People want to know that there are things happening in the high street and I think even kind of anthropologically we’re drawn to that, we’re drawn to where things are happening, where people are experiencing things. So, we need to bring that back. It can’t just be about residential and offices and there you go, we’ve found the solution.
Susan Freeman
Hi, I’m Susan Freeman, welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview the key influencers in the world of real estate and the built environment. We’re recording the podcast digitally so please do bear with us if the sound quality isn’t up to normal studio standard.
Today I am delighted to welcome Rebeca Guzman Vidal. Rebeca is the Group Head of Retail at international investor, asset manager and developer Chelsfield, where she works on retail strategy across a global portfolio that spans gateway cities including London, Paris, New York and Hong Kong. Chelsfield is currently redeveloping a third of the 3.5 acre Knightsbridge Estate, a mixed-use, retail-led portfolio in London on behalf of owner, The Olayan Group. Rebeca is heavily involved in bringing new retailers to the development and leveraging relationships that crossover into the Paris and New York portfolios. More recently, she has also been focussing on refining the long-term retail strategy of the portfolio to ensure its resilience as the world prepares for a global recovery. In Paris, Rebeca is working on projects on Avenue Montaigne that will significantly change the retail landscape of the Triangle d’Or whereas in New York she is working closely with the team in delivering a best-in-class amenities and retail strategy for the redevelopment of 550 Madison Avenue. Prior to joining Chelsfield, Rebeca worked at CBRE where she was part of the London retail advisory team working for some of London’s major landlords including Grosvenor, The Crown Estate, Cadogan Estate and Great Portland Estates. She specialised in luxury assets and worked on a number of high-profile placemaking schemes including Regent Street, Sloane Street and Mount Street. And now we are going to hear from Rebeca with her thoughts on what she sees as both the short and long-term future of international retail.
Rebeca, welcome to the digital studio. It’s great to have you on here because I know that you also host your own podcast so it’s great to have you here as a guest.
Rebeca Guzman Vidal
Hi Susan, great to be here.
Susan Freeman
And, I have to ask you this, you have the most fascinating accent and I can’t quite place it but clearly you weren’t born in London so, where did you start? Where were you educated?
Rebeca Guzman Vidal
So I was born in South America. I was born in Venezuela. My mother is Spanish, my father is Peruvian so I grew up a little bit in South America and then we moved to Spain when I was young so I sort of, you know, I went to school there, I moved to London when I was 18 to do University here which was great and basically, I’ve sort of been here ever since, even though I manage to also live in Paris, in Milan and in Hong Kong in between but I consider myself a Londoner by adoption and a Latino by heart.
Susan Freeman
And was it always a foregone conclusion that you were going to go into real estate?
Rebeca Guzman Vidal
No, is probably the short answer. So have always been fascinated with luxury and so it’s no surprise that when I went to University, I decided to study French and Italian so I always thought I was going to go into the sort of fashion industry when I graduated but I quickly realised that it was a very crowded market and at the time I think if you were either French or Italian you really had an edge, I think funnily enough that has completely changed but I realised, I did some internships in real estate companies, including Cushman and Wakefield, and I realised that for luxury brands, real estate is really the most important part of their strategy and so I thought it was a great opportunity to go into real estate and actually, almost sort of satisfy my love for buildings and architecture at the same time as I could end up effectively working alongside these luxury brands and kind of learning from them, so I think I’ve done pretty well on that front, actually.
Susan Freeman
Now I think that’s a terrific way of arriving at real estate. So, it sounds as if you are in the ideal role for you as Group Head of Retail at Chelsfield and it, I mean there is obviously an international element to that role. How… can you tell us a little bit about what your role entails on a day-to-day basis?
Rebeca Guzman Vidal
Of course. So, I effectively exist in Chelsfield to connect the dots so my responsibility is to ensure that we’ve got a cohesive retail strategy across the board so we have a portfolio that expands Asia in the form of a fund which therefore invests in property and then kind of exits within five to seven years, so it’s quite a traditional format and we invest across offices, residential and retail and then the rest of the portfolio is a much longer term hold that we asset manage and develop manage on behalf of The Olayan Group and that spans New York, Paris and London, and so really my responsibility is to make sure that we have the right strategy for each asset and that we are speaking to the right brands at the right point in time and when I say connecting the dots, it’s really leveraging the relationships that either I have personally or we as a group, as a business, have to make sure that we are growing and nurturing those relationships as best we can at a global scale.
