A Commercial Christmas
Published: 25 November, 2009
This time last year, the UK retail market was in turmoil. Future plans became uncertain, shoppers reined in their spending and weaker retailers went into administration. Twelve months on, the impact of recession has changed the outlook of landlords and retailers. Commercialisation over the upcoming Christmas period is a good indicator of where retailers see themselves now, and the current level of confidence as Britain enters the final quarter of 2009.
Retail merchandising units (RMUs) are a mainstay of shopping centre commercialisation, particularly at Christmas. As Clare Andrew, managing director of Shoppertainment, puts it: “They bring festivity into the mall. RMUs tend to be occupied by small businesses that can’t afford a big unit, but their products are unique and a bit special. They sell things like candles, jewellery and Christmas gifts, which can be more expensive but shoppers don’t normally mind paying extra when things are a little bit different.”
Alongside the obvious advantage of rental income, a range of RMUs selling one-off products gives each centre a point of difference; something Andrew feels is crucial. “There’s no point in having every town and shopping centre looking exactly the same. RMUs give shoppers lots of different things to look at as they wander about, which gives them a better experience and keeps them coming back to the centre,” she argues.
But with the effects of recession still lingering, just how many small businesses are investing money into leasing RMUs? “All our units have been booked for the Christmas period. In this last quarter, things have really started looking up,” asserts Andrew. “Across the board, companies are better organised for Christmas because they realise they need to help themselves by promoting and marketing. This is obviously great for the centres and great for us – we’ve been more organised as well in helping owners generate income.”
Roy Wade, who heads up Promotion Space Group’s RMU division, agrees that RMUs are still a strong component of shopping centre commercialisation. “We’re coming out of a bad time, but we’ve seen high occupancy levels throughout the year,” he affirms. Wade insists that outsourcing RMU programmes is a must if centres want to make the most of commercialisation opportunities. “Venues outsource because they’re looking for expertise. Gone are the days when RMUs were simply add-ons – now they are far more sophisticated,” he says.
Brandspace, a division of Promotion Space Group, recently won exclusive commercialisation rights to manage all promotional retail space at St David’s 2 in Cardiff. Having set up eight RMUs in the new centre, Wade is keen to stress their design and visual appeal. “We’ve got glass display towers which look fantastic on the mall,” he says. “Obviously there’s a need for functionality, but new design is just as important. Right now we’ve got regional traders on the RMUs, but the designs have prompted interest from in-line retailers at St David’s.”
And according to Iain Bell, commercial development manager at The Mall, the role of RMUs within shopping centres is crucial. “They give shoppers a breadth of choice,” declares Bell, who manages The Mall’s 140 RMUs. “It’s about getting the balance right between national and local businesses in a centre. We actively encourage RMUs to change their products and keep things seasonal to match what shoppers want to see. Right now they are providing things for winter and Christmas. More new products in a centre add difference,” he concludes.
Like Andrew, Bell identifies small businesses as those most likely to take up an RMU because they see it as an opportunity to test their products in a suitable location. “It’s a low risk way of starting out in retail,” adds Bell. But although competition between RMUs and big units in a centre has been a long-running issue, it seems managers are putting more effort in to ensure that RMUs are distinct from the centre’s tenant mix. Andrew and Bell focus on having RMUs that complement existing retailers and don’t duplicate items already available in the centre’s stores.
But Andrew has noticed a slight shift in the last twelve months. “More recently, big names like Marks & Spencer have been taking up RMUs to promote new lines or products. It’s something that brands have started over the last year to attract people into their stores,” she says.
Wade identifies a similar trend over at Promotion Space Group. “We’ve been talking to several retailers who are looking to come out into the mall. It’s another ready-made point of sale and takes away the issue of getting people into the stores. They have far more exposure on an RMU in the middle of a centre,” he argues.
Another important development in shopping centre commercialisation involves experiential marketing. Although it has been around for some time, Andrew notes a rise in major brand names buying promotion space in centres to host marketing events. “Because of the recession, bigger brands have realised they’ve got to be right in the face of the shopper. They’re putting more thought into what they’re doing now in terms of marketing and promotion,” she says.
Household names such as Colgate and Xbox are using experiential marketing to promote themselves in the busiest centres. Shoppertainment has been helping brands decide on appropriate locations by providing information on the footfall and customer base of UK malls. Breakfast cereal manufacturer Honey Monster Foods recently ran an experiential marketing campaign to promote a new product in centres across the UK, including White Rose in Leeds and The Pallasades in Birmingham.
