With lockdowns and strict Covid curbs having put paid to many ambitions for expansion in 2020 and 2021, the final removal of all restrictions last month means 2022 is now shaping up to be the year in which retail and leisure operators launch their comeback.
A number have been quick off the starting blocks, with bold new strategies for growth and creative new concepts already appearing. And there will certainly be many more emerging over the coming months.
Here, we take a look at the 8 operators that we think will shape the retail and leisure property markets this year:
1) Amazon lays foundations for UK bricks-and-mortar portfolio
Amazon’s segue into physical stores is a real game-changer for its high street convenience competitors. After the first Fresh shop opened in Ealing last March, the online giant has seized on the increased availability of units across London’s high streets to quickly amass a portfolio of at least 15 such stores in just 12 months. With mooted plans to reach 260 Fresh shops across the UK before the end of 2024, we can be sure that Amazon will ramp up its acquisition rate even further this year. Since many of these new Fresh units having opened just a matter of metres away from the stores of its convenience competitors, the like of Tesco, Sainsbury’s, Lidl and Aldi are keeping a very close eye on Amazon’s every move.
But not only has this concept brought with it increased competition within the convenience sector – which was already locked in a race for space – but it is also leading the charge towards checkout-free shopping. The jury is still out on whether the consumer will fully embrace this technology on a wider scale, but already competitors like Aldi have joined the race, opening its first till-less store last month in Greenwich, southeast London.
In October Amazon also added a second concept to its UK store strategy with the launch of its debut Amazon 4* store – selling products rated 4-stars and above on Amazon.co.uk – in Bluewater, Kent. With a second now open in Westfield London, the retailer is understood to be keen to roll this out further, eyeing up key regional shopping centres.
The launch of these two store concepts in the UK, within less than a year of one another, indicates Amazon’s commitment to UK bricks-and-mortar retailing and means there will likely be more to come in the future, adding further pressure to its competitors. Only last month, we saw the opening of the retailer’s debut Amazon Style fashion concept in Los Angeles. With the Bluewater 4* store representing Amazon’s first for the concept outside the US, it might not be long before we start to see Amazon making strides into the fashion market here in the UK too.
2) Next tries on ‘department store’ concept for size
With the revelation that Next has agreed a deal to open a new ‘department store’ concept at the Atria centre in Watford in April, this high street stalwart is clearly moving up a gear for 2022. Next has been steadily developing its online offer into a digital department store, with the inclusion of numerous third-party brands, so it feels like a natural step to now take this strategy onto the high street.
Bringing together its fashion, beauty and home ranges for the first time in a single 95,000 sq ft store, spanning three floors, the Watford shop will resemble a Next department store in all but name. Adding to this, the adjacent store will also be occupied by Victoria’s Secret – the lingerie brand for which Next holds the UK licence – which will also be directly accessible from within the Next store.
It’s not yet known whether Next will look to roll out this concept elsewhere, but it’s certainly one to have on the radar. Not only would it help drive efficiencies for Next and convenience for its customers, but a wider rollout of this new format would also be welcomed by many shopping centre landlords looking to fill voids left by House of Fraser and Debenhams, taking the department-store concept in a potentially fresh new direction.
3) H Beauty seek to beautify Britain
On a quest to take luxury beauty brands to consumers outside of London, Harrods was an early mover with its standalone concept H Beauty. With three stores already open in Lakeside, centre:mk and Edinburgh’s St James’ Quarter, H Beauty is preparing to open two more units at The Mall Cribbs Causeway this spring and the Metrocentre in Gateshead later this year.
Following hot on its heels, Next has also been tapping into consumers’ rising spend on beauty by opening Next Beauty stores in dominant regional shopping centres, while Debenhams.com Beauty opened its debut store at the Manchester Arndale in December.
But what sets H Beauty apart from its competitors and makes it an exciting one to keep watching this year, is its ability to offer exclusive luxury brands not available elsewhere on the high street and an engaging experiential offer. With champagne and blow-dry bars part of the offer at the centre:mk store, alongside regular beauty masterclasses from professional make-up artists, this beauty concept helps to bring a touch of glamour and theatre to shopping centres, which is on many landlords’ wish lists.