Susan Freeman
So, one of your big projects is in London, the Knightsbridge Estate, which I think is 3.5 acres which is huge in the middle of central London and you are, and you have been for a little while, been involved in bringing new retailers and new concepts to the development and, you know, that is a lot to think about at the best of times but we’ve not got the whole Covid situation overlaid on that so, what sort of retailers are you targeting and has anything changed as we’ve proceeded through a whole year of Covid lockdowns?
Rebeca Guzman Vidal
I think in short, yes, everything has change, virtually everything has changed. I’m spending a lot of time right now speaking to the wider team about our repositioning strategy so, we really believe that Knightsbridge and some of the other prime areas in London are poised to come back and come back very strongly but we are also hugely aware of the fact that customers coming back into town are going to want much more and I think really this is a case of kind of working twice as hard to stand still and therefore thrice as hard probably to thrive post-Covid so, whereas previously I think we were very much looking at a strategy that was predicated on retail first, then F&B and then kind of all the other you know amenity style uses that support our residential and our offices. I think that balance is starting to tilt and I mean, I personally believe as a consumer, we are going to want to come back into the city centre to experience things and particularly things that you cannot replicate online so food of course is a huge part of that but also, you know, things that are to do with wellness, with health, with beauty, smelling things, touching things, hearing things, that as I say, a lot of these things you really can’t do online and therefore if you can’t replicate it then I think there’s a very good chance that people will want to come back into the stores and into the restaurants and the cafes.
Susan Freeman
And are you seeing a similar shift across the world of retail so, you know, you are looking at New York, you’re looking at Paris, you’re looking at Hong Kong, I mean are there similar issues and concerns or are different parts of the world at different stages?
Rebeca Guzman Vidal
I think Asia is always kind of at the forefront in everything and I know when you and I spoke last week, we were talking about Raymond Chow who is the head of retail at Hong Kong Land who just gave this amazing presentation at the ULI European conference around how Asian landlords and Asian retailers are responding to the changes that Covid has brought about and I do think they’re a few steps ahead of us in understanding, you know, that first of all the importance of experiential retail but then also understanding the importance of having flexibility, bringing freshness to an asset therefore having pop-ups as a part of your strategy rather than an afterthought, if that makes sense. But I do think, you know, setting that aside, there’s a huge amount of similarity between what’s happening in London, in Paris, in cities that we’re not kind of operating in because I think ultimately the consumer is becoming a lot more homogenous particularly the younger shoppers, you know, they care about broadly some big, big topics whether its climate change or the wider ESG agenda, they care about sustainability in terms of how we bring clothes to stores, in terms of how you know clothes are produced, where our food comes from, how it travels, so I actually think all those changes are perhaps happening at a different rate in each city but they are happening all around, you know we all ultimately want to live better, longer, healthier lives.
Susan Freeman
It’s interesting, Raymond Chow was talking you know very much about the young consumer and that’s something that came up quite a lot in his presentation and yet it’s the older consumers that actually have the disposable income so, he seemed to be saying that the young consumer was very important, also art and culture and it gets back to what you were saying about you know experience, people want an experience and I just wondered, you know, if you look at the sort of shopping centre or the high street in a few years’ time, what percentage will be retail? What percentage will be, you known, F&B? What percentage will be just, you know, sport and leisure type opportunities?
Rebeca Guzman Vidal
I’m starting to rethink the answer to this as I get asked this quite often. I personally think that we are going to come to a point where the tipping point between non-traditional retail and retail is reached, meaning traditional retail, be it apparel or accessories or lifestyle brands, will occupy around 50% of our spaces and then literally the rest will be a combination of F&B, culture, wellness, fitness, because again, going back to my earlier point, if we don’t genuinely give consumers the reason to come back, if we allow online to forever be more convenient, then we cannot expect the high street to survive let alone thrive.
Susan Freeman
Yes, it’s interesting isn’t it, and I mean Oxford Street, Westminster have, you know, this week come up with you know some plans for the future of Oxford Street and obviously lost Debenhams, lost Arcadia, there are a lot of gaps on Oxford Street. How do you see it? Do you see that following a similar pattern then with the 50% retail?
