Locating Opportunities

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1 Locating Opportunities In our latest Locating Opportunities newsletter we take a look at recent client projects across the world together with detailed features on delivering improved Shopping Centre Performance and the future of Britain s retail centres. If you would like to discuss how we could help your business across the world please contact me or one of my colleagues on their specialist areas. Ian Thurman +44 (0) ithurman@caci.co.uk

2 Fashion and Home Retailing Martin Salisbury +44 (0) DEBENHAMS Debenhams is a leading department stores group with over 200 stores across the world. It offers a wide range of products across womenswear, menswear, childrenswear, lingerie, accessories, health and beauty, homeware and gifts. CACI s retail centre analysis has provided a valuable tool to understand the current and future potential of UK retail centres. They have continued to impress us with their understanding of the location planning issues facing retailers and providing services that help support these decisions. Rob Hadfield Property Director, Debenhams CACI has recently carried out research for Debenhams to assess the potential headroom for further expansion. The analysis revealed that the UK store portfolio could be increased to 240 stores based on optimum market capacity and factoring in online growth. The development of store turnover prediction models and Debenhams use of CACI s InSite location analysis software enables the business to plan with confidence. 2 LOCATING OPPORTUNITIES NEWSLETTER

3 Martin James +44 (0) Knowledge about our market performance is all very well but without the ability to benchmark this we can t build an informed investment strategy. CACI s solution gives us these performance benchmarks through a detailed understanding of the markets across the UK and Europe. It s invaluable in supporting our market strategy. Scott Stevenson Head of Business Planning & Analysis, TJX Europe TJX EUROPE The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide, ranking No. 125 in the most recent Fortune 500 listings. TJX operates four major divisions: The Marmaxx Group (T.J. Maxx and Marshalls) and HomeGoods in the U.S.; TJX Canada (Winners, HomeSense, and Marshalls); and TJX Europe (T.K. Maxx and HomeSense). Launched in 1994, TJX Europe, introduced the off-price retailing concept to the U.K. and Ireland, and today, is the only major off-price retailer in Europe. They expanded into Germany in 2007 and Poland in TJX ended 2011 with 332 stores, which average approximately 32,000 square feet in size. They believe that Europe continues to hold enormous growth potential, and that their current European markets could ultimately support about stores long term. CACI s tools are used as the foundation for the target town list/acquisition strategy and target towns and markets now have to meet minimum thresholds in terms of size, whilst ensuring they do not cannibalise the existing estate. We supply TJX Europe with our market leading analysis and mapping software, InSite, alongside a number of datasets including our leading consumer classifications, ACORN, Retail Footprint the UK s most widely used retail gravity model and Retail Markets the leading international retail catchment model available. These tools enable TJX Europe to undertake in-depth catchment analysis to assess the potential for new sites across the UK, Germany and Poland. This approach provides the business with a consistent view of the potential of new sites, regardless of the country. 3

4 Retail catchments in Brazil As one of the world s leading growth markets, Brazil leads the way for retail opportunities in South America. Using our expertise in building retail catchment models, we have now researched the most important local, national and international brands present and used the retailer locations of each brand to analyse over 150 retail markets in the Greater São Paulo area. Tom Hewer +44 (0) thewer@caci.co.uk In Brazil the distinction between shopping centres and on-street retailing is more pronounced than in the UK, with a high proportion of shopping centres standing alone rather than being complemented by surrounding on-street retailing, so each retailer premise was either grouped at shopping centre level or as part of a cluster of on-street retailers. As a result we can supply centre rankings for the current retail hierarchy and development scenarios can be considered for new shopping schemes to identify the catchment and spend potential for any new centre. 4 LOCATING OPPORTUNITIES NEWSLETTER

