This Major U.K. Owner Is Rethinking Its Entire Approach to Marketplaces

You’ve been charged with reinventing L&G’s retail portfolio. From a high-level view, what exactly does that involve and what’s the vision you’re working toward?

Retail got lost somewhere along the line, and we’re trying to think about how to bring it back, rethink it and reinvent it. In 2020, we designed what we call a Future Retail Blueprint that is ever evolving to respond to the problems in retail and how we deliver better places for people. The blueprint has four chapters. It is about space, our environments; how to change the fabric of how we operate and deliver these spaces; the internal team in the HQ that can think differently; and opinion.

My experience over my short time in the industry is that I felt that everyone had the same opinion, which was really a bugbear of mine. We had pretty traditional-minded people in real estate saying that the problem was a market shift. A market shift means it’s going to come back if we continued on the same path, and I didn’t think it was. This was a cultural shift in how customers and people engage with brands and engage with places, and we have to respond to that both operationally and spatially. There’s this constant balance between how to deliver the perfect place for people and occupiers and deliver value to our investors, whilst also creating the new mechanics and the new future landlord that is able to deliver this long term.

What does the strategy entail?

We have three customers. It’s constantly a balance with: How do we deliver value to our customer, the person who walks through the door? How do we deliver value and the right kind of value to our occupier, new and old? And also, how do we deliver long-term value to our big customer, our investor? Doing that needs to focus on five things. If we get these five things right, we really believe we can create the place for the future.

First thing is about content. We really believe a shopping center, a retail park and a high street need to have the right content in front of the right people. It has to fit the demand of the customer. Retail got lost because everything looked the same. It was this cookie-cutter rollout of hermetically sealed boxes. We really wanted to focus on: What does the customer want in that town, and how do we deliver the best and the right type of content?

Next is a cultural piece, which is about: How do we shift our team to become much more consumer centric? How do we understand our customer better and get to a much more personal level with our customer, not only understanding hard property data — footfalls and spend — but: How do we really begin to understand behavior and how they want to behave in our shopping centers and town centers?

Third, which was a real wakeup call through COVID, is transparency with occupiers and getting a better relationship with occupiers. There has been a massive disconnect and distrust between occupiers and landlords over the years, and we have to build that bridge. If we can tell our occupier about the customer and the content and different things we’re thinking about within these spaces, suddenly it becomes a two-way relationship.

The last two things, in no particular order, are data and digital. We’re customizing and designing our own data dashboards, which is going back to the point of creating agile real estate. We are really beginning to understand dwell time, journey, spend and categories of spend, types of customers and a whole array of different metrics, which are creating essentially a live stream of insights around these assets.

Digital means two things for us. The digital interface, which is basically our socials, our website and how we future-proof those things. Our conversation with our customer doesn’t start at our doors anymore. It starts when they are in their living room when they are on their Facebook or their Instagram, so we have to think about how we create a really personal interface and conversation as a landlord. The other digital piece is: How do we integrate digital within our centers? For years, we’ve been dictated by occupiers telling us they don’t want pure-play retail of having click-and-collect things within our centers. We actually think we should be embracing that because it’s about having that integrated, holistic experience.

Do you have an example of your reinvention?

There are three phases. Phase 1 is what we call reframe. How do we reframe the asset both in terms of its function and the way the customer perceives the asset. Reframe was essentially what we call guerilla retail with less capex, big impact and PR to shift the identity of these assets. We’ve really started Phase 1 on shopping centers, and one example is Kingland [Crescent in Poole], which is one of our shopping centers on the South Coast. It has a brand-new high street dedicated to independents: a fishmonger, a coffee store, a net zero greengrocer and an amazing florist. All of these were digital-first businesses with their first ever shop. A year in, we’ve increased dwell time by about 10 minutes, we’ve generated an additional 2 million pounds in spend across the other parts of the center and created about 1 million pounds worth of spending in Kingland. We’ve now launched a street market, which we operate ourselves. We’ve hired a curator in house. We’ve launched a brand-new public realm, and we’ve launched a new events product called Gather. We’re really driving independents, local content, and giving people a new reason to come to the center. We’ve done this in Eastbourne, Poole and Dundee. The product is the same but the content is completely relevant to the town it sits in, so the market in Poole has a very different facade as the market in Dundee.

Phase 1 was reframe. What’s the second phase?

Phase 2, which we are calling remodel, is what we’re starting now. This is not just about creating retail spaces; it’s about creating spaces that are a fit for a town center and the future. This is about how do you diversify the occupier — base because we all believe that these retail spaces are not going to be 100% retail anymore — and diversifying revenue streams. We launched the flexible partnership model a year ago, which is all about really supporting and driving much more turnover-based leases. That was a way of bringing in new [occupiers] that historically wouldn’t have wanted to do a traditional lease but also giving middle-weight occupiers a new way of doing a deal with the landlord that doesn’t handicap them but rather supports them and gives them a springboard. We launched a brand-new co-working business, the first one opening about four weeks ago. We’ve just launched an 8,000-square-foot college in the middle of a shopping center. We’ve just launched a 20,000-square-foot health center in the shopping center, and we’re looking at leisure opportunities. So what we’re trying to do is really diversify the experience within these centers to drive dwell time, give a new reason to come to the town center and therefore support the good retail that we want to keep within the center.

What’s your third phase?

The third phase is reposition. We haven’t gotten there yet. If we pivoted the asset [and] we then sorted out the revenue model to create a financially stable asset, the longer-term legacy of the asset also is about reposition. For example, in Poole, we’ve just launched a 20,000-square-foot NHS clinic, and we really believe there could be an opportunity to create a health campus or there could be an opportunity to develop the workspace piece. It could be lots of different things. We are doing the [reframe and remodel] to set the foundation for the long term, and we’re being really proactive in understanding and collecting the data on all of these different components to better understand what the future holds.

What are some of the biggest challenges you face in reinventing your retail assets?

We have a portfolio that is relatively big, and real estate doesn’t move that quickly. We’re trying to create that balance between delivering things quickly in a great way to drive value while also collecting the data and learning from what we’re doing. One of the things that complicates it more is that our blueprint isn’t only about retail. This is also about other consumer-facing environments. We have a massive amount of resi that is going up where we’re thinking about how the ground floor integrates with the towns. So we’re really thinking about using these products to drive the ground floor of our resi and ground floor of our office blocks to blur the boundaries between street and asset and really think about the relationship with the customers.

Is your model applicable to other countries and regions?

If the core fundamental problems are the same. If there is a disconnect with the customer and the customer is wanting something different. If they are those cookie-cutter, hermetically sealed environments that have been created for generations. If people are wanting much more experience. If you have those core problems, then I think you can deliver more relevant environments. However, to be really clear, not everywhere can be saved. Especially in the U.K, there is too much retail, so we have to think about how we focus that retail and how we deliver the right, relevant type of retail for the right place and in front of the right people.