Rebeca Guzman Vidal
Absolutely, I think Oxford Street and many of our high streets are arguably, they’re starved for experiences and I think some of the large retailers, you know, whether it’s John Lewis or Selfridges or Nike or even Top Shop, even though at the moment it looks like it’s never going to re-open, at least in that kind of iteration. I think they sort of took on the responsibility of bringing experience to Oxford Street but what it really is missing is, what about the food? What about that moment where you can just grab something, sit near, you know some trees or some planting and have a moment of respite before you continue on with your day? I mean it’s lacking experiences. I know you and I spoke about things like Colour Factory and the Museum of Ice Cream in the US. There’s a brilliant, brilliant brand that is basically reimagining what the toy store will look like called Camp and it’s based, I think it’s based out of New York but they’ve got several stores now in the US and what they do, it’s really clever, they’ve got a sort of traditional retail shop on the front part of the store, so when you enter you just think ‘ah they sell like beautiful toys and books etcetera’ and then they’ve got a sort of secret passage into a much bigger part of the store which is basically all for kids to have experiences in, so they can have learning experiences, they can play around with toys and buy them, and what that really creates is a community and I think that’s exactly what Oxford Street is lacking, I mean if I were honest, I would say I think that’s we’re lacking on the Knightsbridge Estate too, we need experiences like that to get people to come back into town rather than just relying on, you know, some of our anchors, be it Harrods or Harvey Nichols or Hyde Park, we really need to give people reasons to come back.
Susan Freeman
Well it’s interesting, you mention Harrods and I mean traditionally the department stores, or certainly when they first started, were absolutely what you are talking about, they were experiential, you know it was a voyage of discovery and you were finding new things and somehow they lost that element of showmanship and just became fairly boring. I mean, do you see department stores rediscovering their, you know, original purpose because concept stores seem to do quite well, I mean could we see a new wave of department stores that actually do what they originally intended to do?
Rebeca Guzman Vidal
I think so, very much so, but particularly those that have shown that they are willing to pivot in the age of kind of post-Covid, I think Harrods is a really good example, Selfridges is a good example. When I say pivot, I think one of the biggest themes that is emerging from Covid is this idea of localisation and the sort of rise of the local customer and what that local customer means to different department stores will be very different of course but I think in their original kind of ways, they used to really be about the local customer, they used to be about delighting and you know bringing different things to town that you couldn’t find anywhere else and I do think they are going back to that, albeit under very different strategies. To me, it’s very clear that Harrods are really pinning their hopes on the sort of the global VIP customer that may have a home in London but they may also have a home in Singapore, they may also have a home in LA but they understand that customer and they are sticking to that and I think that’s really powerful. And Selfridges perhaps are looking at a slightly younger customer base, slightly broader customer base but again they are sticking to their guns that they really understand what that shopper is looking for and they are just, you know, they’re going for it, they had this amazing campaign a few weeks ago called Project Earth which was all around sustainability and you know the supply chain of clothing and accessories and it was really powerful and really well received and I think that really spoke to that kind of Gen Z shopper that they really target.
Susan Freeman
Yes, and Selfridges reinvented themselves as the whole sort of experiential thing a few years back and then of course some of the other department stores which have now gone just didn’t do that and in terms of the brands that you are, you know, seeing and looking at across a portfolio, what sort of retail brands are going to prove resilient and you know come of out of this stronger because you know we hear a lot about you know the death of the high street because of online and you get exceptions to the rule like Primark who are also not online so, are you seeing sort of any particular features of brands that make it clear that they will come out stronger at the other end of this?
Rebeca Guzman Vidal
I think so, yeah, there’s definitely a tale of kind of winners and losers and there’s a huge amount of both polarisation and consolidation happening in the retail industry. In fact it’s happening in the F&B industry too and so I do think, you know, bigger groups, those that are more diversified, that are both geographically and merchandise-wise so, you know whether it’s PVH or VF Corp in America or whether it’s LVMH or Kering in France, those are the brands or rather the groups that will come out stronger. That said, I also think the consumer, because they have more choice than ever that they are going to kind of either go for the really, really big brands because they feel they provide good value for money so, Inditex, H&M, Primark, to your point, or they are going to go for independent brands because at the end of the day I also think as consumers, we strive to find, you know, that thing that will differentiate us, that thing that will make us feel part of another tribe, so I do think there’s particularly online based businesses that will thrive after this because the one thing we also have all understood is that online e-commerce, it’s here to stay, it’s forced a lot of people to realise just how convenient it is, there’s also a degree of pricing transparency that you don’t get in physical spaces so I think any brand that understands that, be it small or big, is going to thrive after this.
