Going head to head with competitors under the same roof may seem quite unusual for furniture retailers, but as Tim Danaher discovers at Yorkshire’s Redbrick Mill it just happens to work

Think of a place where you’d expect a cluster of upmarket furniture and homewares retailers under one roof and Dewsbury almost certainly isn’t it. The Yorkshire mill town has had more bad PR over the past five years than any place its size deserves, yet is home to one of the most unusual experiments in retail property in the UK.

Calling Redbrick Mill an experiment today though is unfair as it’s been there for 10 years and it works. Since opening anchored by Habitat in 2000, it has brought together brands big and small in one store containing many shops - currently 40. And next month the concept is being transported across the Pennines as the Home Quarter, opening at Liverpool One.

The Redbrick Mill concept goes against almost all received retail property wisdom. It is, as the name suggests, a former cotton mill located in what at face value is the most unpromising of locations, surrounded by semi-derelict industrial property and car showrooms. Yet it attracts between 10,000 and 12,000 shoppers a week from across the north of England, the vast majority of them at weekends when 80% of purchases take place.

A new lease of life

The location is just the start of what’s unusual about it though. There is no lease as such, merely contracts with rents based entirely on a turnover basis and notice periods of as little as three months. And there are no walls between most of the shops. Customers are free to wander around the 100,000 sq ft of trading space from one retailer to another, despite them in many cases being competitors.

But the tenant line-up shows it’s a concept that succeeds in creating a destination where people from not just Yorkshire but also Lancashire, Cheshire and the Northeast drive to when they’ve decided to invest in their homes. The better known tenants at Redbrick Mill include Heals, Lombok, Multiyork, BoConcept and Feather & Black, as well as Conran’s diffusion brand Content by Conran. They stand alongside a raft of independents, from a small art gallery to Ice Interiors, which started with 1,000 sq ft and now occupies 10,000 sq ft.

The job of managing the space falls to Alastair Bailey, managing director of Redbrick Mill, a former car dealer who has been with the family owned scheme from the start in 2000. He describes the aim with Redbrick Mill is to create a “very good home and lifestyle store”, with the preponderance of weekend customers reflecting that people from within an hour-and-a-half radius of the scheme see it as a day out as much as a shopping expedition. With four restaurants and cafes, a resident artist and sculptor, and even a nail bar and cupcake concession, it’s a living community of its own.

Asked to describe whether he is a retailer or a landlord he hesitates, as in reality the job is a hybrid of the two. Bailey unashamedly describes his role as “micromanagement” of the site, which stands to reason as the turnover rents mean that Redbrick’s owners only make money if their retailers do.

Typically a retailer pays a rent of 18% to 22% of turnover, inclusive of pretty much everything including business rates. That means the only costs retailers have to worry about are their staff and their products.

Adam Black, owner and managing director of Feather & Black, says Redbrick Mill works because it allows shoppers to make an informed choice when they’re looking to invest in their homes.

“Furniture is a considered purchase, and Redbrick Mill is like a big Ideal Home Show where people can go out and do their whole home,” he says. “It’s like going into Selfridges if you’re a fashion retailer.” He adds that the cost of going into Redbrick Mill has worked out a lot less than opening a department store concession.

On the top floor there are some start-up businesses, part of a planning obligation to provide incubator space but nevertheless giving a bohemian feel to the top floor in particular that belies its unpromising location.

For some of the retailers, such as Heals, the scheme means they still have a presence in the North despite having no stores of their own there (Heals closed its Manchester store last year), and for all of them the flexibility of the terms means that the risk is much reduced compared with signing a traditional lease on a property.

Some use it to test new formats - when Feather & Black launched a kids furniture sub-brand, it tested it in Fulham Road and Redbrick Mill. Now it’s going into the new Liverpool scheme.

“Our model becomes more attractive in a recession, because there are no leases,” says Bailey. “There’s a more manageable rental system and there’s critical mass, so there’s a massive safety net for the retailer.”

But for retailers to do well in the environment of Redbrick Mill, the tenant mix is key. This means that Bailey has to walk the fine line of ensuring the retail brands are complementary without there being too much overlap in terms of the brands stocked, for example. The site is aimed squarely at aspirational upper-middle market brands and the shopper demographic is As, Bs and C1s.

As Bailey puts it: “We’re not DFS and we’d be eaten alive if we tried to be,” and avoiding the temptation to do deals with retailers that would change the tone of the Mill is key to its success, and, says Bailey, has been the downfall of imitators that have tried to set up elsewhere.

