Handle with care
Published: 20 October, 2010
RMUs generate valuable revenue, but they need to be carefully managed to avoid conflict with in-line retailers
Since RMUs were introduced to the UK market in the early 1990s they have become a secondary lifeline for many shopping centres but they can be difficult to manage, particularly when considering location and sightline issues. It is often a fine balance between positioning RMUs in areas where their products are most likely to sell and avoiding obscuring the shop fronts of in-line retailers.
Locating RMUs within a mall can be a challenge, especially with retailers like John Lewis negotiating exclusion zones. But getting it right is vital to the success of a commercialisation strategy and as the business of RMUs grow and evolve so too do the management demands.
As Mark Wigens, head of commercialisation at Warner Estate, explains: “Location is absolutely vital. Retailers are savvy and they know where the best places to be are. A few years ago we just tried to fill spaces but now it’s just as important to place RMUs properly and in significant areas of footfall.”
Martin Kemp, managing director of Retail Profile, adds: “The location of RMUs within a shopping centre is the primary driver of their commercial success – it’s crucial.”
Kemp warns that RMUs are not problem solvers for dead-ends or areas of a centre with low footfall. “We sometimes have centre managers asking us to put an RMU in a quiet area but it doesn’t work,” he says. “RMUs are revenue generators in prime locations and shouldn’t be used to solve difficult areas in shopping centres.”
And there are other considerations. Brandspace has worked in shopping centres such as St. David’s in Cardiff, Metrocentre in Gateshead and Lakeside in Thurrock. CEO Steve Hughes warns that high value and experimental space that could be used for other promotional opportunities should be avoided as should pinch points where an RMU might cause bottlenecks. Another aspect is fire safety, as Hughes points out it may be that a centre is trying to reduce combustibles in a certain area and has to keep the mall clear.
One area of contention is the placement of RMUs in relation to the surrounding in-line retailers. As Byron Lewis, managing director of Lewis Commercialisation, explains: “There is a big debate about location. You need to have a plan and a strategy, you can’t charge X amount for a space and just put it anywhere.
“In Australia similar retailers are placed together - there’ll be phone shops with phone shops and fashion with fashion. It’s proven to be what customers want and to be a long-term option. But I wouldn’t advocate it in the UK - you can’t put an RMU selling jewellery in front of a jewellery store or you’ll get kick-back from the store.
“On-going issues need to be looked at on a case by case basis,” he advises. “There has to be compromise.”
Retail Profile actively selects product categories that complement the in-line retailers, carefully selecting merchants with products that offer new ideas or products that do not directly compete.
Similarly, Kemp, explains: “Mobile phone shops often see nearby phone accessory RMUs as a positive because they provide products which the main shops don’t.”
thecentre:mk has incorporated its RMU strategy to fully integrate with other changes that are happening at the centre. An enhancement programme was put in place three years ago part of which was to re-work the malls, creating premium, mid-market and value zones. Other changes included making areas more defined and putting in new interactive wayfinding and promotion pods. Since the programme was put in place commercial revenue has gone up by 250 per cent.
The commercialisation team has worked to make sure RMUs fit in with the relevant zones. Dermalogica is soon to take a space in the premium zone and a gold purchase stall is trading in the value zone.
“We have identified 49 RMU sites,” says centre manager, Robert Goodman. “It’s not about filling those sites as quickly as possible but about waiting for the right products, adding to the tenant mix and making sure you don’t impede on pedestrian flow.”
And choosing the right merchants can have a positive impact on surrounding retailers. “Local football club MK Dons has taken an RMU and it has had a positive impact on the independents in the area because football fans seek it out,” explains Goodman.
Creating sightlines so that shop fronts are fully visible and pleasing to the customer’s eye can be a hard task with RMUs taking space in the middle of the malls.
The impact of sightlines can vary depending on the design of the RMUs. As Byron Lewis says: “Aesthetically waist to neck height is ideal for RMUs. On the other hand, waist to knee designs alleviate sight issues but are harder to sell from.”
Whereas malls in the US are wider and designed for RMUs, apart from the larger UK centres like Westfield London and Bluewater which have mall widths of 14 m and 13 m respectively, this isn’t the case in most shopping centres.
Iain Bell is national commercial development manager at Capital & Regional. He believes that you can have height as long as there’s not too much width to go with it. “We’re very mindful of sightlines,” he says. “We space out RMUs and if shoppers can see through the units to the opposite side of the mall that’s ideal.”
On the other hand, Wigens believes that conventional sightline practises can be deliberately abandoned to guide shopper’s eyes away from empty units.
Mall income and commercialisation specialist Shoppertainment works with 80 of the top 150 UK shopping centres. Managing director Clare Andrew doesn’t think sightlines are a problem, saying: “It’s just a matter of communication to get the outcome you want to achieve. You have to liaise with tenants.”
It may be that as RMUs evolve some of the issues they currently pose in UK shopping centres will be automatically alleviated or even disappear altogether.
“We are about 20 years behind the States in mall commercialisation, over there it’s a $1.2bn industry in terms of revenue generation,” says Steve Hughes. “RMUs have evolved into kiosks over there and it’s something that’s starting to happen in some UK shopping centres. Kiosks are bespoke and a lot more pleasant on the eye.”
Because of this Hughes thinks the focus shouldn’t be just on RMUs but talks of mall retail - including kiosks and bespoke options - instead.
“Kiosks are a better retail solution,” he says. “They can be better branded, more individual and when kiosks become more widespread, sightline issues will disappear.”
The type of retailers trading from RMUs is also changing. Whereas traditionally they have been a stepping stone for independents, chain stores such as Marks & Spencer, Thorntons and Body Shop are now starting to take them up. Hughes predicts that over the next two to three years more in-line retailers will turn to mall commercialisation.
More traditional traders often more associated with market stalls are now turning to RMUs as a way to sell their products. Warner Estate has recently put a greengrocer into the outdoor part of the Grange and Pyramid shopping centre in Birkenhead. “It helped to rejuvenate part of the centre which was lacking in colour and vitality,” says Mark Wigens. “It has improved dwell time in the area and had spin-off value for nearby retailers.”
Building on the success of the greengrocer at Grange and Pyramid, Warner opened a second greengrocer in the Middleton Centre two months ago to form a shield in front of an empty unit. And like the one at Birkenhead, it’s trading very well.
Wigens adds: “There’s a juxtaposition between modern trends and traditional values and we are continuing to look in a more considered way at other traditional vendors such as florists.”
RMUs are a relatively new phenomenon compared with the US, but if the industry goes the same way as our neighbours across the pond it seems that kiosks may take over, making management issues easier to deal with. And in the meantime, understanding the concerns of in-line retailers and choosing vendors with products that complement the retail mix while helping RMUs merchants to make the most of their location and unit design, seem to be key to a healthy mall commercialisation environment.