Susan Freeman
Yes, obviously we’ve all been buying online, you know during lockdown and it’s easy and convenient but you do lose something because you can’t really tell what the fabric is going to be like as you say, you know you can’t touch it and if you like shopping, you like browsing, you like actually sort of going somewhere and seeing something that you hadn’t thought about and that doesn’t really happen online so, what about the online brands, the digitally native retail brands that seem to sort of indicate that you can’t do everything online, they are migrating offline? Do you see more of that and can a retail fashion brand survive solely online without any sort of flagship or, you know, showcase for people to see the product?
Rebeca Guzman Vidal
I don’t think they can, I mean I, of course I would say that, I work in real estate, I’m hugely biased but I do genuinely think there is a natural glass ceiling because even in a world, you know, by 2025 depending on which county you live in, UK, US, Germany, France, Asia certainly, a huge chunk of spend is going to happen online but the bulk of it is going to be convenience led, meaning groceries or you know regular purchases, so if you are a brand that is looking to scale, you can’t possibly expect customers to just keep buying things without being able to see them and also you can see, even pre-Covid, you can see just the amount of digitally native brands that were looking at physical spaces as a means to you, you know, grow brand awareness, customer acquisition, grow market share because effectively even though we all, you know, I think as an industry we complain about how inefficient and how costly can real estate be, it is still one of the most cost-effective ways to acquire new customers especially in a world where right now post-Covid, everyone is looking at ways to kind of capture our eyeballs and therefore marketing online is becoming more expensive, it’s becoming more crowded so a very easy way of differentiating yourself is using the data that you have as an online brand and going okay, in London, in San Francisco, I know where my shopper lives, I don’t have to be in a prime street, I’m going to go to a neighbourhood, I’m going to open a beautiful store and that’s going to give me a lot more access to the shopper so they can trade up, so they can you know, we can increase their average spend etcetera. It kind of goes back to the point that we were making also last week around the 15-minute city, I think online is really going to shift how brands look at cities because they have so much more data, you know, 150 years ago when really the only way to sell was to open stores, you kind of were doing it blindly and I think now it’s going to be the exact opposite so it’s really going to make the sort of gravity centres of our cities move and evolve over time.
Susan Freeman
I’m glad you mentioned the 15-minute city, I mean it seems to be, obviously originated in Paris but it seems to be being picked up by a lot of other cities internationally and it seems to involve providing everything that you would need within a sort of smallish area that’s walkable but I’m not sure if it would, would it work for London because London is so much, you know, so much bigger so people have sort of questioned whether that concept would work and would the big brands, you know, go to Neasden or I don’t know, some more suburban parts of London?
Rebeca Guzman Vidal
I think it has the possibility of working and I also think it’s really important for us not to perhaps get fixated on a rigid idea of what the high street will look like for everyone because not every 15-minute radius is composed of the same, you know, genders, ages, it doesn’t have the same densities and so every high street doesn’t need the same thing so I still think that naturally you will have more perhaps more exposure to international brands the closer you get to the city centre but as you move out into zones 2, 3, 4, 5, 6 you will have more what I would call more neighbourhood users and that isn’t just this kind of romantic idea of you know fishmongers and butchers and candlestick makers, I think it’s a lot about, you know, what that community actually needs, you know, do they want vintage shops, do they want I don’t know bookstores instead of apparel stores, do they need more food stores because they currently don’t have access to specific things or I don’t know, the local Tesco doesn’t provide for it. So I do think it is possible but I think each neighbourhood will find its balance.
Susan Freeman
Yes, you mentioned vintage and I’m surprised that we haven’t seen more preloved clothing stores, albeit you know charity shops but perhaps a little bit more sort of fashion orientated, because you go to Japan and you know the kids there just seem to love vintage, you know, preloved and everywhere you go, there are these stores with sort of really interesting, you know, old sort of army surplus or old kimonos but we don’t seem to have that much of it in the UK.
Rebeca Guzman Vidal
I think we are starting to see it and again, going back to the point of how department stores should be a part of the high street, that’s a really good example. Selfridges have been pioneers in this so they’ve done kind of physical representations of things like Depop, things like Vestiaire Collective, in their stores and it’s worked beautifully. I’m lucky enough to know a brand who work in the aftercare space so they repair shoes and handbags, they are called The Restory and again The Restory now has permanent spaces in Harvey Nichols, Harrods, Selfridges and hopefully soon in Europe and I think the point of that is, the department store at heart is a place where you go to not just buy things that you can find everywhere else but more to the point, to find services and products that you can’t find anywhere else and I think that’s their role in the high street.
