centres in this digital age because the pipelining is growing rather than the opposite.
However, what is also true is that shopping centres need to adapt to and harness digital possibilities if they are to continue to flourish. Mike Watkins, Head of Retailer and Business Insight, Nielsen UK, commented, “the most valuable customers of the future will be the ones who shop in-stores and online and this is where shopping centres, with a unique blend of leisure, retail and lifestyle have an advantage over many high streets or traditional retail parks.”
As such, in order for shopping centres to differentiate, properly embrace the modern, connected consumer and continue to thrive, centre operators are considering additional strategies. These include:
- Adding a sense of occasion and making visiting a shopping centre a fuller, enriching experience.
- Selecting a location that enhances convenience for the time-poor consumer.
- Designing shopping centres to act as a hub for the community in which they are located with the combination of retail, social, work and leisure spaces.
- Consider adapting the traditional business model
The KPMG/Ipsos Retail Think Tank (RTT) met in October to discuss what the future of the shopping centre looks like, whether it’s centres at the premium end of the market or more traditional, local hubs, and how these sorts of outlets stay relevant in the digital world. The RTT also went off-site for this quarterly meeting, taking the opportunity to visit the new Grand Central centre and John Lewis store in Birmingham for further insight.
What do consumers want?
Martin Hayward, Founder, Hayward Strategy and Futures, pointed out “consumers are, and always will be analogue entities in a digital world.” On the one hand, having access to boundless virtual aisles at your fingertips adds choice, value and convenience, but on the other, consumers still like to peruse, touch and feel, particularly when it comes to fashion and beauty products. The human interaction and customer service, which is only possible in-store, also remains important to shoppers.
Added to this, Martin Hayward also posed the question “Why do pensioners go shopping on Saturdays?” It would undoubtedly be easier and quicker for pensioners to shop midweek when the stores are much quieter. However, they choose to shop on at the weekend because that’s when everyone else shops so you get something far more like the buzz of a marketplace which makes the experience more fun.
Not only does this suggest that efficiency isn’t everything, it also means that the in-store environment has the potential to add colour and humanity to a shopping trip that will never be possible through digital channels alone.
With increasingly connected shoppers, the role of the shopping centre in the digital world is therefore about getting new products, services and experiences in front of consumers in an innovative and engaging fashion. Digital can still enhance the in-store experience through the likes of personalised messaging but these channels compliment rather than replace the physical store.
A Destination
Internet shopping typically allows greater choice and convenience at a lower price. This means that shopping centres need to offer a different, more engaging experience across multiple demographics in order to remain relevant. With this in mind, Mike Watkins, Head of Retailer and Business Insight, Nielsen UK, suggested “shopping centres are the only true destination shopping trip.” However, in order to be successful this needs more than a handful of “anchor” clients, a cinema and a food court in order to drive traffic.
A good example of a shopping centre creating a destination to shop is Trinity Leeds. In its first year of operation the centre attracted 13 million shoppers and increased Leeds’ overall visitor numbers by one million. But aside from the novelty factor, what has really driven footfall at Trinity Leeds is the leisure offering which includes an Everyman cinema, premium dining options and a street food area with regularly updated food vendors.
Added to this, many shopping centres are increasingly offering entertainment for children. This allows parents to shop, watch a film or have a meal in relative peace and, if the entertainment is good enough, the kids see this as a “treat” and actually leads to the parents visiting the shopping centre more regularly.
Westfield London played a pioneering role in the destination shopping centre concept, stamping its mark on the Capital’s hospitality map and curating a culinary mix that catered from fast food to fine dining. However, the centre also opened KidZania earlier this year, an educational child-sized indoor city equivalent to the size of Leicester Square. Children aged between four and fourteen can try out a range of professions – playing a surgeon, firemen or fashion stylist for the day – in an ultra-realistic, indoor replica of a city. On entry to the park, the kids are tagged electronically with a bracelet allowing parents to keep track of them, while they relax or go off shopping.
David McCorquodale, UK Head of Retail, KPMG added “the best shopping centres offer a great experience all under one dry roof. Combining easy access, free parking, mix of retail theatre and offering, food and leisure facilities – something for all – premium shopping centres provide the epitome of an experiential destination facility, driving footfall and dwell time.” It is the shopping centres that embrace the concept of destination shopping or offering a “day out” with a touch of retail that will continue to thrive in the digital world.
