Europe’s retail market is ahead of the curve in dealing with global structural change, according to a new research report published today by agent JLL.
The report - ‘Structural changes in retail – why Europe and the US are different’ - says the wave of shopping centre closures in the US won’t be replicated in Europe thanks to smaller market size, less reliance on department stores and movement towards shopping experiences.
'While it is true that the global retail landscape is facing headwinds, a lot of the noise coming out of the US is amplified. Transformation is underway; much of the department store space coming to the market will be re-let to new types of tenants, repurposed or undergo change of use,' commented James Brown, head of research and strategy, JLL.
For Europe, the outlook is challenging but bright and the market is in a good position to deal with the ongoing structural change, added Brown. 'It’s further along on the journey than the US. It benefits from different fundamentals; a smaller size; natural diversity and identity; more rigorous planning legislation and proactive landlords who are responding to changing shopper habits.'
Shape and size on Europe’s side
In an increasingly virtual world where spending patterns have shifted towards experience and some spend has migrated online, the US has simply too much traditional shopping centre space: 1,274 m2 of gross leasable area (GLA) per 1,000 people compared to 216 m2 in Europe.
46% of GLA in larger schemes in the US is devoted to department stores, which are relatively unproductive in terms of densities compared to Europe, where they only account for 27%.
'Incorporating diversity of retailer mix into a scheme is vital to remain relevant and keep up with what consumers want. Landlords in Europe are alive to this and have reduced their exposure to fashion and apparel, increased exposure to food and beverage and alternative uses, married online and offline and created an experience to ensure success,' added Brown.