Susan Freeman
Things seem to have gone full circle because I am thinking, you know, the earlier days of Selfridges where you go down to the basement and you know there’d be somewhere to get you know keys cut, jeans repaired and…
Rebeca Guzman Vidal
Timpson’s, I remember.
Susan Freeman
Yeah. And now all disappeared and it all became you know very upmarket so it would be good to get back to that sort of thing and while we’re on the subject of repurposing, I know that you’ve talked in the past about repurposing because in a lot of cases retail assets are going to have to be repurposed if we are going down to 50% you know retail from effectively what was 100%. What do you see the future for un-needed retail on the high street, I mean we talked obviously permitted development rights, you know people are talking about putting more residential on the high street but I’m not sure how you retain the… I mean the idea is somewhere where people can meet, you know, community, you know you’ve talked about the sort of experiential side, if you just suddenly convert a whole lot of high street shops to residential, there is the possibility you have lost that forever.
Rebeca Guzman Vidal
Yeah I do think there’s a risk that you could lose the vibrancy. I think there are two solutions that in my mind should be put at the forefront of this discussion. One is giving retailers the sort of planning flexibility to have those community style uses so, a lot of retailers already have supper clubs for example or they run yoga classes or Pilate’s classes in their stores. Give them the benefit of doing that on a regular basis without the need or the fear that a Council could come after them to say you can’t use your space like that. The other part of the equation for me is the whole idea around making things because that’s really, it’s vibrant, people love to see people making things so, for me, we need to bring thins like 3D printing into the high street because that will be a huge thing for our high streets in 10, 15, 20 years. I think we need to bring back and actually kind of take advantage of what’s already happening, making food in the high street, like what about dark kitchens or what about spaces that are just collaborative spaces where restaurants, cafes and bars can exist effectively under the same rood but utilising the space as the day goes on because a baker needs a space at 4.00 in the morning right after the bar closes, arguably, but wouldn’t that be beautiful, it would certainly be a much more useful way of using our rather limited real estate and I do think again, it just brings vibrancy, people want to know that there are things happening on the high street and I think even kind of anthropologically, we’re drawn to that, we’re drawn to where things are happening, where people are experiencing things so, we need to bring that back, it can’t just be, I think you are right, we can’t just be about residential and offices and there you go, we’ve found the solution.
Susan Freeman
Yes, going back to the 15-minute city, it was interesting hearing that they are using spaces, you know, as you say that are redundant at certain times of the day so, when a school is closed, they are using the school playground and they are using the school as a local hub for activities outside school hours and also using carparks that, you know, are underused, so I mean what you are saying is we need to really sort of think completely outside the box in terms of how we use different spaces at different times of the day and week which is going to be an interesting journey. Let’s talk a little bit about the role of the retail landlord since everything is changing, I imagine that as the landlord you can’t now just be the person that collects rent and you know sees the tenant on rent review so, how do you see that role changing? How has it changed and how do you think it’s going to all work going forward?
Rebeca Guzman Vidal
It’s becoming a partnership really and I think that’s probably easier said than done, I mean we have been behaving like this, or at least I’d like to think we have, for a long time before Covid but again I think Covid has accelerated that and when I talk about partnership, I think there’s a lot of willingness I think on both parts now to be a bit more open, a bit more transparent, to understand that retailers need stores, they need them to be profitable for the most part, there’s a few exceptions I would say but there has to be an understanding on our part that they are there to make money and they can’t just be paying rent because it’s a beautiful store in a beautiful part of town in a prime street, that’s just not good enough so, we have a lot of work to do in that sense, of understanding it, we also have a lot of work to do to bring data to the table because again, online gives you a lot of data on your customer, you know how often do they click, how many things do they put in their basket and I know we can’t replicate that physically but there’s a lot of data that we as landlords can provide, almost sort of to say you know our job is to make everything that happens outside your storefront as exciting as it could possibly be, our job is to bring people to the area and then your job, if we do all of this for you, is then to share your data with us. So we’re not just talking in my opinion about revenue sharing, we’re not just talking about turnover leases, you know, I want to know, I want to believe that we can have a good enough relationship with tenants that they can come to us and say ‘hey, we’ve noticed that there’s more Australians coming to this part of town, have you thought about having brands that maybe resonate more with them?’ because that’s data that we may not necessarily be able to capture and certainly not in real time so I think this idea of partnership really is to you know open up our books on both sides of the fence and understanding that we are in it together.
