Page 28 - RLI July / August 2019

MARK FAITHFULL

Following

the Money

Mark faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets

baltIc marKet attractS more Influx of uS vISItorS booStS
InternatIonal InveStment uK tax free SaleS fIgureS
orthern Horizon Capital, the management K retail sales to US shoppers grew
company of Baltic Horizon Fund, has signed by 27 per cent in May, as American
Nan agreement with Linstow to acquire 100 per Uconsumer confidence hit a six-month
cent shares of Tampere Invest SIA, which owns Galerija high, contributing to a transatlantic spending
Centrs Shopping Centre in the heart of Riga. spree. The boost in sales marked the ninth
The purchase price is €75M, which corresponds to consecutive month of double-digit sales
an estimated entry yield of approximately 6.7 per cent. increases to American visitors.
The transaction was expected to close by the beginning In addition to the increase in overall sales,
of June 2019. the average spend by a US shopper in the UK
The Galerija Centrs property is located on Audeju also rose, to an average €474 in May - €110
Street 16, 1050 in Riga Old Town, next to the National higher than the €364 recorded a year earlier.
Opera. The five-floor property complex consists of two Currency fluctuations will likely have
buildings connected with a passage of glass roofed arcade. enabled this, with the US dollar strengthening
Originally opened in 1938, the centre was last against the pound by 4.9 per cent from May
refurbished in 2006 with an added extension. The net 2018 to May 2019 and by 5.5 per cent against
leasable area is 20,073sq m. Anchor tenants include H&M, the euro in the same period.
RIMI, Massimo Dutti, Douglas, Lindex, Esprit, Gant, Marc The sales figures come from international
O’Polo, and Max Mara Weekend. The fifth floor houses a payments company Planet, which facilitates
healthcare centre, a beauty salon and a fitness club. VAT refunds for international shoppers – an
The combined real estate investment volume in the indicator widely seen as an accurate barometer
Baltic states last year totalled €810M according to of the purchasing power of different nations’
figures published by Newsec in its Baltic Investment tourists and the retail attractiveness of the
Outlook 2019 report. countries they visit. Traditionally a destination famous for its
Deals in Latvia made up 32 per cent of the total, while The UK proved popular with international heritage and tourist activities, the UK typically
Lithuania accounted for a 49 per cent share and Estonia shoppers more broadly in May too, with a has registered a lower average transaction value
19 per cent. The most active players were the Baltic sizeable 11 per cent year-on-year uptick in (ATV) among international shoppers than other
region’s biggest commercial real estate fund managers arrivals coinciding with three per cent growth major destinations such as Italy and France.
including Northern Horizon Capital and EfTEN Capital, in Tax Free sales. This builds on an already Retail sales to international shoppers across
as well as the Swedish companies Eastnine and East successful start to the second quarter, with Europe more widely were also strong, with
Capital, all of which are long-time players in the market. Tax Free sales in April witnessing 15 per cent retailers witnessing seven per cent growth in
The largest deal over the year was South-African growth compared with the same period last sales and a four per cent rise in ATV. Italy led
based NEPI Rockcastle’s purchase of the Ozas shopping year. UK sales to international shoppers have the pack with the biggest rise in Tax Free sales,
centre in Vilnius for €124.6m. now grown in four of the last five months. at ten per cent.

Jet.com fallS by waySIde aS walmart focuSeS on onlIne
S retail giant Walmart has announced a sweeping overhaul at Jet.com, The data from Kantar also shows the number of US households that
the online start-up it acquired in 2016 for $3.3bn, after it failed to live shopped on Jet.com in January 2019 was two per cent, down from three per
Uup to the world’s largest retailer’s e-commerce ambitions. cent during the same period three years ago, forcing Walmart to change tack,
Despite the fanfare over its purchase, Walmart said it will integrate Jet.com’s using Jet as a platform to drive online grocery sales.
retail, technology, marketing, analytics and product teams with its own online Walmart has de-prioritised the business and is focusing more on growing
business. The current president of Jet.com, Simon Belsham, will leave in early August. sales through its namesake website and offering a broader assortment of
Walmart’s move reduces the scope and importance of Jet.com in its overall fashion and accessories through multiple smaller brands like Moosejaw,
US e-commerce business, which competes directly with Amazon.com. Modcloth, Bonobos, Eloquii, Hayneedle and others it has acquired in the past
Jet.com, which was expected to boost Walmart’s reach particularly with city few years to attract millennials.
residents and millennial shoppers, has failed to become a driver for online
grocery sales and growing market share in urban areas.
Walmart has put more emphasis on shopper services such as same-day
delivery and kerbside pickup of groceries ordered online, focusing on food
and grocery sales using those delivery methods. Jet, as a platform to sell similar
items, appears to have fallen by the wayside.
The Jet overhaul is the latest sign that Walmart is attempting to change
the ways it reaches shoppers using different websites and delivery methods.
Earlier this year, it ended a delivery partnership with Google-backed Deliv
and last year Reuters reported its struggles to use its own employees to
deliver products.
In 2016, Jet forecast revenue of $1bn and according to recent estimates from
consulting firm Kantar, the company’s sales actually shrank to $689M in 2019.
50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018