5th Annual State of The Retail Nation

5th Annual State of the Retail Nation
National Shopping Centre Managers Survey 2013
Background and Methodology

In late June 2013, Latimer Appleby, in conjunction with Shopping Centre Magazine conducted an online survey of shopping centre managers.
The research study collates and analyses views on the UK shopping centre from the in-field practitioner, including: the impact of the wider UK economy; current trading conditions; and the outlook for the next twelve months.
A total of 136 responses were received, which is the highest response rate ever achieved for this annual survey.
First conducted in 2009 and where possible, the results are compared directly to the four previous studies.
Latimer Appleby 2013
Base: 136, Shopping Centre Managers Fieldwork: June 2013
Sample profile
<50 units
50-99 units
100-149 units
150-199 units
>200 units
46%
35%
10%
7%
2%
Average size in sample = 66 units
Empty units/store closures, footfall and the recession have been the biggest challenges over the past 12 months
25
20
19
17 14
18
15 13 12 13
15
12
12
9
11
11
2013 2012 2011
10
Empty units/closures
Footfall
The recession
Keeping tenants happy
Service charge savings
Top 5 challenges over the past 12 months

Latimer Appleby 2013 4 Base: 136, Shopping Centre Managers Fieldwork: June 2013
Driving footfall is the top challenge over the next 12 months and has been so for the past three years
25
20
20
18
20
16
15 %
17 15
16
16
13
13
13 13 13
14
12
2013 2012 2011
10
0 Driving footfall Filling voids Keeping retailers happy Increasing sales/spend Dealing with the economy
Top 5 challenges over the next 12 months

Tenant demand for a reduction in service charges has continued to increase since 2011
47%
42%
2009
41% 41%
2013
2010
31 %
2012
2011
Reviewing contracts/operating costs and reducing expenditure are now equally important actions to those approached by tenants seeking service charge reductions
Review / renegotiate contracts
20%
16% 17%
Review operating costs 14%
20%
20%
2013 2012 2011
Manage / reduce expenditure
20%
24% 14%
Consistent with last year, there is an average of zero in the service charge change. Whereas, in previous years there have been small declines
Only 8% are expecting any sort of reductions this year
2 10 32 26 22 6 2
Ave. change
2013
0%
2012
3 6
33
24
21
12
0%
2011
0%
8
10% 20%
Increase 5-10%
34
30% 40%
4
50%
No change 8
39
60% 70% 80% 90%
12
100%
-1%
Increase 10%+ Latimer Appleby 2013
Increase <5%
Decrease <5%
Decrease 5-10%
Decrease 10%+
Majority of managers consider monthly rents on a case by case basis

70 60 50
62
40
The biggest shift this year is in the increase of managers considering monthly rents as a head office decision
54
49
2013 2012 27 2011
%
30 20 10 0 Already offer monthly rents Decision by head office Consider on a case by case basis
19 21
17
12 9
As many as 6% of managers report >25% voids and 8% report these in the range 16-20%
Averages: 2013 = 8% 2012 = 6% 2011 = 6%
31
50 40 30
47 46
40 27
38
2013 2012
15
%
20
2011
10
0
9
4 <5% 6-10% 3 11-15%
8
3 4
3
21-25%
3 >25%
None
16-20%
10
Proportion of voids is slightly more positive when compared directly to last year
However, only 23% of managers felt things were better
2013
Weighted ave.
34 9
16
34
2.8
2012
32
38
15
2.5
3.3
2011
19
31
15
27
0%
10%
20%
30%
40%
50%
The same (3) 11
60%
70%
A little worse (2)
80%
90%
100%
Much better (5) Latimer Appleby 2013
A little better (4)
Much worse (1)
Amongst those who believe that the number of voids have got worse, only 17% are seeing improvements already taking place.
7 %
1 3 %
26 %
22 %
17 %
Already happening
Latimer Appleby 2013 12
15 %
Beyond then
Mid following year
End of next year
Mid next year
End of current year
Consumer confidence is low and amongst those who believe consumer confidence is poor the majority do not envisage a turnaround until beyond 2015
Very poor (1)
Quite poor (2) Neutral (3)
5%
Consumer confidence turnaround

Already happening
5 12
8
Consumer confidence
30%
Quite good (4) Very good (5)
End of the current year
17
Mid next year
26 16 14
15
39 39
2013
Weighted ave. =
47%
End of next year
17 23
2012
2011
2.8
Mid following year
However, highest since 2010
16%
3%
13
Beyond then
17 15
28
%
Around two thirds believe tax rises and public spending cuts will have at least a small impact on retail spending and almost 1 in 5 believe it will have a significant impact
100
12
3 12
11 13
80
60
62
65 58
40
20
27
0 2011
Yes a lot
21
2012
Yes a little
14
18
2013
Don't know
No
Footfall is the most common way centres measure their success; voids/ occupancy is less so since previous years
100 91 92
85
80
89
78
85
79
81
70
64
68
73 65
60
57
46
2013
2012
%
40
2011
20
0 Footfall Tenant feedback Voids/occupancy Retail sales/spend Customer feedback
Top 5 measures of success

