As a pan-European investment manager specialised in retail property, it is our business to identify those markets that contribute to the success of the retailer – and thus to our own success and that of our investors. Over the past years location selection has become ever more important. Location risk has leapt up the agenda as e-commerce is changing the retail landscape at an astonishing speed.
Through cooperative ventures with like-minded investors who share our values and corporate governance qualities, we are looking to invest across the risk return spectrum in property ranging from High Street retail assets in major European cities to dominant out-of-town retail parks and shopping centres in or near dominant retail destinations. Our investment decisions are based on a well-substantiated view fuelled by our in-house Research & Strategy team combined with the local knowledge and expertise of our teams on the ground.
Consumer behaviour and its impact on city attractiveness
we pro-actively seek to understand the challenges in retailing, which is both innovating and being disrupted at an astonishing speed, caused by for instance changing consumer behaviour, e-commerce, structural stagnation of economic growth, political instability and demographic change. This helps us to identify threats and opportunities, and informs the way that we adapt our property offering to the needs of our retailer clients.
Redevco’s in-depth survey of nearly 14,000 consumers across six major European markets, clearly shows that e-commerce is one of the driving forces that changes how consumers shop and what they believe is important in the shopping experience. The quality of products and the shops in a physical shopping environment has become significantly more important as have the surroundings and catering facilities.
The Internet is becoming a key driver of the intensifying “experience and convenience” market polarisation trend and creating a ‘retail state of mind’ that is increasingly impacting retailers and investors. Consumers have shifted their ‘retail state of mind’ from a need-to-buy towards a need-to-enjoy. As shoppers become much more demanding in what they expect of shopping venues and surrounding environments, Redevco needs to ensure that its investment choices address their needs in a more holistic way, factoring in local trends and the relative attraction of cities as retail destinations.
To develop successful investment strategies a solid view on the most attractive cities for our business is required. During the past three years, Redevco has carried out extensive research to develop its City Attractiveness Model which now ranks 825 European cities in terms of attractiveness for high street investments. The city attractiveness model helps us understand what determines a successful retail destination by identifying the factors that underpin their appeal and enables us to assess where the next retail hub is likely to arise.
Insights from the model go beyond fundamental market drivers, such as economic and demographic data. They reveal that ‘soft factors’, like the presence of creative professionals or the number of tourist attractions, are increasingly important in determining a city’s overall attractiveness for investment and lie behind the superior financial performance of assets in these locations. A thorough knowledge of a retail destination puts us in an excellent position to find the optimal location for retailers to open stores, while allowing us to develop investment strategies for our investor clients that outperform the market.