Canary Wharf faces fresh challenges from two new developments, but as Tim Danaher discovers, its shopper base remains unique.

T wo decades ago the pioneers of the regeneration of London’s Docklands weren’t spoilt for choice when it came to deciding where to buy lunch. The then rather basic Asda on the Isle of Dogs or fish and chips in the local pub were about it.

It would have been impossible to imagine then that Canary Wharf - then a wasteland of derelict dockside warehouses - would 20 years later include 800,000 sq ft of retail and leisure space housing more than 200 units. The office complex has established itself as a shopping destination in its own right.

But as it approaches its 20th anniversary Canary Wharf faces new challenges. Having ridden out the recession, which brought thousands of job losses at the banks that call the Docklands estate home, it faces new competition on two fronts.

Later this month Land Securities opens the 220,000 sq ft of retail at One New Change development in the City, which will seek to draw weekend trade away from the Wharf. Ironically, the mixed-use scheme’s high retail content was partly inspired by Canary Wharf’s ability to establish an office district as a seven-day trading destination.

Then next year and even closer to home, Westfield Stratford City will open. Just four stops away on the underground, the giant centre will bring, among others, John Lewis and Marks & Spencer to the East End in time for the 2012 Olympics.

But, having been at Canary Wharf since the very beginning, head of retail Camille Waxer is unfazed by the new competition. Having come to the UK with Canary Wharf’s Canadian developers when the site was no more than a derelict quay, she has overseen the transformation of its retail facilities into somewhere not just for lunchtime trade but for the weekends too.

The business end of retail

Standing in the shopping mall underneath the iconic 1 Canada Square tower at 12.30pm on a weekday, it’s not hard to see the attractiveness of Canary Wharf for retailers. The flow of shoppers is a tsunami of humanity, sharp-suited and well-to-do humanity at that, and they all need feeding and clothing.

While the recession has taken its toll on many of Canary Wharf’s office tenants, the retail elements of the development have emerged largely unscathed, with vacancy rates that would be the envy of any shopping centre. Occupancy currently stands at 99.6% and new tenants, including Tiffany, Jaeger and Pandora, are moving in.

That’s not to say that the past two years have been pain-free, and when in September 2008 the papers were full of pictures of Canary Wharf bankers carrying their belongings home in boxes, there was an inevitable reluctance on the part of those who remained to splash out. Tiffany was due to exchange on a deal the day before Lehman Brothers went bust, but decided to put all its expansion plans on hold.

A handful of retailers - mostly independents - were lost but the shops were quickly filled and rents held up. Tiffany came back and is now fitting out its store. “It came back when it realised it wasn’t really affecting Canary Wharf,” says Waxer. “That’s a real vote of confidence when you’ve been in the headlines day after day.”

Even the extension of original Cabot Place West mall to accommodate retailers including Zara let easily, despite completing in the depths of the recession. A consequence of the banking crisis is that the diversity of people working in Canary Wharf has broadened beyond the stereo­typical banker to include more management consultants, lawyers and media workers.

But what about the new rivals? Waxer describes One New Change as a “very good” scheme that will “make the City more of a destination,” but she doesn’t see it as competition for Canary Wharf. She also warns that creating a seven-day-a-week shopping destination - which Land Securities is trying to do at One New Change - won’t happen overnight, particularly because it doesn’t own the shops that surround the scheme. “It takes a few years - we’ve been through it,” she says.

As for Stratford, Waxer is relaxed about its impact on weekday trade, believing there is no chance that the busy Canary Wharf core customer will travel at lunchtime. “Will these people go even one stop on the tube? No.”

The weekends, though, are a different matter. “At the weekends it will hit us, no doubt,” says Waxer. “They have a big budget and do it very well. But we’re not going to fight them; we’re going to work on loyalty. It will be such a different environment.”

It should help that the Canary Wharf shopper at the weekend is, as on weekdays, highly affluent. “It’s a very similar customer - just not in a suit,” is how Waxer puts it. Westfield, in contrast, is likely to be much more of a mass-market centre. A full programme of event-driven marketing has always played a key role in persuading shoppers to come to Canary Wharf at the weekends and that is likely to be stepped up.

Canary Wharf wasn’t originally envisaged as a retail destination and the early malls are narrower and lower-ceilinged than is ideal, particularly now that a staggering 93,000 people come to work there every day. When the first retail development at Cabot Place West opened in 1991 it comprised a Tesco Metro and a food court anchored by Burger King, cut off from the next phase of retail by the tracks of the Docklands Light Railway.

“It was initially very service-driven and then the retail expanded as the office population expanded,” says Waxer. “We were able to cherry-pick the tenant mix along the way.”

Over time, the nature of the retail space has evolved and shopping and eating have been planned into the development of future phases. Key landmarks included the Canada Place mall in 2000, which introduced a raft of mass-market brands such as the Arcadia fascias, JD Sports and HMV. That was followed by the opening of Waitrose Food & Home in 2002 and then Jubilee Place, which opened under the Lehman Brothers building in 2003 and introduced aspirational brands such as Reiss, Whistles and Links of London as well as M&S Simply Food and Waterstone’s to the estate.

With such a high level of occupancy, the natural thing to do would be to expand the retail space, but Canary Wharf’s retail space is determined by the amount of office space currently being developed. At the moment that’s none, and future development is to be carried out on a bespoke basis to suit occupier needs.

So, as things stand, the next chunk of space definitely on the horizon is the 100,000 sq ft that will be created by the development of a Crossrail station on the site. In the meantime, Canary Wharf is working to squeeze the most retail out of its existing space.

The developer is now looking at how it can extend its Canada Place and Jubilee Place malls down into their basements. With the vast majority of shoppers arriving by public transport, the need for car parks is not great, so taking space from car parking and giving it back to retail is a feasible option.

Reconfiguring the malls also helps drive footfall and makes the space - particularly that built in the early days - better equipped for today’s retail needs. For example, moving a set of escalators which blocked the path of shoppers through the middle of the original Cabot Place mall - where retailers like Currys.digital and Carphone Warehouse are located - increased footfall through it by 48%.

With most of its shoppers working upstairs from the shops, retailing at Canary Wharf is different to other shopping centres. For a start, services are more in demand. “Dry cleaners are very important to us,” says Waxer.

Being based on site and having all leases outside the 1952 Landlord and Tenant Act, Waxer is able to manage the space intensively and leases can often change hands for high premiums.

“It’s a very hands-on approach. I do the leasing, I do the asset management,” says Waxer. “One minute I could be talking to the shoe repair man, the next the head of Zara.”

Shopping on the east side of London could well be poised for its biggest changes in many years, but Waxer has seen it all in her 20 years running Canary Wharf’s retail and is relaxed about the challenges. And justifiably so, as Canary Wharf’s unique captive market is something that is likely to prove impossible to replicate elsewhere.