Bread & Butter is an international trade show for the fashion retail industry. FHP’s David Richardson, who attended the event, says it holds some lessons for our high streets.
Berlin is an historic city which witnessed many of the 20th century’s defining moments. And Tempelhof, its old airport, was the site of one of them – the airlift which prevented West Berlin being cut off when the Cold War really got underway. Today, Tempelhof is a great exhibition venue. While you wouldn’t call the Bread & Butter Tradeshow historic, you can certainly say that the industry it serves, fashion retailing, is currently experiencing one of its defining moments.
Here in the UK, high streets are feeling the strain like never before. The fall out from the credit crunch and the recession that followed in its wake continues to take its toll on consumer credit and consumer spending. On top of that, the march of technology and the internet has raised questions about why do you need to physically go shopping.
On the face of it, Bread & Butter, which has been running for more than a decade, seems insulated from these doubts. Berlin is an incredibly cosmopolitan city, and the Tempelhof exhibition was a typically loud and proud event. But behind the glitz and the glamour, my conversations told me that the challenge facing fashion retail isn’t confined to the UK. All over the world, retailers are asking what they need to do to their stores to deliver an experience which goes beyond great clothes – and whether current models of property leasing are appropriate to the way we trade now.
Bread & Butter is the place where fashion wholesaling and retailing go to network, trendspot, share ideas and generally see what’s coming next. Big high street chains go (House of Fraser were there), major fashion brands display up-and-coming collections (such as Superdry, Marc O’Polo and Scotch & Soda), and they’re joined by emerging fashion brands. These emerging brands are the ones who might find their way into major retailers, into fashionable independents – and may be go from wholesale to retail themselves one day.
But the economic climate and the disruptive effect of the internet mean that wholesaling to retailing is a big transition to make now. In the past, the aim was to gradually build a big network of stores covering all the major cities and towns. But the high street today, certainly outside of London is seen as high risk, and the view among many is that 9 or 10 major cities together with a strong online platform is as far as they’d extend themselves.
The rise of the internet has obviously had a big impact on this (though it still accounts for only a small proportion of retail turnover). But so has the traditional leasing model: those 10 year leases with upwards only reviews and fixed rents make a major move into high street retail look like a big bet.
There was an overriding desire by retailers for Landlords to bear some of this risk. Leases with base rents and turnover provisions are something which are becoming more prevalent within shopping centre leasing.
Is this something that we will see introduced on the high street? What will the implications be? It would certainly make forming an opinion of ERV or capital value a more interesting task and specialist task.
There’s a clear and emerging message: if high street retailing is going to be sustainable it has to be a partnership between retailer and landlord where both understand what they are trying to achieve. Landlords need to understand a retailer’s market proposition, have a feel for its current and future trading performance, and work out how well it might fit in with the shops around them: adding an up-and-coming fashion retailer to your parade might look great on paper, but what if an anchor tenant is only months away from a break or on the brink of administration – where would that leave their footfall?
I’ll bang FHP’s own drum here. Not all landlords will have this kind of market knowledge or a feel for where the high street is heading. This is where a retail consultancy like ours comes in – and it’s the very reason why I went to sniff the air in Berlin.
By definition, fashion retail is an innovative trade and it is thinking hard about new ways of keeping customers coming in. At Bread & Butter, I saw some incredibly innovative brands display fashions and accessories which I know will be making headlines months from now. But I also saw and heard some inspiring talk about adding value to the high street experience – the fashion chains who will add male grooming, refreshment and all kinds of other entertainment to their offer.
Quite rightly, we talk about the UK as a retail and leisure destination, one where shopping is just part of the experience. Retailers themselves need to be thinking in the same way, and they should be supported by landlords.
For further information with respect to this article or for retail property advice, please contact David Richardson of FHP Property Consultants on 07557 973980 or david.richardson@fhp.co.uk
ENDS