And Andrew Keiller, sales director at Brandspace, has seen a flux of major brand names coming into St David’s 2. “It’s definitely getting more popular because the brands that do it, love it. We’ve got big names like Lindt and Vodafone, and Nintendo are running a huge interactive promotion in one of our spaces,” he says.
But brands that focus on television and print advertising are proving harder to convince. “It is more expensive for brands to deliver these events because of staffing costs. But we want them to look at the big picture. TV audiences are down and getting someone to look at a poster for longer than a few seconds is unusual. But promoting in shopping centres is so much more powerful because brands are really touching consumers. The problem is this type of marketing is kind of new so it hasn’t been as heavily researched. We know it works, brands promoting in shopping centres know it works, but we haven’t got nationwide coverage and research to prove it, and that’s the challenge,” argues Keiller.
While this is obviously an effective marketing opportunity for the brands, shopping centres also see huge benefits in terms of commercialisation. “Brands pay a lot of money to get into the centres. Experiential marketing makes far more than RMUs, because it involves bigger brands that generate more income. But it also gives shoppers something nice to look at,” insists Andrew.
Bell agrees that brands now recognise the benefits of promoting within shopping centres. “This area’s been performing quite strongly throughout the year. Brands can interact directly with customers, and their products are being sold in stores around the centre so companies can track how their marketing campaigns affect sales.
These shifts in shopping centre commercialisation are gradual and could possibly reflect a long-term change as retailers step up their promotions to encourage shoppers to spend. But something else to come out of the recession has taken the UK by storm: a fixation with gold, or more specifically, gold recycling. Pawnbroker H&T opened its first Gold Bar franchise, which swaps unwanted gold jewellery for a cash value, at an RMU in May. Six months on, H&T has 56 RMUs and anticipates a total of 70 by the end of the year. Meanwhile Guardian Jewellery has grown rapidly after launching its gold recycling service in Telford 14 months ago; it now has 150 RMUs across 30 UK shopping centres.
The reasons behind this craze seem relatively straightforward. Those looking to make safer investments after the turmoil of the financial markets have forced the price of gold up to record levels. And it’s not hard to see why swapping broken pieces of jewellery for money might appeal to cash-strapped shoppers.
But Tom Cadigan, Guardian Jewellery’s advertising manager, is keen to point out that, although the high gold price and recession is a catalyst, the main reason behind it all is a shift in attitude. “People have always seen this type of thing as slightly untoward; something you’d do in secret. But we’ve put out half a million adverts reaching 10 million people who never realized they can turn something useless, like broken jewellery, into money,” he explains.
Introducing gold recycling into shopping centres has helped its popularity climb even higher. “Shopping centres see a lot of footfall and RMUs are right in the middle of it all. We have thousands of people walking round us daily from every walk of life, which has been crucial in making gold recycling become accessible,” asserts Cadigan.
As one of its clients, commercialisation specialist Promotion Space Group has watched the rise and rise of Guardian Jewellery. Director Guy Soar notes the role that commercialisation played in the company’s success. “Other than asset value, another advantage of RMUs is that they allow operators to scale up. Guardian Jewellery now has a retail chain in shopping centres, and that was entirely driven by commercialisation. RMUs were a quick and easy way for them to set up and prove they’ve got a credible service. It’s fair to say that commercialisation legitimized gold recycling,” says Soar.
Despite operating in 30 shopping centres, there are some that remain wary of the concept. “We’ve been taken out of St David’s in Cardiff because they still saw it as a slightly stigmatic industry. Since Capital Shopping Centres invited us in, sales figures have clearly been up,” argues Cadigan.
H&T have 122 stores across the UK, but chief executive John Nichols emphasizes the benefits of RMUs. “They’re a really good catalyst for our development,” he says. “We ensure that our RMUs are professionally addressed and managed by professional staff. It’s been a win-win situation for us and the shopping centres, and we can now start forming longer-term relationships with them.”
H&T has been careful not to look too far into the future, however. Despite trading ahead of current market expectations, the company hasn’t altered targets for next year because it is uncertain whether this level of gold purchasing can be sustained. “I have no idea what the new year will hold from us,” stresses Nichols.
But while some might anticipate the fall of gold recycling as the economy picks up again and the price of gold drops, companies like Guardian Jewellery and H&T are relying on long-term success now that the stigma has been removed. “The amount of media attention we’ve got has helped shopping centre landlords and management, who didn’t know anything about us, to understand there is a need for our service,” insists Nichols.