5 Largest Retail Markets in Greater Sao Paulo Example of Retail Catchment for Aricanduva 5

6 Delivering shopping centre performance Over the last three years CACI has become the leading consultancy for shopping destination research. From our background in assessing retail development scenarios and advising on retail mix we now deliver increased understanding of centre performance for the UK s leading shopping centre owners and managers including British Land, Capital Shopping Centres, Land Securities and Westfield. The volume of this research is growing and now extends to 72 shopping centres covering a total of 75,000 consumer interviews annually. Steve Halsall +44 (0) shalsall@caci.co.uk As a business we have taken a huge step towards making decisions based on sound evidence. At the heart of all of business areas is this understanding of the customer. CACI have provided a range of tools and services which in a very short space of time has assisted us greatly on our journey. Linsey Wooldridge Retail Marketing Director, British Land BRITISH LAND As the largest owner of retail parks in the UK, British Land has a very successful track record based on their vast experience and client network. To maintain and grow that success they have established an extensive research programme designed to improve understanding of the market and more specifically their first customer the consumer. A combination of shopper surveys and in depth catchment analysis has provided the complete toolkit for the whole business. This consistent approach across all asset types shopping centres and parks will provide British Land an internal set of benchmarks as performance monitoring tools. As the programme progresses each business unit (leasing, management, marketing, development, investment) gains a clear understanding of who the customer is, how they interact with the asset and the competing assets. A clear set of actions can then be delivered to maintain and improve the asset. 6 LOCATING OPPORTUNITIES NEWSLETTER

7 CAPITAL SHOPPING CENTRES Capital Shopping Centres Group plc (CSC) is the UK s leading specialist developer, owner and manager of regional shopping centres. CSC owns 15 regional shopping centres, including 10 of the top 25 UK centres. CSC employ a research led approach to their shoppers by carrying out three shopper surveys per year on each centre, as well as commissioning retailer specific leasing reports through CACI. CACI s work is designed to track changes in shopping patterns across each centre, allowing CSC to monitor changes they have driven themselves or respond to those occurring due to external influences. CACI has supplemented the regular shopper surveys at the centres with tenant targeter reports to support leasing activity. These reports are designed to outline the specific market opportunity at any of the centres, either more broadly to attract more of a given retail category, or with a named retailer in mind. These retailer specific reports have proved valuable in helping to secure retailers across the CSC portfolio. 7

8 Home Improvement & Enhancement In recent years we have worked for a range of clients in the residential RMI market. With many consumers looking to enhance their current homes rather than move house, specialist retailers in this market continue to look for expansion opportunities in serving consumers and smaller contractors. Our clients include building trade retailers, DIY stores and specialist product retailers. Farid Mohsen +44 (0) fmohsen@caci.co.uk SHARPS BEDROOMS In the home enhancement arena, Sharps Bedrooms are a leading UK retailer who currently operate 26 standalone stores and 85 concessions mainly in Homebase and Dreams stores across the country and are owned by Sun European Partners Private Equity. As a national brand, with a wide reaching network of stores supported by national TV advertising and marketing Sharps wanted to understand their opportunity for profitable expansion across the country. We identified the key factors in their current store performance and assessed the relationship between online sales and store sales. We analysed Sharps customer information, transactional data, store and concession sales to build a bespoke model to predict store performance. By statistically testing the actual performance against a series of criteria, CACI built up a scorecard for every retail centre in the UK. The score card details each location s specific components, and its suitability for a Sharps store or concession. We provided a detailed Expansion Roadmap targeting the markets to open stores in next and the impact on their online offer. This approach supports Sharps in making decisions on where to open their next stores/concessions, and assess the impact it will have on the online offer in order to ensure all future showrooms are as profitable as possible. 8 LOCATING OPPORTUNITIES NEWSLETTER

9 Supporting the grocery sector Our work for the grocery sector now stretches around the world with major retail network projects in the southern hemisphere as well as the UK. In Britain we have an established track record in assessing sales potential for many grocery formats as well as advising on store competition issues. Nicky Christie +44 (0) The Southern Co-operative is an example of one of the many UK co-operatives and regional players where we have supported c-store expansion through the development of bespoke store performance models. THE SOUTHERN CO-OPERATIVE The Southern Co-operative is a regional co-operative society based in southern England. They operate over 160 convenience stores covering the counties of Berkshire, Dorset, Hampshire, Isle of Wight, Somerset, Surrey, Sussex and Wiltshire. The Southern Co-operative needed a geographic information system (GIS) fit for purpose for micro analysis of locations to support the turnover model predictions and allow for the benchmarking of new sites against existing stores. These tools are used to assess store investments including openings, development of existing sites and refurbishments. The Southern Co-operative use CACI s Spatial Modeller (within the InSite GIS) with a bespoke turnover model to simulate new store openings, estimate turnover and understand the impact the on the rest of the estate and their competitors. This also allows them to report on catchments and by using these tools in conjunction with ACORN, they are able to inform and target local marketing campaigns. CACI has been able to help the Southern Co-operative understand their customers by identifying key customer types, profiling membership data, tailor communications and offers increasing ROI on marketing spend. By being able to analyse their store network at a local level the Southern Co-operative can protect themselves from competitors, understand whether they need to be offensive or defensive in their marketing strategies for particular catchment areas and increase their market share. 9