Consumers crave convenience
Martin Newman, CEO, Practicology, said “the best performing centres in the UK generate high footfall by providing convenience or are a destination (for leisure as well as shopping).” So, for the busy, on-the-move consumer, convenience in terms of location is everything.
The new Grand Central development in Birmingham is a prime example of this. 40 million people use New Street station below the shopping centre annually which ensures a captive audience of travellers and commuters who are able to buy goods on-the-go, distress gift purchases, and also collect online orders.
As a result, many shopping centres work extremely well as fulfilment points for click-and-collect services in addition to providing inspiration and a showroom environment for consumers who want to complete purchases online via their own devices or in-store terminals.
However, as previously highlighted, technology and the digital marketplace also have a role to play in order to ensure the future of the shopping centre. Therefore, taking this idea a step further, shopping centres could look to harness social media feeds to allow consumers the opportunity to purchase goods or services from all the centre’s retailers and collect in one, easy to find, location.
David McCorquodale, UK Head of Retail, KPMG, suggested “centres working with retailers to provide a single retailer agnostic click-and-collect facility can work with ease and provide a frictionless experience for the consumer.”
Creating community
Community is another differentiator for some shopping centres. Many continue to observe the “death of the high-street” affecting towns all over the country, so the model of a community orientated space is one that is relevant in many places in the UK.
Thus, a shopping centre that has value retailers competing under one roof within a community; that allows shoppers to compare bargains, pick up necessities and access essential services like a post office or a job centre as well as offering leisure facilities can thrive and survive as a community hub.
Added to this, shopping centres have an edge over the internet shopping experience when it comes to addressing demographic differences in the population. For instance, older consumers with a relatively high disposable income may want a safe an environment to socialise, which could put a greater emphasis on fine dining or theatre/concert venue. Alternatively, rising property prices and population growth are likely to mean younger people are increasingly living in a more condensed environment. These consumers may be looking for a more open and green space to spend their leisure time. Shopping centres that adapt to these sorts of trends are for more likely to remain relevant to the local community and also not be so impacted by the digital age.
Dr Tim Denison, Director of Retail Intelligence, Ipsos Retail Performance, highlighted that for shopping centres “acting as a community hub, meshing dwelling, working and social spaces together, such as the soon to be completed Friars Walk development in Newport…the future looks bright.”
Changing the business model
Martin Hayward, Founder, Hayward Strategy and Futures, pointed out that as the use and access to data has become more and more prevalent, it allows retailers to better engage with consumers. “We have the opportunity” he said “with their permission, to know our customers in intimate detail. We have the opportunity to talk with our customers whenever and wherever they are.” The possibilities opened up through data are significant for shopping centre operators, but may also mean they need to consider changes to their business model to be more than just providers of real estate.
For example, data could allow for an additional service offering with the centre operator delivering real-time footfall analytics and customer insights to retailers through the use of central localisation technologies. David McCorquodale, UK Head of Retail at KPMG, further noted that “This may mean a change to the financial model as well, with retailers and shopping centre operators working on a joint physical and digital revenue model or deriving some form of ‘services’ charge for data services provided.”
As such, for the centre operators prepared to embrace the possibilities technology affords and consider evolving their business model in order to drive change, a new structure of shopping centre may emerge in today’s digital world. Similarly to how web design has taken over.
Practical tips
However, despite shopping centre’s embracing the concept of destination shopping, making sure to cater for convenience or creating a sense of community, there are practicalities to consider in order to continue to thrive.
With so much to include in these spaces, shopping centres are getting increasingly bigger. So in order to prevent shoppers from being overwhelmed James Knightly, Senior UK Economist, ING, suggested “a greater use of zonal shopping so consumers don’t get “lost”. This can also allow a deepening of the relationship with the customer by offering a more entertaining and interactive experience.” For instance, sports shops in close proximity to a sports centre or a technology zone with relevant retailers, but also where manufacturers can showcase new innovations before they come to market.
