Retail parks are trying to compete with town centre rivals by giving shoppers more reasons to stick around when they visit. Liz Morrell reports on the rise of experience-led schemes

Retail parks have, in the past, been soulless places. With an offer that comprises little more than car-parking space and a collection of large-size stores, there has been little reason to do more than drive in, get what you want and drive out, the shopping experience being kept short and sweet, but a little boring.

This arrangement may have attracted custom in the past, but retail park landlords are beginning to realise that, in order to compete more effectively with shopping centres and town centre developments, they need to widen their appeal by offering a more experience-led shopping trip. Done correctly, such asset management can help to drive up rental income, too.

Shoppers need more than a parking space and mammoth stores to increase their dwell time and spending and, while other shopping centres may be expert at this, retail parks, whose focus has largely been on getting the customer in and out as fast as possible, have taken longer to learn this lesson.

Increasing revenues is, of course, the key, but some landlords have failed to realise the gains that can be made through diversifying. “For a long time, landlords have thought that small deals are no more than stocking fillers and have instead concentrated on bigger deals,” says Johnny Rowland, a director in the retail warehousing team at Savills.

However, the opportunities are vast. “There is a lot of scope to do more,” says Stephen Yarnold, senior partner at property agent Harvey Spack Field. He argues that retail park landlords have been guilty of not being inventive enough in their thinking. “Most think they’ve done a lot when they put a burger van in,” he says.

Other landlords put in pod units to house outlets separately from the rest of the retail offerings, but then fill them with unimaginative names such as McDonald’s, he claims.

“There are opportunities to transform the pods at the front of retail parks to the likes of Costa Coffee-type operations,” says Yarnold.

Rowland says that this is already happening. “In the past six months or so, there has been a clamouring of coffee shops on retail parks,” he says.

“The likes of Costa Coffee and Starbucks now realise that there is big potential in retail parks,” says Mark Stirling, director of fund management at British Land, which owns the likes of Glasgow Fort Park and Fort Kinnaird Park. Costa Coffee is looking for pod units of 1,500 sq ft (140 sq m) at several retail parks, while Starbucks has opened a number of stores in pods.

Not so fast
Landlords are also upgrading their food outlets. “Five years ago, it was KFC, McDonald’s, Burger King and Pizza Hut,” says Rowland. Today, the offerings are changing to a healthier, family-oriented set of restaurants, with an emphasis on quality. “Now there are the likes of Frankie & Benny’s, which is on a number of retail parks and also Pizza Express, which is just starting to open sites at retail parks,” says Rowland.

Pizza Express’s unit at Teesside Park shows how an offer can be transformed. The restaurant chain is now keen to roll out to a number of retail parks.
“We are talking to it about a unit in Edinburgh,” confirms Stirling. Convenience food retailers, such as Somerfield Essentials and the Co-op, are also looking for retail park units of between 5,000 sq ft and 6,000 sq ft (465 sq m and 555 sq m), according to Rowland.

The Junction, owner of several retail parks, claims to have pioneered the arrival of additional facilities for shoppers through its Pod concept, which aims to provide extra retail, leisure and community space.
It says the provision of such facilities will continue to be a feature of The Junction’s strategy, although each Pod will be tailored to its surrounding location.

Not all services housed in the pod need to be money-making, but they must offer extra services that shoppers will appreciate, such as toilet facilities, a community area, public seating and ATMs.
At The Junction’s retail parks, its Pods also house a management suite, which allows shoppers to speak to someone who is in charge of the whole park.

A 12,000 sq ft (1,115 sq m) Pod at The Junction’s Morfa Shopping Park, Swansea, was completed in June. As well as housing the management suite, units have been let to Starbucks and Carphone Warehouse. And its Pod at St Andrew’s Quay Retail Park, Hull, includes tenants such as Starbucks, Jessops, Carphone Warehouse and Subway. The landlord says the mix of tenants has proved successful.

“Landlords must continue to look at innovative ways to add value to retail parks and create a better and more rewarding shopping experience,” says John Gatley, director of investment for The Junction’s retail parks. “Responding to retailer needs is one of our key priorities and, over the past few years, we have considered solutions that attract shoppers to the parks and increase dwell time, including the Pod concept and appropriate additional income streams.” This has ranged from the addition of food outlets to car washing, and lamppost and billboard advertising that is complementary to retailers, he says.

Active service
“As part of our commitment to providing and delivering a high standard of service on site, we brought the operations management of The Junction parks in-house, which has proved extremely successful,” states Gatley. “Not only is the team committed to providing clean, safe and well-managed parks, it is also continually looking at additional income generation that will benefit our retailers by attracting more shoppers. Of the revenue generated from any additional income, a proportion will be returned to the tenants either by way of covering marketing initiatives that benefit the tenant, or as
a credit to their service charge.”

British Land is credited with changing the face of retail parks when it opened Glasgow Fort in October 2004. With 75 units, the scheme’s retail offer comprised a number of traditionally high street-based retailers, including Zara, Warehouse and Jane Norman, which all opened their first retail park stores at the Scottish development.

The food offer at Glasgow Fort comprised 12 eateries, including four restaurants and four coffee shops. In addition, other services were included in the offer. “We added all the things you would expect to see in a shopping centre,” says Stirling. “There are cashpoints, children’s play areas and a quality food offer. There are also public toilets and a crèche facility,” he says.

Other services have also helped to increase dwell time, as well as alleviate the natural consequence of customers staying longer – a clogged-up car park. “We have extended opening hours until 10pm and 40 to 50 per cent of our trade is now done between 6pm and 10pm,” says Stirling. “We also have 24-hour security, buses serving the centre and real-time availability information in the car park.”

Stirling says that the strategy has paid off. “We reckon we get an average dwell time of one and three-quarter hours, whereas a traditional retail park is probably one to one and a quarter,” he says. “Extending dwell time increases turnover and helps us to increase footfall, which leads to more affordable rents.” Yet there still has to be careful management of such attractions. “Dwell time is key, but you need to get the punters spending too,” says Rowland.

Building pods may also seem an attractive option to extend dwell time, but there will be a limit to the number that can be built before lease stipulations that restrict the number of car-parking spaces kick in. As a result, landlords are also increasingly trying to chop up their large-scale units into smaller sites, which will attract a wider number of retailers and other operators, bringing a greater diversity to their parks.

“Landlords are looking at smaller and smaller units and asset management of parks is more important than ever. The ability to subdivide a landscape unit of 10,000 sq ft is really key,” says Rowland.

Stirling says that this means striking a balance between taking away car parking and adding new retailers to bring people in. “Before, people tended not to concentrate on smaller units. Now we are finding that there is a tendency for retailers to take smaller space,” he says. A case in point, at Glasgow Fort, almost half of the units are 1,000 sq ft to 2,000 sq ft (95 sq m to 185 sq m).

This change in strategy is one that landlords and retail parks will continue to execute if they want to drive turnover, interest and, therefore, rents forward. “The more interest and the more fascias there are on a park, the more people will visit. It’s all about creating regular and sustainable footfall,” says Rowland.

“You have to continue to refresh these offers,” agrees Stirling.

Coming up with imaginative uses of space is difficult, but one idea that has been floated previously is that of budget hotels above shops in retail parks, which would make use of the empty car parks at night. Whether any retail park ever goes down this route remains to be seen.

The added facilities that customers seem to want are those that they would have access to at any shopping centre. The challenge for retail parks is to bring themselves closer to their in-town competitors and offer their shoppers an experience that is about more than just driving in and driving out again.