Majority believe their centres sales are mixed between sectors, however this is less marked than recent years
52
Mixed between sectors
59 73
22
Stable
27 15 2013
14
Generally down
2012
12 8
Polarised view
2011
11
Generally up
3 4
0 10 20 30 40 50 60 70 80
%
Footfall is the most popular measure tracked by centre managers; sales statistics, spend and shopper satisfaction are generally increasing in importance over recent years
100 80
92
97
92
84
88 81 73
Allowing for multi responses
64
60
65
49
47 38
45
2013
41 41 2012 2011
40 20 0 Footfall Sales statistics Tenant satisfaction Spend
Shopper satisfaction
Top 5 tracked measures

In-mall events are the most popular marketing activity this year, however, advertising and PR have varied across the years and mall merchandising has dropped this year
Top 4 marketing activities
1
In-mall evens & promotions
93%
*Remained above 90% since 2009
2
Advertising
88%
69%
3
Public relations
78%
18
4
Mall merchandising/ RMUs
A website remains the most common form of online activity; Facebook looks to have stalled, Twitter is strongly increasing whilst email/SEO is declining
2013
95%
78%
71%
51%
43%
2012
100%
82%
61%
61%
52%
2011
100%
65%
54%
73%
62%
19
To discuss the findings of this report, or to find out how we can help you understand your shoppers better, please contact either Paul Latimer or Peter Appleby.
Paul Latimer 07957 653590 ppl@latimerappleby.com Peter Appleby 07973 214630 pda@latimerappleby.com Latimer Appleby Limited Old Steyne House 21-22 Old Steine Brighton BN1 1EL tel: 01273 648335 www.latimerappleby.com
Appendix
About the sample

2
200+
4 3
150 - 199
Centre Size
4 10
18 19
Ave no. shops: 2013 = 66 2012 = 81 2011 = 86 2010 = 72 2009 = 67
100 - 149
15
14 27 35 39 39 46 56 41 43 40 50 60
2013
2012 2011 2010 2009
50 - 99
< 50
0
31 10 20
22
35
30 %
Recent challenges
25
21
20
18
19
17 17
18
15
15
13
13 13
12
10 8
12 12
9
11
2009
10
9
66
9 5
2010
7
4
6 6
7
5 55 4
2011 2012 2013
5
3 3
55
1 1
23
Future challenges
25
20 20 18 16 17 20 17
20
15 %
14
15 14
16 15
15
16
16 14 12
15
13
2009
13 13
13 13 13
10
10
8 6
10
7 8 6 4 2 6 4 8 66 3 8 6
2010
2011 2012 2013
55
5 5
24
Pressure to reduce service charges
2013 2012 2011
42 41 31 41 47 0 10 20 % 30 40 50
2010
2009
25
Achieving service charge reductions

30
26
25
20
20
24 22 20 20 20 20 20 14 10 20 14 11 11 10 11 9 14 14 10 10 9 10 17 16 14
2009
15
10 5 0
2010
2011 2012
6
2 1 2
6
4
6
4 3
6
4 2 3 2 2 33 2
2013
Base = those who have experienced pressure to reduce service charges 26
Shopping Centre Managers Fieldwork: June 2013
Service charge comparisons

Ave. change
2013
10
32 33
26 24 21
22
6 2 12
0%
2012
3 6
0%
2011
8
14 19 21
20%
34
21 21
30% 40%
4
19 19
50% 60%
39
23 24
70% 80% 90%
12
4 11
100%
-1%
2010
-1%
2009
1
0%
14
10%
-3%
Increase 10%+ Decrease <5%

Increase 5-10% Decrease 5-10%

27
Increase <5% Decrease 10%+
No change
Monthly rents
49
Consider on a case by case basis

34
54 9 27 12 15 12 17 21 19 21 15 14
62 64
Decision by head office Already offer monthly rents

6
8
9
2013
2012 2011 2010 2009
No intention Considering making standard
10
22 1
Other
1
0
10
20
28
30 %
40
50
60
70
Voids
>25% 21-25%
3
3 5
16-20%
3 3
8
8 12 9
Averages: 2013 = 8% 2012 = 6% 2011 = 6% 2010 = 6% 2009 = 10%

15 19 17 23 33 27 31 38 40 47 46
2013 2012 2011
11-15%
6-10% <5% None
0
12
2010
2009
50
6 7
8 10 10 20 30
40
50
%
Voids comparison
Weighted ave. 2013
16
34
34
2.8
2012
32
38
15
2.5
2011
19
31
15
27
3.3
2010
12
28
37
22
3.3
2009
0%
14
10% 20%
23
30% 40% 50% 60%
44
70% 80% 90%
14
100%
2.5
Much better (5)
A little better (4)
The same (3) 30
A little worse (2)
Much worse (1)
Occupier demand
17 18
36 50 44 29 22
Already happening End of the current year Mid next year End of next year
7 12
12 10 13 11
10
12
22
8 15 17 22 22 17
25
26
2013 2012 2011
24
2010
2009
Mid following year Beyond then