In addition, Open Access Wifi, something which was once rare, is now expected in any large scale retail outlet. In a connected world where people use smart phones as part of the shopping experience, whether it be to make price comparisons or receive special offers, consumers expect to be able to get online anywhere, anytime. David McCorquodale, UK Head of Retail, KPMG, commented “Free wifi should be a given in any shopping centre, almost like toilets – digital natives can’t last without wifi!”
Therefore, shopping centres that get the basics right, truly understand what consumers want when they visit, and also harness the power of technology will have a bright future.
Conclusion
It is important to keep in mind that the future of shopping centre is not about competing to outdo the digital sphere – this isn’t either/or – consumers have such diverse shopping habits in today’s connected world that there is room for both and likely even more channels to engage with shoppers and entice them to spend.
In fact, new technology tools can be used to increase engagement both in and out of store so the key is remembering that technology is not a replacement for the physical, rather an enhancement. Mike Watkins, Head of Retailer and Business Insight, Nielsen UK pointed out “it is no longer just about attracting shoppers to new stores, it`s now about getting new products and services to the increasingly connected shopper. This is the role of the shopping centre in the digital world.”
As such, the RTT concluded that the digital world, through the competition created by online shopping, has not only led to the design of better shopping centres, but will be instrumental to their continued improvement. As Dr Tim Denison, Director of Retail Intelligence, Ipsos Retail Performance, said “it may seem counterintuitive, but the digital age is helping to secure the future of the shopping centre within the retail ecosystem, rather than put it under threat.”
Nevertheless, owners, retailers and management teams also need to acknowledge that the shopping centres of the 21st century actually mean being more than just a “collection of retailers”. Whether it’s embracing the idea of destination shopping, selecting locations and offering services to cater for convenience, creating a sense of community or evolving the traditional business model, shopping centres in the digital world need to extend beyond a location where shoppers simply go to make multiple transactions.
In fact, the RTT further concluded that idea of the shopping centre as we know it might become a bit of a misnomer in the future and rather than the activity of shopping being its anchor, we may see a shift such that retailing is only a constituent part of a multi-purpose, multi-activity space.
Part II: In detail – Individual views of the KPMG/Ipsos Retail Think Tank members
James Knightly, Senior UK Economist, ING (348 words)
A key selling point of internet shopping is that it typically allows greater choice and convenience at a lower price. This means that shopping centres need to offer a different, more engaging experience. The days of being able to provide merely a few “anchor” clients, a cinema and a food court in order to drive traffic have gone.
With shopping centres seemingly getting ever bigger we are likely to see greater use of zonal shopping so consumers don’t get “lost”. This can also allow a deepening of the relationship with the customer by offering a more entertaining and interactive experience. For example, providing a sports centre with sports shops in close proximity or a technology zone where manufacturers can highlight new innovations that may eventually come to market.
Consumers may also be looking for something new – something that they are less likely to come across when browsing the internet. Shopping centres could follow the example of craft markets and pop-up stores that are frequently changing which would offer shoppers a “surprise”.
Shopping centres are also increasingly offering entertainment for children. This allows parents to shop in relative peace, watch a film or have a meal/drink. If the entertainment is good enough, the kids see this as a “treat” and actually leads the parents visiting the shopping centre more regularly.
In addition, shopping centres will need to address demographic changes – something that can give them an edge over the internet shopping experience. An ageing population with a relatively high disposable income may want a safe environment to socialise, which could put a greater emphasis on, for example, fine dining or theatre/concert venue. Furthermore, rising property prices and surging population growth are likely to mean younger people are living in a more condensed environment. They may be looking for a more open and green space to spend their leisure time.
Other factors that may help include loyalty programmes that cover the whole centre, while access to the shopping centre always needs to be addressed– train or tram lines and improving how easy it is to park at busy times.
Dr Tim Denison, Director of Retail Intelligence , Ipsos Retail Performance
At first glance it may seem counterintuitive, but the digital age is helping to secure the future of the shopping centre within the retail ecosystem, rather than put it under threat. Shopping centres are evolving beyond being utilitarian locations where shoppers simply go to make multiple retail transactions. If they want functional experiences they can go on line. Owners and management teams acknowledge that the shopper centres of the 21st century have to offer more.
