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“UK consumers seem to be easily confused over premium price and premium value. We seem to be prepared to pay enormous sums for a branded fleece, to an extent that US consumers wouldn’t dream of. More fool us!”


PUSHING UP RENTS?


US retailers are happy to pay what it costs to make a splash. James Ebel, partner at Harper Dennis Hobbs, says US retailers make a complex calculation. “They don’t have rates in the US and


to them our retail rents are much higher. Surprised isn’t a good enough word – astounded might be better – to describe how they see London property costs,” he says. Having realised that even a poorish


store in an average location is going to cost what feels like a fortune, they still splash out. “When they decide to do something, they decide to do it well. They execute well. There are no cautious trials and dipping of toes.” Ebel doubts US retailers are helping


to force up prime West End rents – he reckons they are capable of striking deals, knowing they are flavour of the month. But John Strachan, global head of retail at Cushman & Wakefield, is not so sure. “The international retailers have


helped hold rents up,“ he says. “Just as every high net-worth individual in the world wants a London home, so every international retail brand must have space in London.” Research from Jones Lang LaSalle


supports the point – with 235 international retail brands represented, London is the most international of the world’s major shopping cities.


marketing and advertising.” There is, however, a limit to the magic a good retail address can weave. Thomas says: “Customers are no fools. Even Primark on Bond Street wouldn’t get premium prices. But if you have the right product – or you can become a tourist attraction – then it can work.” Paying for premium retail floorspace


makes sense, he says. “US retailers don’t necessarily have deeper pockets, but they are raiding different budgets to meet their goal of establishing their brand in the UK. This is important for new brands who want to make an international station, and aren’t overly interested in profit margin, at least to start with.“


James Dolphin, lead director for


International Retail at Jones Lang LaSalle, agrees that margins are the key to the US retailers’ upscale strategy. “They can increase their margins in Europe, and European real estate is expensive, so it’s about making a splash to hit the wider markets, and spending to achieve the most beautiful and effective sales space,” he says. “The US retailers know you pay for


what you get. Bond Street is expensive but they want to be in the right location. It gets you fabulous turnover and great international profile.” For some, the UK reaction to the


US brands is hard to fathom. A slightly puzzled Patrick Heaps, head of retail at BNP Paribas Real Estate, confesses: “If you’re a certain age the ultimate fashion coolness was Milan or Paris. Today the US is cool. There’s no quality difference, it’s just down to UK consumers and what they think, and they might not think the same in 10 years’ time.” Will the US brands be able to sustain their premium image?


Some whisper that the appeal to a


mass audience of today’s tee-shirt-and- flip-flops-look is bound to undermine premium status. Look at the fate of Burberry, they say, with a shudder. Yet others point to Gap – once upon a time an upscale new entrant, like Abercrombie. James Ebel, partner at Harper Dennis Hobbs, was one of those who pioneered Gap’s move out of London to the UK regions in the mid-1990s. He says: “Back then Gap was the prettiest girl on the block – but everything moves on. Gap entered the UK market higher up the scale than it was in its home market. Today the UK and US positions have equalised.” One adviser to some of the biggest


US fashion brands told EG: “UK consumers seem to be easily confused over premium price and premium value. We seem to be taken in by the Hollister concept and prepared to pay enormous sums for a branded fleece, to an extent that US consumers wouldn’t dream of. More fool us!” One day UK consumers may realise


that a pair of flip-flops really is only a bit of plastic with a loop on the front, no matter what Bond Street shop you bought them from. Until then, long live the US of A.


Summer 2013 www.estatesgazette.com 31


ALAMY


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