3
0
20
30
40
50
Base = those who believe the void situation is much worse or a little worse Latimer Appleby 2013 31
Consumer confidence
Weighted ave. 2013
3 6 15
16 26 31 39
47 62 50 33
30
5 6 4
2.8
2012
2.3
2011
2.6
2010
19
10
3.6
2009
2
0% 10%
22
20% 30%
Quite good (4)
29
40% 50%
Neutral (3) 32 32
39
60% 70% 80% 90%
8
100%
2.7
Very good (5) Latimer Appleby 2013
Quite poor (2)
Very poor (1)
Consumer confidence turnaround

5
Already happening
5 12 8
End of the current year
17 26 33 32 39 39 40
Mid next year

9
2013 2012 2011 2010
End of next year Mid following year Beyond then

0 10 9
7
16 17 14 15 17 20 19
23
2009
19 28
15 16
20
30
40
50
Base = those who rated consumer confidence as quite poor /very poor Latimer Appleby 2013 33
%
Tax rises and public spending cuts
2013
18
58
13
11
2012
21
65
12
2011
27
62
12
2010
21
65
0%
10%
20% Yes a lot
30%
40% 50% Yes a little

34
60% 70% No
80% 90% Don't know
100%
Sales trends
52
Mixed between sectors

22
59
40
48
73
Stable
15 14 12 10
14
27
23
21
2013 2012 2011 2010 2009

27
Generally down
Generally up
3 4
11
16
10
20
30
40
50
60
70
80
%
Measuring success
100 90 80 70 60 50 40
96
92 91 85
89
75
79 78
81
85
70 73

68
64
65
57
69 67 65
54 58 56 53 44 50
56
58 48 46
42 44 42
47
39 37 33
48
31
35
26
30
20 10 0
14
4
18
13
2010
2011
36
2012
2013
Tracking measures
100 90 80 70
100 97 92 92
88 84 81
73 73 62
6564
53 45 4141 31 46 43 39 47 44 40 33 32 29 23 17
60
50 40 30 20 10 0
4749
2010 2011 2012 2013
4038
Footfall
Sales Tenant statistics satisfaction
Spend
Shopper Dwell time Visit Conversion satisfaction frequency

37 Base: 136, Shopping Centre Managers Fieldwork: June 2013
Marketing activities
100
90 80
100 92 91 93 80
92
97
88
92 91 78 69 79 81
94 Allowing for multi responses

69 62 52 53
70
60 50 40 30 20 10 0 In-mall events & prom
50
53
46 35 35
15 15 10
5
Advertising Public Mall merch./ Market Cust satis. Relations RMUs research surveys 2010 2011 2012 2013
38
Other
On-line activity
100 90 80 70 60 65 54 40 98100 10095 82

78 71 61 73 61 51 42 62 52
50
40 30 20 10 38
43
22 16 12 12 15 14 8 9
0
Website Facebook page Twitter Email SEO newsletter 2011 2012
39
2010
VIP / Priviledge PPC advertising club 2013

5th Annual State of The Retail Nation - Latimer Appleby Market Research Consultants

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National Shopping Centre Managers Survey 2013

Background and Methodology

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Average size in sample = 66 units

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

2013 2012 2011

Keeping tenants happy

Service charge savings

Top 5 challenges over the past 12 months

2013 2012 2011

Top 5 challenges over the next 12 months

Review / renegotiate contracts

Review operating costs 14%

2013 2012 2011

Manage / reduce expenditure

Latimer Appleby 2013

Base: 52, Shopping Centre Managers Fieldwork: June 2013

Increase 10%+ Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Majority of managers consider monthly rents on a case by case basis

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Much better (5) Latimer Appleby 2013

A little better (4)

Much worse (1)

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Mid following year

End of next year

Mid next year

End of current year

Base: 58, Shopping Centre Managers Fieldwork: June 2013

Consumer confidence turnaround

Quite good (4) Very good (5)

End of the current year

Mid next year

End of next year

However, highest since 2010

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

0 Footfall Tenant feedback Voids/occupancy Retail sales/spend Customer feedback

Top 5 measures of success

Allowing for multi responses

40 20 0 Footfall Sales statistics Tenant satisfaction Spend

Top 5 tracked measures

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

About the sample

Ave no. shops: 2013 = 66 2012 = 81 2011 = 86 2010 = 72 2009 = 67

Base: 136, Shopping Centre Managers Fieldwork: June 2013

2011 2012 2013

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Latimer Appleby 2013

Base: 136, Shopping Centre Managers Fieldwork: June 2013

Pressure to reduce service charges

2013 2012 2011