For their retail customers, the basic needs are for larger footprints, higher footfall and fair rents. Impressive architecture, clever planning, strong tenant mixes and effective transport links all help to meet these goals, but in themselves are no longer sufficient grounds for guarantee of survival. Research data show that the direction of travel is for people to shop in fewer geographical locations and less frequently for comparison goods. Our own data show that footfall volumes in these stores are over 15% lower than they were only 5 years ago.
Yet for centres that meet the basics above, that embrace modern consumer living and are responsive to change, the future looks bright. There are various ways to achieve this, including:-
- by offering a sense of occasion or experience, with leading retail brands as magnets, but food too. Westfield London played a pioneering role in this, planting its postcode on London’s hospitality map and curating a culinary mix that catered from fast food to fine dining.
- by acting as a community hub, meshing together dwelling, working and social spaces together, such as the soon to be completed Friars Walk development in Newport.
- or by delivering convenience to the ever-busy consumer, at transport nodes or other key touchpoints central to their everyday lives. Airport hubs such as Heathrow’s T5 demonstrate how well it can work.
Digital technology, through the competition created by online shopping, has not only led to the design of better shopping centres, but is instrumental to their improvement. We live in a connected world, where people use their smart phones to help them shop, whether it be to make price comparisons, wayfaring, or receiving special offers. Open access Wi-Fi is something once cherished but now expected of shopping centres.
While being a service in itself, it also provides valuable ongoing insights about their end customers for those operating the centres, such as how long they spend there, how often they visit and which combination of shops and facilities they use.
These are exciting times for the evolution of the shopping centre. One has to do no more than mention the likes of Grand Central, Oxford, Brent Cross and St James, Edinburgh to know that others believe this as well.
David McCorquodale, UK Head of Retail, KPMG
Technology advancements are changing the retail industry like never before and digital transformation is at the centre of this. The internet has connected consumers across the world and new generations of digital natives have evolved with different shopping habits. Is the endless aisle the death of the shopping centre? I don’t think so but the shopping centre has to evolve to survive.
‘Experience’ is the first differentiator offered by the physical store. The best shopping centres offer great experience all under one dry roof. Combining easy access, free parking, mix of retail theatre and offering, food and leisure facilities – something for all – premium shopping centres provide the epitome of an experiential destination facility, driving footfall and dwell time. At the other end of the scale, ‘community’ is another differentiator. A shopping centre that has value retailers competing under one roof within an urban community, allowing shoppers to compare bargains for necessities and enjoy essential services like post, job centre as well as leisure facilities can thrive and survive as a community hub and not be so impacted by the digital age.
But are experience and community enough in the digital world? Retail centre operators need to change their business models to be more than just providers of real estate. Free wifi should be a given in any shopping centre, almost like toilets – digital natives can’t last without wifi! Working with retailers to provide a single retailer agnostic click and collect facility can work with ease and provide a frictionless experience for the consumer. So too could a digital market place, driving traffic through the centre’s social media feeds and allowing consumers the opportunity to purchase goods or services from all the centre’s occupiers and collect at the centre. This could be expanded to include retailers without a presence at the centre itself, perhaps from an ‘e-floor’ in the centre with internet access and dressing rooms; like House of Fraser’s concept stores. Data provides another opportunity for a service offering, with the centre operator providing real-time footfall analytics and mobile-accessed customer insights to its retailers through central localisation technologies.
This may mean a change to the financial model as well, with retailers and shopping centre operators working on a joint physical and digital revenue model or deriving some form of ‘services’ charge for data services provided. There’s no need to stick to the tried and tested if evolution can drive change.
Embracing technology could help the best shopping centres thrive into social playgrounds and community hubs. Fighting it could lead to a concrete wasteland.
Martin Hayward, Founder, Hayward Strategy and Futures
There are so many ways digital technology can and should help business to better engage with customers. We have the opportunity, with their permission, to know our customers in intimate detail as data is so much more prevalent. We have the opportunity to talk with our customers whenever and wherever they are, again with their permission, as new channels effectively render them ‘always on’.
We can use these new tools to deepen engagement both in-store and out of store but the tendency in recent years has been to use technology as a replacement for the physical world rather than an enhancement.
