The battle for prime retail
Developments in the prime highstreets
November 2014
Definitely.
DTZ Zadelhoff
www.dtz.nl
The battle for prime retail | DTZ Zadelhoff | 1
The battle for prime retail
A battle is going on for the best shops
in the most popular highstreets in the
Netherlands. Competition for these prime
retail properties is cutthroat and retailers
are jostling for position. The fashion sector
and international retailers have an ever
more dominant presence in order to attract
as many consumers as possible. They need
these consumers to generate turnover, not
only in their physical stores, but also online.
Locations with the highest footfall are
popular, and as a result they enjoy stable or
even rising rents, even in the current climate
of falling shopper numbers. In the best retail
districts of the Netherlands greater emphasis
is being placed on fashion and the idea of an
‘experience’. These developments combined
have meant that the prime retail districts
have become smaller. These are the main
findings from interviews DTZ Zadelhoff
has held with a number of large retailers in
the Netherlands. These main findings and
DTZ Zadelhoff’s vision form the basis of this
market analysis which sets out the main
trends in the prime retail districts from the
perspective of the retailer.
2 | DTZ Zadelhoff | The battle for prime retail
years. This is the result of low rents - from an
“It is not our policy to develop
a location ourselves; we have
become a major player precisely
by opening our stores on the
best highstreets.”
international perspective - in the Netherlands
An international single brand fashion chain
Internationalization
In the quest to find new markets and
commercial opportunities, major foreign
retailers have moved into prime retail
shopping districts in the Netherlands in recent
and a population with purchasing power. In
the prime retail districts, all the requirements
Displacement market
a retailer may have to set up business come
It is therefore the international chains that
together: high footfall, major brands, a strong
initially, and above all in Amsterdam, are
experience and an extended length of stay
responsible for new dynamism. Amsterdam
among visitors.
is the perfect example of an increasingly
one-sided retail sector at prime retail
It is estimated that between 15 and 20%
locations, with very high market rents,
of the shops at prime retail locations are
caused above all by the international fashion
occupied by foreign chains, and this share
sector. A displacement market is created,
will increase in the coming years. Many
because these chains want and are able to
international newcomers target Amsterdam
open stores in the very best locations with
first. Once they have proved to be successful
the highest footfall.
there, interest then fans out to the other G4
cities. After that it is the turn of towns with a
The traditionally local retail market was
population more than 100,000. In general,
already dominated by national chains (87%
in their business location strategy foreign
of retail outlets at prime retail locations are
chains focus on larger catchment areas than
chain stores), but these are now making way
Dutch retailers.
for international retailers which can pay
Rent trends at prime retail locations in G4 shopping cities compared to G5-23
Index: 2000 = 100
180
170
160
150
140
130
120
110
100
90
2000
2002
G4
2004
2006
2008
2010
G5-23
2012
2014
Source: DTZ Zadelhoff
higher rents. Where the playing field
It is precisely the crisis that is making
other retailers. During recent years the rate
previously shifted from a locally oriented
international retailers in search of footfall
of change in the prime retail highstreets has
to a national market, Amsterdam is now
focus more and more on the very best
been between 7% and 14% per year within
undergoing a shift from a nationally oriented
properties in the best highstreets. This
the G23¹. Retail outlets with non day-to-day
market to an international market.
increases the pressure on these properties
product categories, such as fashion and
and forces rents upwards. The more
shoes, account for three-quarters of this
traditional retailers can often no longer afford
dynamic change. The composition of shops
the rising rents and in that case will no longer
in prime retail districts is changing fast from
choose for the prime retail districts. As soon
a shopping centre in a broad sense (with a
as they leave, other retailers are already
full range of day-to-day and non day-to-day
scrambling over each other to move in.
products) into a shopping centre in a narrow
“In the large towns and cities it is
becoming more and more difficult
for us to pay the market rents.
We cannot compete with foreign
retailers on the rents they can
pay. Kalverstraat is out of reach
for us now.”
A national multiple brand fashion chain
Crisis: rising rents
It is often thought that retail rents have
fallen since the crisis, but at the prime retail
locations rents remain high or are even
rising. This is evident from movements in
top rents in the largest shopping towns and
sense. Prime retail districts are increasingly
“It just doesn’t make sense: we have
a crisis and the rents keep rising
at prime retail locations. With the
crisis everyone wants to have the
best spot, so everyone moves into
prime retail districts. And that
area is simply getting smaller
and smaller.”
A national pharmacy chain
cities in the Netherlands. Rents in the G4
offering the very latest and best of a limited
range of products. This means that certain
sectors, such as household goods and
personal care, are disappearing from the
streetscape, sidelined by the increasingly
dominant position of the national and
international fashion sector.