Susan Freeman
And do you think that tenants are willing to do that, I mean I’m thinking of a comment that Ross Bailey made in one of the ULI panels last week and they were, it was a conversation about data and data sharing and his comment was that tenants tend to be suspicious of landlords and they are more likely to be willing to share their data with Apple than to share data with the landlord which seemed a little bit sad but do you see that? Is this part of the partnership building that you have to you know create this relationship of trust before your tenants will share data with you?
Rebeca Guzman Vidal
Absolutely, and you, you know at the end of the day you are also providing a service to them, as you said right at the beginning, it’s not just about providing them with four walls and saying you owe me rent, it’s about providing something that kind of adds value to their business so the point about data, the point about trying to do everything you possibly can to bring people to their door, so I do think yes there’s more work to do but I also think, you know, the UK market for instance is very archaic in that regard. Of course you can be suspicious of a landlord because we have five yearly, for the most part, upward only rent reviews so if I give you information as the tenant, are you going to use that against me? Funnily enough, that doesn’t happen in Asia because you do not have rent reviews, you just have annually indexed rents, you have the same broadly across Europe, you have a very similar structure in the US, so perhaps Ross’ comment is more, I would say relevant to the UK but he is right, we have more work to do but you know it is not impossible and again to cite Raymond Chow and what he was saying about their experience at Hong Kong Land, it is possible you know, they’ve even moved brands that were on fixed rents to completely variable rents through Covid, I mean that’s amazing.
Susan Freeman
And do you see that happening in the UK?
Rebeca Guzman Vidal
Very much so. It’s going to be very painful, there’s a lot of reticence, certainly on our part of the table because I think as, you know, as developers, investors, landlords, to take a sort of unilateral hit on the value of your asset is simply not fair. We’ve had zero help through the crisis and yet tenants have had a great amount of help, be it through business rates, be it through several furlough schemes, small business schemes, and I’m not questioning the validity of them, quite the opposite, but what I am saying is, equally we cannot be expected to bear the brunt of the adjustment of retail rents as we move into a completely new kind of world where performance linked leases become the norm so the lenders have a lot of work to do on that front, if the valuers have a lot of work to do and again it’s about coming together and understanding that this is the way forward but that we cannot go from zero to a hundred in a matter of seconds, it’s just not possible.
Susan Freeman
So what do you think is going to drive it because, as you say, there is a lot you know, a lot to do sort of moving from a situation where we’ve had sort of long leases, you know five yearly upward only rent reviews and you know if you go sort of back to basics and you start talking about you know shorter, well we are talking about shorter leases and turnover rents? How are valuers you know going to change the way they value? How are lenders going to you know come to terms with a completely new system and will that have an affect on the value of retail property?
Rebeca Guzman Vidal
I think they have to start thinking about valuing retail spaces in a slightly different way, I mean for instance, when you talk about F&B you know restaurants, cafes and the likes, and arguably fitness business, it really is a model that is perhaps more alike to a hotel, I mean it’s an operator based model and there is a limit to how much money you can make because there’s a limit to how many people physically you can have in a Pilates class or a whatever or a HIIT class and the same goes for you know a number of seats and number of turns that you have a day in a restaurant or a café so I think that has to become part of the equation for F&B. I think for retail, I mean look I don’t have all the answers but I have an inkling that covenants should matter a bit more than it currently does. I mean, you know we’re having conversations right now with valuers around should the yield of an asset not be keener if you have arguably one of the biggest companies in the world signed on a 10, 15, 20 year lease? I personally think that still counts for something regardless of where the market is or where the cycle is so I think covenant needs to count for a lot more than it currently does and I think where things will start to change is big brands and bigger landlords taking the plunge and proving, you know, as soon as we start to build a track record and we have some sort of base rents that keep kicking some sort of ratchets and we can really start seeing that that turnover does provide an upside to whatever the rent was before, that’s where the tipping point will be but I think we are, you know we are all relying and I’m certainly looking at some of the big landed estates in London for instance, some of the big landlords out of Hong Kong, out of China, out of the US because I think they are the ones that are going to do this first and then we will all hopefully be able to follow suit with the valuers and the lenders in agreement, if that makes sense.
Susan Freeman
No, it does make sense and since you know everything is more international now and so many of these brands are across the world, if it works you know if it works in Hong Kong, if it works in New York then it can work in the UK as well but you can see why landlords and lenders might prefer to hang onto the old regime and do you have any thoughts about the Chancellor’s plan to do away with tax free shopping? I mean at the moment we’re not seeing many tourists but hopefully they will be coming back soon and we want to make sure that London is competitive as possible so it doesn’t seem like a terribly good idea.