Consumers are, and always will be analogue entities in a digital world. Yes it’s great to get a relevant on-line offer, but it’s also great to get a smile and good morning. Yes, it’s great to be able to try clothes on virtually, but equally good to touch them and smell them.
We all face both the challenge, and enormous opportunity, of using the astonishing advancements in digital technology to make our businesses more efficient, both for ourselves and our customers. If staff time is freed up by new technology, don’t immediately reduce headcount, but think how they can be used to better deepen customer engagement. If new channels allow customers to self-serve, think how the benefits can be passed on in ways other than price.
As our ability to interact with customers through digital technology grows, we need to balance the cost savings and efficiencies that tempt us against the impact that any migration to digital channels may have on customer engagement.
It may sound odd on first inspection, but don’t let digital make your business too efficient.
It may also help to ask yourself “Why do pensioners go shopping on Saturdays?” It would be far more efficient for them to shop on Wednesdays when the shops are quiet, but they understand that it’s more fun on Saturdays because that’s when everyone else goes shopping – the buzz of the market place. This insight is important as it proves that ultimately, efficiency isn’t everything. The in-store environment has the potential to add colour and life and humanity to the shopping trip that will never be possible in digital channels alone. Digital can still enhance this experience through personalised messaging and better information for customers but see it as a means to a better end, not an end in itself.
Nick Bubb, Retail Consultant
Online shopping is getting ever easier and Birmingham is a good place to debate the subject, as Amazon is trialling an extended Grocery delivery service for its “Prime Now” subscribers in the city.
But consumers still like to browse and compare and touch and feel, particularly in Fashion, and it is also ironic that in Birmingham last year Primark acquired a large, if ageing, shopping centre to convert into one of its biggest stores to date. Primark is now seeking planning permission to spruce up The Pavilions and it will relocate from its existing store on New Street.
Of course, Primark is famously the only big High Street chain that does not embrace the concept of multi-channel shopping, as it has no Online offer, but John Lewis certainly does (with over 35% of its sales coming Online). And it is interesting that back in 2011 John Lewis chose the Grand Central development above New Street Station for its first city centre store in Birmingham.
The recently opened John Lewis in Grand Central is slightly smaller than average, but at 150,000 sq ft in sales area it is still a big investment in “bricks and mortar” and management must be delighted with the strong start the store has made, reflecting the significant level of innovation and new merchandising, together with extra customer services.
So, every modern shopping centre needs a strong anchor store and John Lewis is about as strong as you can get, given its unique mix of Fashion and Household goods.
But anchor stores don’t pay a huge amount of rent, so from a commercial point of view shopping centre developers need to let the unit shops on good terms and in Grand Central it is interesting that there is little sign of the major space users like River Island, Zara, H&M, New Look and Top Shop that are usually found in big malls. Instead, there is a raft of complementary upscale Fashion shops like Hobbs, Joules, Fat Face, White Company and Cath Kidston.
And, as in most modern shopping centres, Grand Central has an attractive array of restaurants like Giraffe, Handmade Burger Co, Yo Sushi, Carluccio’s and Ed’s Easy Diner, to encourage dwell time, although the proximity of the railway station would also argue for a strong catering and “food to go” offer.
It’s also good to see that Grand Central will have a specialist bookshop, in the form of Foyles, as bookshops are fast disappearing from many shopping centres, given their inability to combine high rents with thin profit margins, but consumer still appreciate concessions from landlords to improve the retail offer.
Of course, it seems like only yesterday that the Bull Ring shopping centre opened next to New Street station in Birmingham, but it’s actually 12 years ago and the fact that this development, with its iconic Selfridges department store, has stood the test of time shows that there is a future for well-conceived shopping centres in a digital age.
Martin Newman, CEO, Practicology
The first thing to say is that good quality centres certainly have their place in a digital world. CBRE says that investment in UK shopping centres was at its highest for 10 years in 2014 – so the money men are confident of future returns.
The best performing centres in the UK generate high footfall by providing convenience or are a destination (for leisure as well as shopping).