10 Opportunities in the growth markets Will Fisher +44 (0) CACI s catchment models and proven analysis techniques helped Karle Infra to truly understand the sizing of the retail development along with the other metrics which are useful for product mix analysis. CACI s high level of expertise and the willingness to adapt to changes ensuring cost effective and applicable analysis. Babu Nagappan Business Manager, Projects, Karle Group DEVELOPING IN INDIA: KARLE GROUP 2012 marked our first project in India with the Karle Group. CACI was asked to build a bespoke catchment model, for a site in the south of India, to better understand the potential that it held for a retail development and what the optimum size of the scheme should be. This project enabled CACI to form local partnerships on the ground, source local information and understand the potential market at an entirely new level. This approach will allow CACI s retail and development clients a safe and robust route into a diverse yet profitable market. 10 LOCATING OPPORTUNITIES NEWSLETTER

11 The future health of the Britain s retail locations Paul Langston +44 (0) plangston@caci.co.uk Our latest analysis shows that the prospects for some 2800 UK retail centres are so poor that they could struggle to survive as viable locations for retailers selling non-food items beyond 2015, signalling further cause for concern for companies including Argos, Currys and New Look, whose stores fall in vulnerable locations. We have ranked the prospects of over 4,000 of the nation s shopping centres as destinations for selling comparison goods from A to E based on 20 different factors in our Centre Health study. Only 116 centres were classified as A, for strong, vibrant centres that will continue to thrive, while 283 were B, and 1,038 C the benchmark for adequate performance and long-term viability. The remaining centres, making up two-thirds of all UK retail destinations, were ranked either D or E, denoting centres that are likely to see decreasing numbers of multiple retailers and a decline into serving a convenience and value role as spending migrates to the top centres and online. The results, when combined with CACI s figures for spending per retail centre, showed that the top three per cent of retail centres now take nearly a quarter of total UK spending on non-convenience products such as clothes, furniture and household appliances, demonstrating the consolidation of spending in only a few top centres. Assuming the challenges of low sales growth and increasing online sales continue to 2015 and beyond, only the strongest centres may survive as viable destinations for comparison shopping. Retailers with large numbers of stores in the D and E grade centres are highly exposed to this increasing polarisation of the market, unless they are specifically fulfilling a convenience or value role. RETAILERS EXPOSED TO STRUGGLING RETAIL CENTRES Fascia % in A to C Grade Centre Clintons 58% New Look 55% Thorntons 51% Argos 49% Currys / PC World 43% Carpetright 34% Taking Clinton Cards, which only had 58 per cent of its stores in A to C centres, as a benchmark, New Look, Currys and PC World, Thorntons, Argos and Carpetright should be even more concerned by their exposure, as they have an even higher percentage of their stores in vulnerable centres. 11

12 London Olympics As we all look back with pleasure at a highly successful London Olympics at CACI we have played our part in supporting businesses involved in and around the Olympic Park ensuring that spectators were well supplied with shopping opportunities and suitably targeted with refreshments. We use CACI for development appraisals, leasing support, launch strategy, consumer surveys and performance analysis across the whole of our UK portfolio. We have been particularly impressed with the strength of the CACI brand with occupiers and investors. Myf Ryan GM Marketing, Westfield Dan Parr +44 (0) dparr@caci.co.uk WESTFIELD STRATFORD CACI has been involved in the development of the 1.6 million sq. ft. Westfield London shopping centre in London since Our relationship has continued with the opening of the 1.9 million sq. ft. Stratford City scheme next to the Olympics site. CACI advises Westfield on the trading potential for the retail and entertainment offer and the retail mix. We also analysed shoppers public transport travel patterns, demographic and spending profiles from regular shopping centre surveys. LocationStrat ACORN Club CACI Ltd Kensington Village Avonmore Road London W14 8TS CACI Limited All rights reserved