Rebeca Guzman Vidal
I think it’s really sad and I think that they are leaving a lot on the table and you know as someone who has the privilege of also working in cities like Paris, I can see already, I can see the change in the language that brands are using around London. I can see that you know they are probably already thinking ‘oh well, you know if London is going to perhaps see a dip in spend from oversees tourists then where are they going to go and where should I be re, you know, redeploying, redirecting my capital? Should it be Paris? Should it be Frankfurt? Should it be Munich?’ You know a lot of the brands that I talked to perhaps because our portfolio is slightly skewed towards luxury are some of the big luxury groups and they, I mean they’re fairly chilled about the position in so far as they’re very diversified themselves and they can see that you know they still have the ability to follow the customer but as I said at the beginning, we are leaving so much on the table and I fail to understand why we are just deciding that it’s not worth it when it’s worth billions to the London economy and however that plays politically, the truth is people come to London because it is one of the greatest cities on the planet because they want to come and visit, you know, our beautiful parks, our museums, Buckingham Palace etcetera so if we don’t make it easy for them to shop here, they’re just going to go somewhere else or they’re just going to come here for a shorter amount of time and spend less and that’s really sad.
Susan Freeman
It is really sad because you can see, you know the brands of, as you say, looking and saying well okay, so you know perhaps we focus more on Paris or you know we focus more on you know Amsterdam. So what should we be doing to encourage them back because obviously once things start you know re-opening, once people start travelling again, what can we do in the UK to be sort of more attractive than say Paris?
Rebeca Guzman Vidal
I think the answer lies, has to lie on place making and public spaces. I was so excited to see, I saw yesterday and for the first time, the CGI of the Marble Arch meanwhile, what do you call it, hill I suppose?
Susan Freeman
39.27 that they are thinking of doing.
Rebeca Guzman Vidal
I think it’s so clever. I mean, just I think using public spaces that already exist, using greenery, using public art and culture to activate spaces, it doesn’t cost as a lot, it’s really clever, it’s incredibly inclusive because it doesn’t cost the consumer anything either, it provides them you know an opportunity to sit, to dwell, to chill out, that’s so important and that has to be one of the main ways we get people to come into town because again, I just don’t think shops are good enough anymore, I don’t even think restaurants per se are good enough anymore, I mean I want to get into a shop and into a restaurant as much as the next person but I don’t think I am going to rush out the door the minute lockdown is lifted, I need something more.
Susan Freeman
And actually as you were talking about you know this hill and the experience, I’m still thinking about Instagram because you know everything, you look at everything in the context of okay how will this, you know how will this look on Instagram and I suppose it’s the same for you know the restaurants and the shops and everything but you know it gets back to the experiential side of it.
Rebeca Guzman Vidal
And culture you know, I just think we have so much of it, again you know London is so, so lucky in that we have some of the best museums and they are for free which is something so unique, you know anywhere else you travel in the world you have to spend a lot of money to get into some of these museums. What about bringing those museums out onto you know the squares, the parks, the streets? That would be so exciting. I remember, I mean I still remember that, in Paris, I don’t know if this happens so forgive me ignorance but in Paris you have what they call the white nights and white nights is a sort of one week long, in summer, you can go to the museums at night and therefore there’s a lot less people obviously and you get a totally different experience and again you know what about the night-time economy? What are we doing to kind of revive that? What are we doing to bring people into town? It doesn’t just have to be about you know going for I don’t know a meal and a really late nightcap. It could also be about museums and theatre. It, yeah, I think culture is really the answer here.
Susan Freeman
I think that’s a really, it’s a really interesting idea because I think Tel Aviv also does the white night and maybe this is something we should address with Amy Lamé because this idea of using spaces 24/7 I mean would be a brilliant idea to be able to go to some of these museums outside normal, I mean we have late nights sort of visiting now but, and then I’m just thinking you know when you are talking about bringing the museum outside, take the Wallace Collection, I mean it sits there in you know a beautiful green square, if one could actually bring some of the sort of action activities outside because so many people actually walk past it, I am convinced people walk from Selfridges you know to Wigmore Street and beyond, they have no idea that the Wallace Collection is there so you know we could make a lot of these things more visible. So yes there’s a lot to do and I sort of mentioned at the beginning that you host your own podcast which you call ‘Retail is Dead’ but I know that you don’t think that retail is dead but what’s that all about?