Take Trinity Leeds. In its first year of operation it attracted 13 million shoppers and increased Leeds’ overall visitor number by one million. The centre owner – Land Securities – has used digital and social channels to reach younger consumers. It’s also currently trialling a Digital Loyalty Scheme, with 60 retailers, in a six-month project using a mobile app to offer visitors to the centre relevant offers and tracking behaviour.
Such digital engagement is great, but what has really driven footfall at Trinity Leeds is the leisure offer – an Everyman cinema, premium dining options and a street food area with regularly updated food vendors.
Similarly, the success of the two Westfield centres in London has certainly been helped by the array of leisure and food & beverage operators. This destination feel pushes retailers to offer innovative store-fits and in-store experiences too (which can be fused with digital).
Convenience is also key, and that’s part of the reason why click-and-collect services have been so successful in the UK. Shopping Centres can be a fulfilment point, as well as providing inspiration and a showroom environment for consumers who want to complete purchases online via their own devices or in-store terminals.
For convenience location is everything. The new Grand Central development in Birmingham is a prime example.
40 million people use New Street station below the Grand Central centre annually. This captive audience of travellers and commuters will be able to purchase goods for on the go, distress gift purchases, collect online orders and potentially research purchases that they go on to order online.
Digital channels merely complement a quality shopping centre that consumers use for convenience purposes, or want to spend their precious leisure time in.
Mike Watkins, Head of Retailer and Business Insight, Nielsen UK
The most valuable customers of the future will be the ones who shop in stores and on line and this is where shopping centres, with a unique blend of leisure, retail and lifestyle have an advantage over many high streets or traditional retail parks. Shopping Centres are the only true destination shopping trip.
There are three elements which shape shopping behaviour in today’s digital world: the influence of media and communications in creating the interest, social word of mouth and on line comparison which shapes intention to buy and then the final purchase – which may be online or offline.
With so many touch points, shoppers are demanding value for money but also customer service and in store experiences and this is where many modern shopping centers are now leading other parts of retail. The human interaction that is only possible within a store will remain very important for shoppers – before or after a purchase, anytime and anywhere.
One of the unwritten truths is that all types of physical shops will have to be re-invented in this digital world, offering customers a more involving experience that enables them to shop and have their needs met, in a way that is convenient for them and fits in with their busy lives.
Providing the location where retailers and brands have the space (and customer profile) to showcase and personalise both service and shopping experience, is a competitive advantage.
In some respects `show rooming` will become the new shop window and this is where a modern shopping centre with the one-stop opportunity to visit and engage with a wide range of exciting retail brands, is a compelling attraction.
It is no longer just about attracting shoppers to new stores, it`s now about getting new products and services to the increasingly connected shopper. This is the role of the shopping centre in the digital world.
– Ends –
Note to Editors:
The RTT panellists rely on their depth of personal experience and sector knowledge, and review an exhaustive bank of industry and government datasets including the following:
Members of the RTT are:
• Nick Bubb – Retail Consultant
• Dr. Tim Denison – Ipsos Retail Performance
• Martin Hayward – Hayward Strategy and Futures
• James Knightley – ING
• Richard Lowe – Barclays Retail & Wholesale Sectors
• David McCorquodale – KPMG
• Maureen Hinton – Conlumino
• Mike Watkins – Nielsen UK
• Martin Newman – Practicology
The intellectual property within the RTT is jointly owned by KPMG (www.kpmg.co.uk) and Ipsos Retail Performance.
First mentions of the Retail Think Tank should be as follows: the KPMG/Ipsos Retail Think Tank. The abbreviations Retail Think Tank and RTT are acceptable thereafter.
The RTT was founded by KPMG and Ipsos Retail Performance (formerly Synovate) in February 2006. It now meets quarterly to provide authoritative ‘thought leadership’ on matters affecting the retail industry. All outputs are consensual and arrived at by simple majority vote and moderated discussion. Quotes are individually credited. The Retail Think Tank has been created because it is widely accepted that there are so many mixed messages from different data sources that it is difficult to establish with any certainty the true health and status of the sector. The aim of the RTT is to provide the authoritative, credible and most trusted window on what is really happening in retail and to develop thought leadership on the key areas influencing the future of retailing in the UK. Its executive members have been rigorously selected from non-aligned disciplines to highlight issues, propose solutions, learn from the past, signpost the road ahead and put retail into its rightful context within the British social/economic matrix.
