Starting point

Published:  26 January, 2012

The Retail Merchandising Unit is a great way for retail start-ups to trial their format and products at relatively low-cost. Can landlords do more to encourage entrepreneurs?

As well as providing landlords with additional revenue, RMUs and kiosks can be used to nurture small, independent retailers with a view to growing them into in-line units. But what are the stepping stones to success, and how can landlords help local entrepreneurs to expand?    

Julia Langkraehr, founder and development director of Retail Profile - now part of Spaceandpeople - and a lecturer at the ICSC, describes the move from an RMU or kiosk to an in-line unit as “incubation”.

Retail Profile has helped a number of RMU operators upgrade to in-line units including Flutterbyes, an outdoor decorations retailer at The Glades shopping centre in Bromley. Flutterbyes began life on the mall as Garden Sundries and moved into a permanent unit 12 months later, evolving its product line and changing its name along the way.

Charlie & Ben, a designer petwear specialist, is another example, having started as an online business before taking up RMUs at the MetroCentre and The Bridges in Sunderland. It now trades from a permanent unit at the MetroCentre. Retail Profile has also helped bespoke jewellery service Sha Sha to move into a shop at the Harlequin centre in Watford after starting out from an RMU at the centre two years earlier.

For Langkreahr, incubation is something to be encouraged, but she admits that for incubation to work the landlord has to be committed and motivated. “It all relies on the right space and the patience of the landlord,” she says. “It’s a mid-to-long term commitment that could take 1-5 years so it doesn’t happen overnight.”

She says the process involves several steps. Picking a suitable merchant is only the first. “Choose an operator and category,” she says. “And make sure they’ve got sustainable sales and aspirations to move into a permanent unit. Go through 12, 18, even 24 months of sales history, meet them on a regular basis and connect them with new product lines if necessary.”

Langkraehr advises landlords to start budding retailers off on a short-term deal, maybe 12 months, ensuring that they understand the importance of the sales vs occupancy cost ratio, and stepping them up to a market rent if possible.

And she warns landlords to avoid “setting them up for failure” by choosing a good location, taking into account that the move from an RMU to a kiosk can be a fairly painless step, but the jump from a kiosk to a unit can be more difficult for some.

“Going from a location on the mall where you’re surrounded by shoppers to being a destination in your own right, somewhere a customer would seek out, can be a challenge,” says Langkraehr.

But she thinks that challenge, both for the retailer and the landlord, can be a rewarding one.

“There’s a big debate about the cloning of malls,” she explains. “Shoppers want to see big chains on the high streets – we are a nation that loves brands – but at the same time people are noticing that local shops are disappearing and with a move towards experiential marketing, especially in secondary and tertiary towns, there’s something to be said for local flavour.”

The team behind Frenchgate shopping centre in Doncaster has been successful in growing several RMU operators into permanent units. The scheme has 29 independent units and of those The Original Lash & Nail Bar and branded clothing specialist Smarty Pants both started off on the mall.

The Original Lash & Nail Bar was set up by 24-year-old single mother Rebecca Taylor. Previously unemployed and homeless, she received a £3,000 loan and a £1,500 grant from the Princes Trust, helping her to set up shop at Frenchgate, and she has recently opened a second store at the Corn Exchange in Leeds.

“The Original Lash & Nail Bar is unique to Frenchgate and it sits very well in the scheme,” says Paul Devlin, asset manager at Belfast Office Properties. “We listened to her requirements, identified a unit and we were very glad to reach an agreement. Rebecca has done fantastically well and she’s now looking at other destinations.”

Smarty Pants, which prints and embroiders clothing for celebrations like birthdays and stag and hen parties is another success story. It had various incarnations over two years, starting off on an RMU and upgrading a couple of times on the mall before moving to a permanent base at the centre.

“We supported the concept primarily, met the owner on site and discovered she had an ambition to grow into a unit from the offset but it was a step too far in the early stages,” says Devlin. “The business was progressing very well and we felt it was something to encourage – with her input we found a suitable location and talked her through things like fire issues and electrical outlets so she wouldn’t fall foul of the regulations.”

