‘Old Habits Will Return:’ U.K. Businesses Lay Groundwork for Recovery
LONDON — Even before non-essential retailers reopened their doors on Monday, myriad businesses were drawing up plans to build back British high streets and luxury shopping quarters in anticipation of a surge in demand as lockdown begins to ease.
The British economy is estimated to grow by 4 percent this year — and by 7.3 percent in 2022 — and much of that growth will be powered by British tourists, returning office workers, and the international rich who already own homes in the U.K., and are planning to spend their summer here.
Matt Farrell, managing director of Trophaeum, which owns much of Albemarle Street and properties around Mayfair, is particularly bullish about a bounce-back. He said that by summer, with much of Continental Europe potentially in lockdown, Britain could become a hub for the peripatetic international set who have homes here.
“The weather will be better, the shops will be open, and there is always the English countryside to escape to,” said Farrell, pointing out that the big, luxury country house hotels are already booked for post-lockdown holidays.
Farrell added that Trophaeum has not lost any retail tenants over the past 12 months, and it has been seeing demand from high-end restaurants seeking space. In Mayfair, its stores include Self-Portrait, Thom Browne, Alexander Wang, Casadei and Aquazzura, and it will open the London outpost of Paris restaurant Le Bar des Prés later this year.
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Trophaeum has also redeveloped parts of St. John’s Wood high street, which serves an affluent north London neighborhood, and Farrell said it was buzzing even before Monday, due to demand for food at places like Planet Organic and Panzer’s Deli.
Piers Townley, director of the London Estate for Grosvenor, one of the country’s oldest and largest landowners, said the company has been working closely with its retail tenants over the past year to ensure that neighborhoods can thrive once lockdown lifts.
“Our main effort has been to make sure that we can help our retailers survive this period. We’ve been providing concessions and, in some cases, capital to help people survive.”
As reported in October, Grosvenor Britain & Ireland said it was looking to “selectively invest in tenants to help them pivot their businesses and grow post-pandemic.” At the time, it was reported to be taking a minority stake in Roland Mouret’s business. Townley declined to comment specifically on that move.
Grosvenor is landlord to about 500 retailers, and food and beverage operators, on its properties in Mayfair and Belgravia in London. About two-thirds of its retailers are independent, or smaller businesses, which have been hit particularly hard by the pandemic.
Townley said Grosvenor, which owns Mount Street and much of Mayfair, has been working on how to attract people to the neighborhood, giving them “multiple reasons,” in addition to shopping, to visit a certain street, or area.
In addition to larger-scale retail projects, Grosvenor has been broadening sidewalks and making room for more outdoor seating and al fresco dining.
It has created outdoor “cultural trails” planting a series of artworks across Mayfair and Belgravia. It has opened a virtual concierge service so that retailers can serve clients at home, and partnered with the Google company NearSt, which promotes local products to shoppers strolling through a particular neighborhood.
It has also been drawing up contracts with new tenants: Dr. Barbara Sturm has opened a store at 125 Mount Street, with a spa to be added in May when further restrictions lift. In Belgravia, Rixo will open a shop for its new bridal collection on Elizabeth Street.
Grosvenor also found a new site in Mayfair for Browns, which opened earlier this month at 39 Brook Street in Mayfair, near Claridge’s hotel.
Townley said he’s encouraged by the demand that Grosvenor saw last summer when nonessential shops reopened after the first lockdown.
“We tracked what happened last time, and it was gradual. We’re not expecting a big bang return of footfall. We noticed last year there was a big increase [in footfall] once hospitality opened fully,” he said, adding that government guidance around when people can return to the office will also have a big impact on retail.
“We do believe there is pent-up demand for shopping, and for experiencing ‘the normal,’” he said.
In March, Anita Balchandani, partner, head of apparel, fashion and luxury for EMEA at McKinsey, offered up research saying that fashion and luxury sales will recover more quickly in the U.K. than in Europe due to the country’s rapid and widespread vaccine rollout.
The U.K. adult population is set to be fully vaccinated by the end of July, while all social distancing restrictions will likely be removed by June 21 if the country hits government-mandated health targets.
According to McKinsey’s Fashion & Luxury 2021 report, fashion net sales in the U.K. are forecast to be minus 8 to 12 percent this year, compared with 2019. Continental Europe’s recovery will be slower, with minus 12 to 24 percent in fashion net sales.
Balchandani believes that physical stores and brands that know how to tune in to customers and create a “relevant experience” will also thrive. She added that “hyper-local” shopping will be “a very dynamic and interesting space” in the coming months and years.
Diane Wehrle, marketing and insights director at Springboard Research, which tracks retail footfall across the country on a daily basis, said “as we move through the year, old habits will return.” She pointed out that World War II lasted six years, with shuttered shops, rationing and factories focused on the war effort.
“This has only lasted one year, and we’ve still been able to buy things,” said Wehrle, who believes there will be a surge in sales once shops — and restaurants — are fully open. People will be eager to mingle and spend some of the money they’ve been saving over the past 12 months, she said, adding that shopping patterns will eventually return to their pre-COVID-19 rhythms following that initial surge.
Wehrle also believes that smaller high streets will benefit from the new hybrid working model that’s emerging, with people engaging more with their local neighborhoods on the days they spend at home.
As for all those dark and empty department stores resulting from the collapse of Debenhams and the Arcadia chain in particular, they can have multiple future uses, potentially serving as centers for health care and booster vaccines, said Wehrle.
She believes that once rental rates are “rebalanced” in traditional retail neighborhoods, there will be ample room for new commercial formats, experiential and community spaces.
“New concepts will naturally open up, new retailers will come through and there will be more choice. Ultimately good things will come out of it,” she said.
Townley would agree, and said Grosvenor is cautiously optimistic about the future of London’s West End in particular.
“The West End’s greatest strength has been its ability to adapt, and create, those experiences that respond to the changing times. While there is a big challenge in the short term, we fully expect there to be an opportunity for those big spaces to be reimagined and for the next form of retail, hospitality, experiences start to emerge.”
While domestic retail should return in earnest later this year, industry players are hoping that international tourism also makes a comeback.
Jace Tyrrell, chief executive officer of New West End Company, which represents 600 businesses in Oxford Street, Regent Street, Bond Street and Mayfair, said the sooner international travel can resume, the better.
“The reopening of overseas tourism must be a two-way street. Allowing Brits to holiday and spend overseas must be matched by welcoming back priority overseas tourists who account for 50 percent of the West End’s annual 10 billion pounds turnover. [Tourists] who benefit commercial centers the most — from the Middle East, Far East and U.S. — must be encouraged back to boost the British economy and its businesses,” he said.
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