4) Ikea downsizes its flat-pack dream
With convenience its mantra for 2022, Ikea is seeking a new look which marks a stark departure from its traditional big blue box. Later this month, the 50,000 sq ft Ikea Hammersmith store – which is about a quarter of the size of a traditional Ikea – will open in the former Kings Mall in west London. Focused on home accessories, soft furnishing and a new food offer called The Swedish Deli, this new format represents a blueprint for Ikea’s advance onto the high street.
Following next year will be a second store in the former Topshop unit on the UK’s busiest shopping parade, London’s Oxford Street. If the Hammersmith store proves an early success, the Ikea property team will surely be on the hunt for more as the retailer seeks to take advantage of the current strength of home improvement and interior design spend, and to offer its customers greater access to its stores. This is a big player with big – yet also little – ambitions for 2022 and beyond!
5) M&S Food to gobble up space
M&S is on the acquisition trail this year with its food concepts very much the focus. Retaining its crown as Britain’s fastest growing grocer – according to research by NielsenIQ which this month reported that M&S has a UK grocery market share of 3.6%, up 0.4% on the year – the retailer is on the hunt for new stores, alongside the well-documented and ongoing rightsizing and right-placing of its full-line store portfolio. As opposed to Amazon Fresh and its convenience competitors seeking smaller high street units, M&S instead has extensive plans to open bigger-format food stores, of up to 25,000 sq ft, both inside and outside of London, albeit smaller formats are in play within London and in other strategic locations. Parking will be key for the larger store formats.
This high street icon will be a name that will crop up regularly this year on new lettings, as it seeks to fulfil its ambitions of opening up to 50 new food stores a year over the next few years.
6) B&M seeks to become a community hub
Many traditional out-of-town value operators are now bringing their formats in town to capitalise on the resurgence of localised, high-street shopping and customers’ desire for increased accessibility. Here B&M is no exception, but it has an interesting requirement circulating. The FTSE100 retailer’s new community hub concept is understood to be seeking stores UK-wide of around 7,500-15,000 sq ft in tertiary locations, close to residential areas.
It is not yet known how many stores it is hoping to open for the new concept, but with B&M having reported a doubling of profits for the year to the end of March 2021, it’s fair to say B&M is in a strong position and highly acquisitive. Landlords and competitor value operators alike will be paying close attention to what B&M delivers with this new format and the impact that has on the market.
7) Restaurants stay dark
The pandemic was a torrid time for the restaurant sector, with many relying on delivery partners or dark kitchens – where food is prepared for restaurants solely for delivery – to try to recoup sales lost from physical premises. These dark kitchens were springing up in empty restaurants across city centres whilst Covid restrictions were in place, but now despite physical restaurants operating at full capacity once more, demand for delivery shows no signs of abating so nor does the need for dark kitchens to fulfil this.
Delivery companies like Deliveroo, with its Editions concept, are increasingly on the hunt for dark kitchens in city centre locations to help them vertically integrate and offer restaurants a more cost-efficient delivery service, while restaurants are also seeking to go it alone opening their own dark kitchens.
More generally, restaurant operators are enjoying a strong resurgence following the pandemic, with new concepts and expansion strategies emerging. Busaba is a prime example – acquiring sites including the launch of a new concept called Ajia in Oxford last month – while Popeye and Gail’s are also growing, Wendy’s is looking for more drive-thru locations and the Mixing Jug is keen to secure site for its hybrid office and café concept along the M4 corridor. We anticipate there will be a lot of activity in this sector in 2022, to make up for lost time over the last two years.
8) Kurt Geiger steps up expansion
Another retailer seizing the opportunities created by a distressed market, Kurt Geiger is looking for space this year with an ambition to secure up to 15 new locations. The move comes as the footwear retailer moves out of some of its 200 department store concessions in a bid to gain greater control of its business, and its expansion plans could also see it launch standalone stores for its Carvela fascia following its growing popularity.
To keep up to date with the occupier market and to find out about the tenants you should be speaking to this year, simply get in touch.
Enter your name and email address below to subscribe to our property email alerts.