Hammerson - strategic direction

First let me say that I’m not convinced that online shopping will take over the world and people will cease travelling to shopping centres.  Online might take a bit more of retail spend, but there are real barriers for them. People like to try on clothes, touch and feel other items they might buy, compare prices and quality from a number of shops in an afternoon. And they like to intersperse shopping with chats over food/drink or leisure activities such as cinema and going up climbing walls.
Even those retailers that fully “get it” when it comes to online know that physical retail is often a critical part of omnichannel fulfilment and brand experience.


Fashion retailers used to take around one half of Hammerson’s (LSE:HMSO) space, but that has evolved so that now less than one-third of new lets are fashion. In the 1990s food and beverage was 5% of the tenant base; these days its more like 20%. And increasingly gyms and wellbeing service providers are occupying units.
While the death of Debenhams and Top Shop get the headlines less noticed is the steady growth of the likes of NEXT which often take the space vacated by lesser retailers albeit at lower rents, e.g. ex-Debenhams space in Reading and Croydon run by Hammerson has been taken by NEXT.
Alternative uses
We must not be Polyannaish here though. Setting aside the luxury brand occupied space at Value Retail Villages, we are seeing overall  a large reduction in demand from retailers and others for square metreage at Hammerson’s flagship malls. Because demand is down rents have been reduced along with better terms granted.
A solution being pursued is to reduce the supply of the number of units being offered to retailers. The directors of Hammerson refer to this as “densification”. I think this means they concentrate the retail shops in part of the mall; and then use the released space to collect rent from various service providers, or to build and sell property such as flats built in and on top of old stores.
Whereas it used to be the case that 95% would be retail, these days we’re looking at 50% being other things, such as:

• For example, in Wigan 500 new homes, in Leicester Highcross there are plans to replace Debenhams with 300 flats for rent with partner Packaged Living
• Hotels
• Offices
• Cinema
• Last-mile logistics and click-and-collect
• Climbing wall
• Bowling alley
• Mini-golf

CEO, Rita-Rosa Cagné pointedly told the FT in May “This happens to be a portfolio of prime, urb........