But don’t retailers mind sharing a shop with their competitors? “Yes they are competitors,” says Bailey, “but competition is always going to exit anyway. It’s the critical mass that makes it work.” When it comes to brands stocked, Bailey says the rule is first come first served, so retailers aren’t generally allowed to bring in brands stocked elsewhere in the Mill. There is a set Sale period in which retailers are obliged to participate, but otherwise retailers are free to promote when they like, although Bailey says he wouldn’t look kindly on any retailer “permanently on Sale”.

An upmarket haven

Everyone in retail knows that the home furnishings sector was the hardest hit in the recession, as credit-crunched consumers put off buying sofas and tables and made do with the ones they had. This inevitably had an impact on Redbrick Mill, not helped by the fact that many of the financial institutions most affected, such as HBoS and Northern Rock, had a major presence in the scheme’s catchment area.

However, Bailey says the impact on Redbrick Mill was not as severe as the wider market, which he attributes to a drive to take the centre upmarket and a big marketing push to say to shoppers that investing in your home is a fun thing to do. “It sounds corny but we had a saying that the recession ends at the entrance to our car park.”

He says sales improved in 2009 after a tough 2008, and that 2010 has continued the positive trend. Spending on marketing has been key for Redbrick Mill from the start - it needed to be in what Bailey freely admits were very difficult early days when persuading both retailers and shoppers to make the journey to Dewsbury proved a huge challenge - and the £200,000 a year spent by the scheme is doubled up by the marketing spend of the retailers themselves.

But that didn’t mean that decisive action didn’t need to be taken at various points during the downturn. Redbrick lost only one of its multiple tenants - New Heights - and “one or two” independents, but being so close to the businesses within the scheme enabled Redbrick’s management to make sure they stopped taking deposits when it became known they were in trouble, and then when they did go bust, ensure that the space was reoccupied within 24 hours, even if just by giving one of the other tenants the space.

The difficult market in home furnishings meant that what is to be known as the Home Quarter at Liverpool One will be making an appearance later than planned. The first conversations were held two and a half years ago, but Bailey said the Redbrick board stepped back because at that time the market was in the depths of recession.

“We wanted the worst of the recession over with,” he says. “We didn’t want to have a great project at a bad time and no matter how good you are it would be hard to convey that to a retailer that was closing stores at the time.” The plans were revisited a year ago and Bailey and his team are working against the clock to get the Home Quarter open for late October.

The development is a collaboration between Redbrick Mill and the Duke of Westminster’s property company Grosvenor, developer of Liverpool One. At 45,000 sq ft it is smaller than Redbrick, and also a split site on opposite sides of a road, with one building of two storeys and one of three.

But while the property is very different the concept is the same and virtually all the space is accounted for two months ahead of opening. Natuzzi, Roche-Bobois and BoConcept are among the retailers signed up, a reflection of the sea change in how Liverpool is perceived as a retail destination, particularly following the opening of Liverpool One.

The structure of the deals is also the same, with Redbrick having taken a headlease from Grosvenor and then Grosvenor getting a percentage of Redbrick’s turnover percentage. Crucially the underlying philosophy is the same and the Home Quarter will have the same ‘micromanagement’ as Redbrick, with a retail manager on site, and it will also feature outdoor cafes on a balcony overlooking Liverpool One and late night opening.

Creating the same cult following that Redbrick Mill has won’t happen overnight, but again there will be the same focus on marketing, with a ‘cube’ showing off product sold in the Home Quarter being exhibited in the main areas of Liverpool One.

The Northwest already has an established home offer at locations like the Trafford Centre’s Barton Square and Arighi Bianchi in Macclesfield, but Bailey is given confidence by the number of shoppers who already travel from the Northwest to Redbrick that the concept will take off in Liverpool.

Once Liverpool is up and running Bailey sees no reason why the concept cannot be replicated elsewhere in the country, with one in Scotland, one in the Midlands and one in the South.

And while the original Redbrick Mill owed much of its success to the unique building in which it’s located, Bailey thinks such a distinctive setting is not essential and that future sites could be vacant retail park buildings of about 40,000 sq ft, with six or seven retailers in the building. “The beauty of furniture is furniture becomes a feature in itself,” he says. “It helps if you’ve got the backdrop but it can be done with a more boring building.”

It will be an interesting test, but at a time when traditional leasing structures still dominate big-box retailing, the Redbrick experience shows that by creating a genuine destination where the owner’s success is intrinsically aligned with the retailers’, something can be created that is greater than the sum of its parts.