Page 26 - #181 May 2023

RLI RETAIL INSIGHT

Flight to Prime

Rhys Evans, Head of Asset Management at Pradera Lateral, the
team behind the Trafford Centre in Manchester, discusses the ‘flight
to prime’ trend and what it means for retail destinations.

he retail market is a dynamic entity that is heavily influenced something we’ve seen work very successfully at Trafford Centre where
by multiple factors, including design, consumer trends, we’ve created clusters of like-minded brands, such as Dyson, Hugo,
Tthe economy, regional preferences, the list goes on. One Boss, and Calvin Klein.
phenomenon we’re seeing across the board, likely due to all of these This is where flight to prime can become a bit of a self-fulfilling
factors, is the ‘flight to prime’, whereby both occupiers and customers prophecy in that, once a centre has established itself as one of these
gravitate towards centres offering the most attractive experience. prime locations, it will then begin to reinforce this status by attracting
Defining what the most attractive experience looks like is tricky, as it more and more desirable tenants and offerings, making it more and
won’t be the same for every shopper or visitor. This is why breadth and more desirable again. This makes prime locations extremely appealing,
variety of offer are both key to building the desirability of a destination. as brands will be exposed to higher levels of footfall and potential spend,
Whether a customer is looking for experience, quality, convenience or a big determinate in profitability. It will also often mean they benefit
a seamless journey, this layer of relevance creates the sweet spot that from the specialised management that goes with managing prime assets.
pulls visitors in and keeps them coming. Destinations vary, of course, and some are better placed than others
In today’s retail market, consumers have more options than to implement this approach. Others may face unavoidable challenges,
ever before, which means they have the luxury of choosing where such as high levels of competition or not having the necessary scale
to spend their money. From virtually browsing online baskets with to manipulate tenant locations. The flight to prime phenomenon will
same-day delivery to physically browsing a bricks & mortar centre for also be affected by regional factors, as some brands will trade better in
a day out experience, customers can select what is most attractive to certain areas of the UK. This is particularly true of fashion, but it is also
them. This puts the onus on retail destinations to make themselves seen in F&B, so landlords will be acutely aware of this when planning
the standout choice. their tenant mix. For all centres, there is always a way to understand
When it comes to town centre shopping, flight to prime is rather what your catchment and customers require and it doesn’t always have
less applicable. Local high streets have generally grown from more to be traditional retail.
organic origins and don’t have the tailor-made back-of-house set-up Thanks to the ongoing evolution of flight to prime, certain destinations
that designated shopping centres have been designed with. The larger, are becoming increasingly competitive. Vacancy numbers are shrinking,
international tenants tend to find a natural home in shopping centres, presenting a growing challenge to retailers, with multiple brands
with town centres providing a home for more traditional retail day-to- beginning to chase the same unit. This shift is affecting leasing too, with
day offerings. flexibility built into terms to ensure that, if either party is not faring well,
At the outset, landlords and asset managers need to focus on the there are mechanisms to allow an earlier parting of ways. It is common
areas of their schemes that need bolstering to build a more rounded now to include performance clauses within lease terms.
offering that will appeal to a wider audience. What does the customer There is also a greater focus on tenant trading forecasts in the
want or need and are you providing it? By incorporating a variety of decision-making process – centres will want tenants delivering strong
occupiers, the offering will draw a wider mix of customers. For larger sales figures. Flight to prime has heightened the requirement for strong
schemes this will mean a mix of categories and user classes, so diverse data analytics in retail destinations. Understanding your customer and
fashion brands, diverse food offerings and diverse leisure, as well as catchment demographics is imperative to forecasting how brands will
alternative uses, such as medical offers. trade, feeding into the leasing process.
From a retailer perspective, we have seen increased curiosity around There will always be a focus on prime schemes for larger tenants,
understanding our strategic approach to leasing and building out the however this will only become more competitive as these schemes get
different categories. Interested parties will seek relevant adjacencies stronger and occupiers will need to remain nimble in choosing where
that could bolster their own trade in a shopping centre. It’s certainly to secure space.

26 RETAIL & LEISURE INTERNATIONAL MAY 2023