Rebeca Guzman Vidal
So, it was an ironic name. I co-host it with two of my very close friends, Leanne Catterall who works at the Crown Estate and manages Regent Street retail and Erin McDonald who works at CBRE and also is in retail leasing and we honestly have just grown so fed up of people talking ill of retail and talking about retail, and F&B, in such a negative light that we thought we wanted to create a space, a little corner on the internet if you like, where would just talk about positive things relating to retail so we talk about spaces, we talk about brands, we talk about places that get it right and we interview people who we think are kind of fighting the good fight and so they might be small business operators or they might be architects or they might be master planners and they’re sort of talking to us about how retail is evolving and concepts that are really making a difference so, it’s really exciting and it’s a nice way to kind of bring together what we are already thinking and kind of putting it out there in a kind of neat little podcast package.
Susan Freeman
I think that’s brilliant, I think the title is absolutely great as well. And in terms of your career to date, what do you reckon, what has been the best career decision and is there anything with the advantage of hindsight you would have done differently?
Rebeca Guzman Vidal
Oh that’s a great question. Probably career highlight was moving to Hong Kong on a secondment. I followed my heart because my husband was already moving to Asia and I thought if I don’t do it now, when will I do it and it really was any eye opening experience. I had never quite appreciated just how much more advanced cities like Seoul, like Tokyo, Osaka, Shanghai are in terms of retail and you know the experience element of it and it just changed my life, it really did, it made me think about retail in a completely new dimension, it really opened my eyes to the sort of F&B and leisure world too, in a way that I hadn’t really been interested in before. In hindsight, probably the only thing I regret is not moving there for a bit longer or maybe trying a different city. I am forever in love with Japan and all things Japanese and there was this small chance that I could have gone to Tokyo and yeah I definitely regret that now but you know never say never, I mean the world is our oyster really.
Susan Freeman
Yes, well I hope it goes back to being our oyster and I agree with you about Japan, I mean it’s pretty sort of inspiring, there are some things there that are just you know quite crazy, I mean we talked a little bit about you know some of the themed cafes and I don’t, maybe you know talking about the experiential, we could do with cat cafes or you know dog cafes or maybe that wouldn’t comply with you know the various sort of food hygiene regulations, I don’t know but you know that would be sort of quite a nice thing to have on your Knightsbridge Estate.
Rebeca Guzman Vidal
Definitely. No, it’s a really good point and you know, jokes aside, I do think going back to our earlier points around inclusivity, we also need to start thinking of the high street in a slightly different way you know, it’s not all about Gen Z, it’s not all about millennials, what do the what we call the so-called silver pound want? What do they want? What do kids want? Why are there so many places where it really isn’t convenient to bring your kids along? Why are there so many places that don’t accept pets? Like we need to change that because again otherwise if you make it hard, if you create paths of resistance for people to come into to town, dwell, spend time, spend money, they will choose another route, they will choose something more convenient, always, that’s just how we are wired.
Susan Freeman
And we are hearing about you know so many people during lockdown have taken on puppies, I have just acquired a little Cockerpoo puppy myself, so you know I am immediately thinking okay so what happens you know when we can go out again and I can go shopping, I can go to a restaurant, what happens to the puppy because most places you can’t take animals, I think Selfridges do have a sort of slightly dog friendly rule…
Rebeca Guzman Vidal
Like concierge you know. Yeah. I’ve seen the doorman, like he waits with the puppy doesn’t he? It’s the cutest thing.
Susan Freeman
Apparently you can take the dog in but it’s feet I think can’t touch the floor so it can either be you know you can carry it or have it in a bag but I don’t think it’s allowed to roam free but you can, you actually can take a dog there but so many, you are right, so many shops you can’t, cafes you can’t and I know in the past I’ve had to sort of try and sort of hide my dog under the tablecloth in a café, you know, and you see this paw sticking out and you get thrown out so yeah, I think you are absolutely right, we want people to you know spend time on the high street, we need to make it as simple as possible so that’s something to think about for our next podcast, Rebeca. So, I think it’s a good place to end and thank you very much for your time today.
Rebeca Guzman Vidal
A pleasure. Thank you for having me.
Susan Freeman
Thank you, Rebeca, for joining us today to share your invaluable insights into the world of global retail and how we should expect retail to evolve in the years ahead.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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