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Fall 2012
London Centers Take the Gold

Article Resources

Bill Moss, General Manager
Mall Retail & Experiential
Westfield Shopping Centre Management
Westfield Stratford City
London, UK

Julia Langkraehr
Retail Profile Ltd.

The Olympics showcased premier London centers to the world and their model has lessons for centers everywhere.

It is easy for any traveler to see the dramatic influence the 2012 Summer Olympics have had on the city of London and the rest of the country. A visit to London’s legendary retailers, its markets, and Westfield’s two new shopping centers, underscores the city’s ambition. The energy plays an integral role in the visitor’s attraction to this city.

Westfield’s success

ChampagnebarWestfield-copyIf you haven’t been to Westfield’s premier properties here, you haven’t been to the new London. According to the London Financial Times, Westfield’s two London centers reported soaring sales in the first quarter of 2012. Steven Lowy, CEO at Westfield said that together the two centers attracted 8.5 million customer visits who spent about 1.8 million pounds.

Westfield London, a center with 265 shops and 50 eateries opened in west London in 2008. The newer Westfield Stratford City, opened in September 2011 on the city’s east side. Stratford City is adjacent to the 2012 Summer Olympics’ stadium and park. Visitors can stand on level three of the center and see “The Orbit,” the vertical pillar that promises to remain an attraction long after the Olympics. Everything about these two centers, with their large billboards and enticing retail concepts, says mega mall.

There has been a lot of buzz in the specialty retail community about Westfield’s choice to introduce temporary kiosks as opposed to RMUs in these centers. Westfield’s commercialization programs are maximizing revenue by shifting to kiosk formats and betting retailers with more inventories can generate more sales and therefore pay more rent. What’s been most striking about this shift is the willingness of kiosk retailers to pay for a custom-designed kiosk. Bill Moss, General Manager, Mall Retail & Experiential, believes this philosophy of moving the kiosk capital costs to the retailer, is dead on. He also believes that RMUs “have done their time in the UK.” The center’s custom kiosks, operational standards and quality of products are evident, one design outdoing the other.

CustomPerfumeKioskWestford-copyWestfield’s common area programs in London are certainly not an afterthought—they are designed for the needs of each center. During Westfield London’s design process, the development team did not want to block storefront sight lines; hence no roofs are allowed on any units in the common area. “Westfield has been a driving force for commercialization in the UK. We’ve been given an amazing canvas and even though we are (Westfield London) five years old, it has not aged,” Moss said. “Though other specialty retail programs are less developed, we created a model for specialty leasing that fits the shopping center.”

Strawberry-RMUforJuliaSide-copyMoss worked as a Clear Channel Outdoor Advertising executive and he has the dynamic personality of a “get-it-done-now” manager. His title now, General Manager, Mall Retail & Experiential, perhaps best describes what his job really entails. Moss has a broad vision of the common area—overseeing retail uses, experiential marketing and sponsorship. With a 17-member team to support these activities throughout the UK, Moss understands how to value, price and sell retail, marketing events and sponsorships. He is very proud of his team, saying they “debate every deal brought to the table.”

Westfield’s UK programs carefully zone kiosk placements according to where retail, services and food are appropriate. Unique uses are merchandised to complement permanent inline retail. For example, the children’s play area is surrounded by irresistible Krispy Kreme Doughnuts, Joe Deluccis’ ice cream and a toy concept called Tinc. This retail lineup respects the inline permanent children’s stores in this zone too.

After they develop a merchandising strategy, Moss’s team begins the leasing process. They bet that new retail talent will come from calling on permanent brands that may or may not have a bricks-and-mortar presence. The top performing retailers, according to Moss, are soft pretzels, cellphone accessories and other food operators. When opportunities become available, Moss and his team send out requests for proposals and given the center’s success, it’s likely to be a competition. Recently the team added a half-price theater ticket booth and Cath Kidston, a renowned British brand selling a range of products inspired by floral prints.

Execs-copyMany of the common area retailers are seasoned veterans. Brands like Twining Tea, Soap & Co (Dead Sea Salt products); Apples & Berries (Cellaris’s rebranded UK kiosk), Models Own Nail Polish, and, Dermatologic Cosmetic Laboratories (DCL products) are established operators.

But this doesn’t mean new retailers have no room here. Recently Westfield developed a smaller, more mobile retail unit for London Stratford that affords up-and-coming designers or brands the opportunity to lease affordable space on short-term (1-3 months) leases. These “trunks” look like original travel steamer trunks or a “Louis Vuitton set of luggage,” said Moss. “The lighting for the units is channeled through the modular flooring system and is totally flexible for different configurations,” Moss said. The center uses these units in the “high-end zones” and entries at Westfield London.