¹ The 23 largest shopping towns and cities
in the Netherlands comprise the 17 largest
shopping cities, where the city centres have
more than 400 retail outlets, together with
have been clearly rising since 2009, whereas
Range of shops
towns with more than 100,000 inhabitants
in the other towns and cities they show a
In a displacement market where rents are
with a central shopping district with between
more stable trend.
rising, retailers are therefore making way for
250 and 400 retail outlets.
The battle for prime retail | DTZ Zadelhoff | 3
However, more and more products are sold
Fast Fashion
For such a concept to be profitable, footfall
in each shop because retailers are more
A driving force behind the change at prime
needs to be as high as possible, and this
likely to hold a larger range with many
retail locations is the shortening of the life
means a shop at a top location.
brands, and as a result shops at prime retail
cycle of certain consumer products. New
locations are becoming larger. We are
collections and products follow each other
Fast Fashion is not successful everywhere.
seeing more frequently in this context the
in rapid succession, thus reducing the
The speed at which a shop’s stock is sold
merger of different shops into a single store.
available selling time for a product. Fast
will vary per town, per street and per shop.
Fashion means that in a market with reduced
The investments that need to be made are
spending power among consumers and
however the same. Only in towns and cities
fewer visitors to shopping towns and cities,
with high enough footfall can Fast Fashion
it is even more important for a retailer to
be profitable. We observe this trend on a
have its shop at the best locations. ZARA,
European scale, which is causing European
for example, pursues a production and
towns and cities increasingly to resemble
marketing concept in whicha large part of
each other. The very latest fashion will be in
the range is renewed every two weeks. The
the shops the very same day in both Milan
entire collection changes every six weeks.
and Amsterdam.
“For us a presence at a prime retail
location is extremely important,
because the brands we sell can
also be sold elsewhere.”
A national multiple brand fashion chain
Changing range of shops on prime retail highstreets
Distribution in 2003 (inner ring) and in 2013 (outer ring)
Clothing and fashion
Department store
18%
Shoes
4%
6%
7%
25%
4%
4%
8%
37%
43%
Sports & Games
Personal care
22%
22%
4 | DTZ Zadelhoff | The battle for prime retail
Other
Source: Locatus, adapted by DTZ Zadelhoff
Some brands are sold by more than one
“How fast do you sell your
retailer. As the life cycle of products
clothing? That is the question.
becomes shorter and the visibility of brands
The amount of clothes which one
becomes more important, a presence at the
particular shop in a particular city prime retail locations is a must in order to
will sell in a week, will be sold in
generate turnover, both offline and online.
As a result, single brand stores have become
a shop in a different city in half
a threat to the multiple brand stores.
a day. Even so, the investment in
both shops is the same.”
“A day out shopping has become
An international single brand fashion chain
a brand experience. The actual
buying process would seem to
Brandstores
The changing shopping behaviour of
be less important.”
consumers plays an important role for
retailers. Single brand stores are demanding
A pharmacy
the shopping public’s attention even more
Feeling and experience
aggressively through the growing presence
Thanks to the changing range of shops to be
of single brand stores, which are seeking
found in prime retail districts, the catchment
to develop a direct relationship with the
areas of the large shopping towns and cities
consumer. A day out shopping has in fact
have become larger. The maximum distance
become a brand experience, with the actual
that the consumer is prepared to travel to
buying process being pushed into the
an attractive shopping city has increased.
background. Consumers are more often
The shopping environment cannot therefore
likely to try on clothes in the shop, but then
be viewed in isolation from the other
actually buy them online. The product brand
functions of the city. The cultural amenities,
is increasingly important, while the brand
gastronomy and hospitality increasingly form
in the shop is becoming less relevant. As
an integrated whole to persuade day visitors
a result, visibility and recognizability at
to extend their stay there and to offer them a
prime retail locations has become ever more
high-quality experience.
Although the most dynamism is currently
to be found in the prime retail shopping
districts in the largest cities, this does
not mean that the consumer ignores the
other towns and cities for an enjoyable day
out. There are towns with only 20,000
inhabitants which retailers regard as being
successful. Smaller towns may well have a
large regional catchment area. Ultimately,
the feeling that people get in a town or
city and the experience they have there is
crucial. That feeling and experience does not
merely depend on the size of the population.
Maastricht is proof that in an area with
a shrinking population and high levels of
unemployment, a very successful shopping
city can flourish.
“If you do not invest as a town
in shopping amenities, catering
facilities and hospitality, you
simply will not survive. Shops
will still exist, but the day visitors
seeking an experience will stay
away. They make the difference.”
A national single brand fashion chain
important.
The battle for prime retail | DTZ Zadelhoff | 5
Contact
For more information about this survey or a custom-made survey please contact
the Research department of DTZ Zadelhoff via research@dtz.nl.
the Retail department of DTZ Zadelhoff via 0031 (0)30 6 022 211 or via retail@dtz.nl.
11-2014
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