It’s entirely true that there’s money to be made even in a declining market. Being better at making a return on capital than the competition will see to that. And it’s also equally obvious that retail isn’t dead. It’s suffering some pressures from online, but bricks and mortar stores are going to be with us for some time yet. Still, there’s a certain unease here:
Christophe Cuvillier has the confidence of a man who knows he is on the home straight.
Last week, shareholders of Unibail Rodamco, the company of which he is chief executive, signed off on a $24.7bn (£18.3bn) deal to buy rival shopping centre owner Westfield. This week, Westfield’s shareholders will rubber-stamp a deal that has been three years in the making.
Unibail Rodamco is the largest property company in Europe, but few in the UK have heard of it. Its shopping centres – some of the world’s largest and most successful – are mostly in France, with others in Spain, Poland and elsewhere in Europe.
That’s the background, it’s this statement which worries a little:
Christophe Cuvillier: Retail is not dying. Only boring retail is dying.
Because that’s not quite how markets work.
As above there’s money to be made in retail, no doubt about it. People will continue to come up with concepts which will make them bundles. There will be interesting retail which gathers the crowds. It’s equally true that as online nibbles away at physical world stores it will be the worst which fail first. That’s all pretty obvious.
But if you’re a supplier of the space in which people do retail then it’s a little bit different. Yields and rents on all retail are going to be falling as that oversupply of retail space works its way through the system. We’ve 10% or more empty on the High Street these days. Entire malls and shopping centres are emptying out. Sure, of course, those owned by Unibail won’t. Of course not. But the price they can gain from them will fall as space opens up elsewhere.
The real point here being sure, retail will survive and exciting such do so well. But M. Cuvillier is not a retailer, he’s a supplier to retailers. Rather a different thing and one likely to suffer from the general sectoral decline.