Up the Junction
Published: 10 November, 2006
Junction One outlet centre is the first of its kind in Northern Ireland and, with gross profits growing at 20 per cent year-on-year, its owners are taking the opportunity to reassess its progress.
John Drummond is managing director at The Guinea Group, which has a strong track record as developer, asset manager and operator of outlet shopping centres. "Our responsibility at Junction One is twofold," he says. "Originally, the site was owned by The Kennedy Group and now it is owned by ourselves, Cusp, The Kennedy Group and Dunalastair.
"Because of what Guinea do, we have a totally separate contract with Junction One, whereby we act as asset managers and operators. Because we are developers we're responsible for future phases, too," he adds.
Currently, as it stands, there are six parts of the Junction One development. Firstly, the main 245,000 sq ft of outlet retail incorporating 60 stores in which The Guinea Group has a proprietorial interest and then a further 80-acre site, which is owned by Cusp and The Kennedy Group, which consists of a second planned retail phase, a Holiday Inn Express hotel and leisure facility, the Red Panda restaurant and standalone stores for Asda and Homebase.
So far, during its short history, the complex has secured some of the top names in fashion, sport and footwear, from Next, Marks & Spencer, Nike, Adidas, Reebok and Polo Ralph Lauren, to more recent additions, Clarks and Ravel. As part of the forward-planning for the centre, The Guinea Group has been reappraising its team of leasing agents.
Drummond explains: "We've got Rohleder Lumby, of the West End, who were the original leasing agents when we first started phase one. We've also got O'Connor Kennedy Turtle and they've also been on board from the beginning. More recently, we brought in another company, Realm, for phases 1D and 1E and they will work alongside the existing companies."
The purpose of bringing Realm into the equation was not because the developers were engaging in a strategic rethink but more to add to the growing interest in the Junction One site.
"It's important to continually assess the units we have in Junction One - just last month, we signed Ravel. Although Junction One opened at full capacity, there have been a few companies that have gone into receivership, such as Mikey, so while we lost out there we were able to bring a great name like Ravel.
"This is normal in retail, units will always come and go but it allows us to continually reassess everything we do. For example, the Levi's store has recently changed from a franchised store to a company-owned one and that, in simple terms, means it will be a better store."
With successes, such as Polo Ralph Lauren and the Nike brands taking space, Drummond explains that securing the right mix of brands is vital for a project like Junction One.
"The letting to Polo Ralph Lauren was important because of the Bond Street name link. Also, when we got Nike it basically set Junction One up for all sports-related custom. We already had Reebok and Adidas so why would anyone go anywhere else.
"We're constantly looking to improve the mix, because an outlet is a very flexible trading model," he continues. "And with the changes in the fashion industry, Junction One will move to suit the current trends."
With all this activity, Junction One has created more than 300 jobs in the local area rising to more than a thousand as work continues on further phases.
"People who once had to travel to Belfast for these types of jobs no longer have to make that long journey. This gives them an alternative," says Drummond.
The success of Junction One was by no means an easy ride for Drummond and his team, and one of the biggest hurdles the developers have had to overcome was getting people to first buy into the idea of outlet shopping before any purchases would be made.
"It was important to get people to believe in the idea, and in the very early days - we're going back maybe five, six, seven years ago - the challenge was getting the brands and stores to come to Northern Ireland and take it seriously.
"It's hard to remember now, in many ways, what it was like seven or eight years ago but we had already been working over here for quite a bit, and I used to talk to people from the rest of the UK and say I was off to Northern Ireland and they would gasp. They were 10 years out of date but that's how people thought."
Now, with the support of the consumers and the retailers in three short years, Junction One has elevated itself to the status of a tourist destination in its own right, and Drummond is confident that this will only grow and grow.
"Northern Ireland doesn't have this tourist trade yet. It's building, but at the minute, it's mostly just friends and family," says Drummond. "One of the challenges is not just building our chunk of the tourist market but building up the tourist market.
"Belfast itself is building up - Belfast has a really good night-time scene, it's a great place to go out. And now we're working hard on convincing people to come up to Junction One. That's one of the challenges of Northern Ireland - you work with a very small resident population and you have to communicate a lot, keep them informed and make sure they come regularly."
So with a solid base from which to grow, Junction One has easily established itself as Northern Ireland's premier shopping destination but the plans don't end there. With another 80-acre site waiting in the wings, Drummond believes Junction One has the capabilities to become a completely self-contained development.
He says: "Our plans now are to keep driving Junction One forward, keep driving it as a multi-use centre with lots of reasons for people to come to it, keep driving the outlet side of the business so we drive it more upmarket.
"You couldn't make a solely upmarket centre work in Northern Ireland there just aren't enough people - but you have to get the high end and also the middle market. We never relax. In retailing you can never relax. We're in our third year, we've built an incredible customer base, so we're in a very commanding position," Drummond continues.
"Competition comes along and nibbles at the edges but we're constantly freshening our offer.
"It's a fast-moving economy and you have to keep on top of that because new things are happening all the time, and it's a small enough market that something happening quite some distance away can actually have a relatively large impact."
And of course, knowing your market is probably the most crucial cog in the Junction One wheel, which Drummond admits was a huge learning curve for him. For a start, Northern Ireland is now more accessible with the low-cost carriers. "That again gives its own challenges; given that Northern Ireland is the only place I know where 25 per cent of the population goes on holiday in the same month. The first year we traded here it happened and we looked around and wondered where everyone was - so we had to learn how that worked.
"It's great, challenging and one of the most exciting places I know," Drummond concludes.