For media enquiries please contact:
Jessica Liebmann
PR Assistant Manager, KPMG UK LLP
Tel: 0207 311 3245 / 07551135778
Email: jessica.liebmann@kpmg.co.uk
Max Bevis, Tank PR
Tel: +44 (0)1159 589 840
Email: max@tankpr.co.uk
Date Published: 11/4/2015 11:50 AM
Note to Editors:
The RTT panellists rely on their depth of personal experience, sector knowledge and review an exhaustive bank of industry and government datasets including the following:
Members of the RTT are:
- Nick Bubb – Independent Retail Analyst
- Dr. Tim Denison – Ipsos Retail Performance
- Jonathan De Mello – Harper Dennis Hobbs
- Martin Hayward – Hayward Strategy and Futures
- Maureen Hinton – Conlumino
- James Knightley – ING
- Richard Lowe – Barclays Retail & Wholesale Sectors
- David McCorquodale – KPMG
- Martin Newman – Practicology
- Mike Watkins – Nielsen
The intellectual property within the RTT is jointly owned by KPMG (www.kpmg.co.uk) and Ipsos Retail Performance (www.ipsos-retailperformance.com).
First mentions of the Retail Think Tank should be as follows: the KPMG/Ipsos Retail Think Tank. The abbreviations Retail Think Tank and RTT are acceptable thereafter.
The RTT was founded in February 2006. It now meets quarterly to provide authoritative ‘thought leadership’ on matters affecting the retail industry. All outputs are consensual and arrived at by simple majority vote and moderated discussion. Quotes are individually credited. The Retail Think Tank has been created because it is widely accepted that there are so many mixed messages from different data sources that it is difficult to establish with any certainty the true health and status of the sector. The aim of the RTT is to provide the authoritative, credible and most trusted window on what is really happening in retail and to develop thought leadership on the key areas influencing the future of retailing in the UK. Its executive members have been rigorously selected from non-aligned disciplines to highlight issues, propose solutions, learn from the past, signpost the road ahead and put retail into its rightful context within the British social/economic matrix.
Definitions: The RTT assesses the state of health of the UK retail sector by considering the factors which influence its three key drivers.
1. Demand – Demand for retail goods and services. From a retro-perspective, retail sales, volumes and prices are the primary indicators. When considering future prospects, economic factors such as interest rates, employment levels and house prices as well as others such as consumer confidence, footfall and preferences are used
2. Margin (Gross) – Sales less cost of sales; the buying margin less markdowns and shrinkage. Cost of sales include product purchase costs, associated costs of indirect taxes and duty and discounts
3. Costs – All other costs associated with the retail operations, including freight and logistics, marketing, property and people
The Retail Health Index – how is it assessed?
Every quarter each member of the RTT makes quantitative assessments of the impact on retail health of demand, margins and costs for the quarter just completed and a forecast of the quarter ahead. These scores are submitted individually, collated and aggregated in time for the RTT’s quarterly meeting. The individual judgements on what to score are ultimately a combination of objective and subjective ones, drawing upon a wide range of hard datasets and softer qualitative material available to each member. The framework follows the example of The Bank of England Agents’ scoring system on economic intelligence provided to the Monetary Policy Committee.
The aggregate scores are combined to form the Retail Health Index (‘RHI’) which is reviewed at that meeting and occasionally revised after debate if members feel it appropriate. The RHI tracks quarter on quarter changes in the health of the UK retail sector and as such provides a useful and unique measured indicator of retail health. The index ‘base’ of 100 was set on 1 April 2006. Each quarter, it assesses whether the state of health has improved or deteriorated since the previous quarter. An improvement will lead to a higher RHI score than that recorded in the previous quarter, and with a deterioration leading to a lower score. The larger the index movement, the more marked the shift in the state of health.
The RHI has two main benefits. Firstly, it aims to quantify the knowledge of the RTT members in a systematic way. Secondly, it assesses the overall state of health of the UK retail sector for which there is no official data.
For media enquiries please contact:
Max Bevis, Tank PR
Tel: +44 (0)1159 589 840
Email: max@tankpr.co.uk