Devlin and the team promoted Smarty Pants in mail-outs and on the website and kept it in mind, so that when the right 750-sq ft unit came up they set up a meeting with the owner and discussed how they could make it work.

“She had a clear picture in terms of what she wanted for the store design. We showed her how to get the best from the shopfront and talked her through the paperwork she needed to give us, shopfit plans, for example.

“When the store opened, we allowed her to promote the launch by hiring people dressed in Baywatch outfits to walk the malls, and made sure she was aware of promotion outlets like the website, Facebook, Twitter, and utilising wayfinding.”  

Devlin says incentives like rent free periods can be offered based on the merits of each case.  “Independents are quite astute and they’re conscious of cash flow so they tend to manage their businesses very well,” he says. “We don’t want to take charge of the business strategy from the start, we’ll give them a chance of survival and where we can, we’ll consider doing a deal.”

Devlin admits that Frenchgate has been a victim of its own success with fewer and fewer available units meaning there are now limited opportunities for incubation, which while good on one hand, can be “constricting” on the other. And according to Devlin, each new addition to the independent quota has resulted in footfall growth and rendered an improved perception of the scheme among customers.

This year Frenchgate is planning to bring in new mall operators during a series of themed weeks, health and wellbeing being one and others proposed to coincide with Valentine’s Day and Mother’s Day, allowing in-line tenants to take space as well as new operators, trialling a new generation of potential future tenants.

“We’re hoping it will connect the right products and services with the right customers at the right time of the year and it should be a great draw,” he says. “That’s the reason you get shoppers coming back again and again.”

Devlin stresses that the better an RMU or kiosk looks, the better chance of success it will have and he’s careful to attain detailed drawings and samples so he can visualise what a bespoke stand might look like. “We encourage quality, the better the quality the better the trade, and it has a positive knock-on effect on other retailers,” he says.

Andy Ferns, managing director at RMU design and manufacture specialist, Unibox, concurs. “Quality, well-designed RMUs and kiosks can certainly act as a stepping stone to success,” he says. “They’re a good way to test the market and the feasibility and viability of the business or product.”

Unibox designed a kiosk for My Milkshake, now installed in Lewisham shopping centre,  The Mall Walthamstow, The Mall Luton and The Mall Romford.  “The My Milkshake kiosks started trading in summer 2011 and have been trialing on the mall with a view to moving into a shop unit. Their plan is to trade for a full year and see how it works before it expands,” says Ferns.

Unibox’s bespoke jewellery display kiosk can be designed, built, manufactured and installed with the intention of moving a brand seamlessly and economically from the mall into an in-line unit.

“The whole thing could be moved into a shop unit and used as a central display or reconfigured to stand against a wall,” explains Ferns, saving money on the shopfit and allowing a bit of respite during a first move into a unit.   

Clare Andrew, managing director at Shoppertainment Management, has noticed an incubation trend. She gives an eyebrow threading service at Elmsleigh shopping centre in Staines as an example, which moved from an RMU to a unit in 12 months.

“The RMU on the mall became extremely busy, which prompted the retailer to take a unit at the centre and expand their business. They still maintained the RMU along with the additional unit as they had a good position on the mall and both options have in turn worked well for them.”

She also believes incubation should be encouraged where appropriate but she thinks it’s important that mall traders are allowed to come and go to sustain variety.  

“If you’ve got a good RMU operator and they’re an asset to the centre it makes sense to encourage them to be a bigger part of it and take a permanent unit,” she says. “On the other hand, it’s good to get different mall traders in at different times and to coincide with different activities. Whereas there tends not to be too many in-line changes during the year, RMUs add fresh blood and breathe new life into a centre.”

And the benefits? “If mall traders graduate to an in-line unit on a permanent basis, the value of that is hard to measure,” says Belfast Office Properties’ Devlin. “Aside from rent roll and improved footfall, the main benefit to the scheme and shoppers is variety.”

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