Hi, Tom. I'm here to talk with you about Re:Imagining Retail, the report that you spent quite a fair bit of time putting together for Savills over the last months. Could you just outline firstly, its chief findings, but before that, set it into context?

 

Yes, okay. Thank you. So, going back about five years ago, as a retail analyst, I realized that talking about vacancy trends wasn't particularly progressive, or doing anything about them. And at the same time, a colleague of mine in a shopping investment team spotted that actually the values from some retail assets were declining because of low occupation. So, we started thinking about alternative uses for space. And out of this was born Re:Imagining Retail - it was the idea that retail needs to the right-sized but not replaced. And bringing in a disparate number of other functions actually helps, for all sorts of reasons - it increases occupation, it, by bringing in medical, wellbeing offices, residential, and all sorts of other myriad things - that, in turn brings in new customers, it makes for more interesting places. And places that are more vibrant and ultimately more resilient. And that's really where we were starting out with Re:Imagining Retail. And very quickly that progressed, and talking about specific assets, to talking about retail places. So, thinking about reimagining town centres and city centres and thinking about what it is that is ultimately going to drive the economics forward in those places. Not just economics, from the point of view of those that are investors, but all stakeholders whether that's people that live in those towns. And actually, when we bring together those sorts of things like 15-minute city principles, you actually create really interesting places. And gradually, the story just got more and more interesting. Now, at the time, I was quite keen to do something about environmental sustainability, which is something I'm passionate about. But the economic sustainability bit was big enough in its own right. And then about 12 months ago, we obviously had COP in this country, which really brought certain things to the fore. We recognize within the property industry that things like the ESG agenda - environmental, social and governance - is really shaping the future of all properties. And it just kind of sort of came together that it was an ideal opportunity to start thinking about the environmental sustainability of retail places to naturally follow what we've been talking about before. And my working brief that I gave myself was to come up with the most comprehensive review to date of all the myriad of different things that are or are not being done within retail property in order to go green. And that's effectively where we've got to and then nine months later, we've literally just launched today, that particular publication.

 

What is the key nugget that we should take away from the report? What's the main takeaway?

 

Okay, there are lots of things going on. And it's a massive topic. But I think the most important ones, I think, for me, are that environmental and economic sustainability drivers are not disparate issues. They are two sides of the same coin, really, really key. When I was growing up, environmentalism was very much on the periphery of the way that communities and society drove things forward. And I think it's really coming to the fore now. And one of the things that's really driving that is that, actually, it makes financial sense in lots of instances, to develop and think greener. You think about the cost of living and the energy crisis, now, energy security, green energy, is ultimately cheaper. And it gives us that. So, you start to find these individual components whereby it makes sense for shopping centres to stick solar panels on the roof. The cost of energy goes up, and ultimately, they're able to produce more - all these things start to tie together. Same in terms of developing. If we think about town centres, we used to develop sort of island assets, where you'd have your retail asset and your office asset and your residential asset. And one of the things that really became obvious during COVID was: when people are stuck in one particular community, they are having to use those communities for all sorts of different things at the same time. Before that, you'd be you'd live wherever you worked. You'd live wherever you lived, then you drive to wherever you worked. And then you might travel to somewhere else to play and go out. And that meant that you have limited amount of affinity or synergy within particular place that you live. You start to bring all those things together, and actually, you have more loyalty and more sense of community within those particular locations, you're more likely to visit them. And ultimately, that helps lead to better occupation for the businesses and the retailers that are within those locations. So starting to bring all these things together is really, really helpful. Consumers and communities are now actually drawn to things that are greener - whether it is through more environmental purchasing or just are actually in terms of green spaces and parks and the environment.

 

I was going to ask about that, actually, if I can just jump in there, because I wondered whether you think that consumers do make green choices. So: somebody walking along Oxford Street, for example. Do they make a choice about going into Primark based on Primark’s sustainability credentials, and where they get their products from and fast fashion, etc? Or do you think they don't?  How deep does the ESG principle go in retail, and particularly from the consumer side?

 

Yeah, it's pretty polarized. I think if we ask most consumers whether they want to be greener, they say yes. But the stark reality is that most don't follow that up with their way that they spend. And one of the big concerns for me is that, with things like Re:Imagining Retail, is you can see how you can start to identify solutions. But when you have a cost-of-living crisis, both from a consumer’s perspective, but equally for, businesses and shopping centres that are trying to think about who they lease space to, quite often, you end up having to focus on the here and now, the ever-present problems. So, consumers do want to be greener; they won't necessarily pay for it. More affluent consumers often will. But I don't think that means that they won't punish those retailers that have really bad credentials. And I think increasingly, we'll see consumers vote with their feet where they can afford to do so. Remember of course, as well that most big retailers also have their own ESG strategies. IKEA, for example - they don't just measure their carbon footprint of the goods within their supply chain; they even measure the energy that's used for the light bulb that you have in your house during the course of the lifetime of that particular product. It is a really progressive way that they're looking at it. And it's kind of how things are going to go. From a retailer's point of view, you've even got to think about the waste and the energy and the embodied carbon at the end of that product's useful life. So, you kind of get into Circular Economy principles, which is another tranche entirely. 

 

Maybe I can ask one final last question. Because the other the other thing that crops up in my mind when it comes to thinking about retail and green principles is parking. To what degree have you taken on board any issues about parking and access and, transport to retail sites? And I suppose you mentioned it within your opening comments about the 15-Minute city to a certain degree. But to what extent is that an issue?

 

Yeah, it is an issue. But so is the issue of things being delivered to our homes. Quite often, you find a problem, you look for an alternative, and that alternative isn't necessarily without its own issues. I think the reality is, and one thing I really like about the idea of the 15-Minute principle is that actually it brings all these things together. And that reduces the number of journeys. The one I often talk about is people dropping their kids off at school, they'll go and use a convenience store. People going to a medical centre, may go to a pharmacy and go for a coffee. And once you start getting journey linkages, then transport and those journeys are more sustainable. As long as you've got journeys all being for entirely different purposes than absolutely it's not a particularly sustainable way of life. And one of the advantages of repurposing shopping centres and town centres to bring in all of these other disparate uses is then you reduce the number of reasons why people need to visit other places.

 

Well, it's all fascinating stuff. And I'm presuming there's plenty more of this to be found in the actual report, which I think is the third in the series, isn't it? Is that right? 

 

It is. Yeah.

 

So, you're quickly on to the fourth, presumably - there's no time to muck around?

 

I'm going to go on holiday first (laughs)

 

(laughs) Excellent! Well, I hope you find some good, reimagined retail, wherever you're going. And thanks for talking it through.

 

Excellent. All right, thank you very much. Good speaking to you

 

Cheers!

 

Thanks, David. Bye