ParliamentWestminsterAbbey-copyThe London centers have sure created an impression. John C. Williams, President of J C Williams Group, a global retail consultancy, said, “My first impression [of the Westfield centers] was ‘Wow! This is the next step in the evolution of the shopping center.’” According to Williams, Westfield has put the consumer first with lots of places to lounge, all sorts of food choices and a wide assortment of kiosks for impulse buys. “There are lots of lessons here—first and foremost is, food is the new anchor in retail shopping centers and if you get it right, the customer will reward you with spending more time and more money at your place,” Williams said.  Secondly, said Williams, “it’s time to rethink specialty retail. Westfield has offered new products and a new mix of tenants and mixed all this up in an environment of bold, exciting design.”

The sponsorship/partnership marketing vision for these centers is also carefully considered. Ask Eric Carlson, Vice President Partnership Marketing in the U.S. what attracts marquee names and the answer is simple: traffic. “Having Westfield Stratford City positioned next to the 2012 Olympic Park has provided Westfield a global stage for major brands and agencies to market their brands and products in an iconic environment. The collaboration, trust and knowledge sharing between the U.S. and UK has enabled us to promote, market and sell our assets globally during this special time,” Carlson said, “And the UK team has been instrumental in driving new business and opportunities here in the U.S.” Recently, Carlson tossed a deal to his UK teammates with Griffin Technology who opened their first “pop-up store” at Westfield Stratford City in time for the Olympics, further underscoring the collaborations across the pond.

American implications

MassageAngels-copyMake no bones about it: The Westfield model will probably not work everywhere. It requires a retail center with enormous foot traffic and sales to be successful. It also requires a corporate commitment to providing the intense design services and leasing review processes that deliver custom kiosks in response to a strategic merchandising plan. Will this philosophy work by retrofitting an existing center with kiosks given the physical constraints?

Unlike most American specialty leasing programs that encourage turnover to add fresh and new products, Westfield’s program is not as spontaneous. It feels more permanent and more serious. Just about every kiosk uses white as a unifying theme rendering the program metaphorically sanitized to perfection. Moss and his team say some of the kiosks have more short-term agreements and are more moveable. Other longer-term deals are not as portable.

On average, a retailer’s kiosk capital investment ranges between $60,000-$90,000, a price that may shut out smaller entrepreneurs. Also, not all centers can work solely with kiosks, as wider corridors are required to make programs accessible to the baby buggy-pushing consumers. Movement from kiosks to permanent storefronts is anticipated. For the future, Moss is focused on upgrading and rolling
out kiosk concepts to other Westfield centers in the UK.

NailSalonWestfield-copyIf iconic department stores and celebrated historic markets are London’s retail soul, then the Westfield properties are London’s new spirit. It’s likely that the same customers who shop the mega malls also visit the Portobello Road Market in one day. It is understandable why today’s consumer seeks the brand experience as well as the not-so-tidy feel of the urban street market.

Westfield London and Westfield Stratford City are such specialized projects there’s no doubt they will carry the Olympic flame long after the games conclude. During the recently concluded summer Olympics, Westfield Stratford City registered approximately 5.5 million visits in just over two weeks. In the end, Westfield takes the gold for developing and leasing these magnificent developments.


Third-Party Leasing in Europe

NYS-copyFor some people, opportunity has to knock only once. Julia Langkraehr is one such person. In the late ‘90s she saw what she called “the market gap in specialty leasing” in Europe and moved to London to develop a Pan-European third-party specialty leasing program across the continent.

With training from work at Equity Properties, Hyman+Landau,  General Growth Properties and Trizec-Hahn, Langkraehr had enough business savvy to find partners for her business ventures. In 2001, she founded Retail Profile, Ltd. with United States operational partner, Kathy Wilson. A few years later, Wilson left and returned to the United States. By 2010, Langkraehr merged Retail Profile Europe, Ltd. with SpaceandPeople, a company with a similar client base of venues, shopping centers, railways, regional airports, outlet centers, retail parks, high streets and strip centers. SpaceandPeople is one of Europe’s largest aggregators of retail space and is Europe’s largest media space provider. With access to over hundreds of venues, SpaceandPeople was among the first to start purchasing shopping center space as an advertising medium for promotion, samplings and experiential marketing events.

Retail Profile’s division of the business leases, manages and does marketing for third-party specialty leasing programs at shopping centers. Third-party management works in Europe, Langkraehr says. “In Europe, pension funds own most of the shopping centers and they outsource and hire industry-specific managers to handle different aspects of the business.”

Retail Profile’s thriving integrated specialty leasing/media space provider has over 80 employees in four countries (UK, Russia, India and Germany) and access to 526 venues handling either specialty leasing or experiential marketing events or both. Langkraehr’s programs range in size from six units to over 50 RMUs.

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