2. Business Plan Retail Management and Consulting
Purpose of this document
Following discussions within the market on the topic
of commercial real estate management, we have
identified an opportunity to extend our current
portfolio of real estate management services. The
development of new property management services
ensure future profitability and relevance for your
business.
ARRA is a property management firm offering
integral and customized property management
solutions for private and institutional investors. She
takes care of all technical, commercial and
administrative tasks for property owners.
Due to the overall change in our economic climate,
profitability of retail real estate activities is under
pressure. We have identified ways of making real
estate management more of a value add activity.
Thereby increasing the profit potential of retail real
instate in general, and management services
specifically. This we call ‘retail management &
consulting activities’.
This document serves as a preliminary business plan
to support a decision to choose ARRA as your
partner for real estate management
The first step in this process is an in dept discussion
with ARRA Property van Interim Management and its
director Arnoud van Raak. The choose of ARRA
implies an accelerated start of the new activities for
your company as resources and methodologies
developed by ARRA will be directly available to
generate new business.
I look forward to a discussion of this plan with the
management board and trust this is the start of a
fruitfull business relationship.
Arnoud van Raak
11 January 2016 2
3. Introduction
Retail in The Netherlands is under pressure
Retail in The Netherlands is in sharp decline.
Revenues are at an all time low, the number of
retailers shrinks and vacancy in shopping centers
and high streets is on the rise. At the beginning of
this year, 15.000 properties were vacant. A rise from
6,4% in 2013 to 6,9 in 2014. Measured in square
meters, the percentage is even higher at 7,3%.
There are major differences across the country.
While in Amsterdam shopping streets are relatively
healthy, an average province, has vacancy levels of
up to 20%.
Shopper behavior is changing rapidly driven by the
wide spread adoption of electronic commerce.
Technological developments impact the way the
consumer approaches the shopping journey.
‘Showrooming’ is quickly becoming the key role of
the physical store, while a major part of the actual
transactions moves online. Furthermore, consumers
are increasingly spending their money on cross-
border purchases putting more pressure in the Dutch
retailer. In 2013, 16% of total online spending was
with foreign retailers.
11 January 2016 3
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
2007 2008 2009 2010 2011 2012 2013 2014
Development of Vacancy in The Netherlands
WVO
Vkp
Source: Locatus
USA, 34%
Others,
10%
Germany,
26%
UK, 30%
Cross-border Purchases
Source: e-commerce Europe
4. Introduction
Retail in The Netherlands is under pressure
11 January 2016 4
65.9 64.6
70.1
73.6
54.9
52 50.7
48
11 12.4
19.4
26.9
0
10
20
30
40
50
60
70
80
2012 2013 2017 2020
Total Consumer Spending
(corrected for inflation)
Total Market Offline Online
+12%
-15%
+145%
Source: e-commerce Europe
The total retail market is expected to grow in the
period 2012 – 2020 with 12% (adjusted for
inflation). However, the growth in retail is largely
fueled by electronic commerce. ABN AMRO
expects an annual growth for e-commerce of 7
to 9% annually.
Although physical shops will remain to play an
important role in the retail customer journey,
offline, traditional commerce will see a decline of
15% until 2020. Omni-channel retail, mashing
digital and physical channels is quickly becoming
the norm.
The consumer is going digital to an extensive
degree. Experts from e-commerce Europe
foresee a total growth of 145% in online
consumption until 2020. Rapid growth is
expected in telecommunications and DIY chains.
5. Introduction
Vision for Retail outlets / shopping centers
The role of shopping centers
Shopping centers have a specific position in the
Dutch retail landscape. Also, from a property
management point of view. These centers are capital
intensive and require specialist management
attention to ensure their profitability. In society, the
role of shopping centers is to allow for meeting,
shopping, eating and drinking. Shopping centers are
all about enabling a pleasant shopping experience.
They are ‘favorite meeting places’.
This vision has implications for retail property
managers. In order to create ‘favorite meeting
places’, property managers need to follow an integral
strategy which can be summarized in six elements.
1. Location is key – A shopping center needs to be
of high potential to its owners and renters. Thus be
located in the heart of consumer footfall.
2. Local connection – A shopping center needs to
be connected closely with the local community in
order to fulfil its social role.
3. Smart partnering – In order to generate a level of
entertainment, partnerships need to be formed with
organizations who have direct influence on the
shopping center and its immediate surrounding.
4. The center as a brand – A shopping center needs
to become an engaging brand in itself which appeals
to the consumer’s preference.
5. Inclusive – Loyal, long term relationships need to
be formed with the consumer and business partners,
renters and other organizations involved.
6. Social value – A shopping center needs to act as
a catalyst for social, economic and cultural dynamic
in the local community.
Fulfilling these strategic guidelines requires a deep
understanding of property managers of both the
physical elements of a shopping center as well as
the customer and the local eco system.
11 January 2016 5
6. Introduction
Vision for Retail in The Netherlands in 2020
As retail in The Netherlands is in decline and
vacancy is on the rise, a new vision for retail is a
necessity. This vision needs to embrace the changes
in consumer spending and its impact on the retail
landscape. This vision needs to be tailored
specifically to regions and shopping formats.
Especially for shopping centers, a dedicated vision
needs to be developed.
Combating vacancy
A number of tactics can be applied to combat the
growing number of vacant properties:
1. The planning and zoning regulations need to
allow conversion of retail property into residential
or other business property.
2. Rental rates need to be decreased to welcome
back the crafts in the high streets. Retail needs to
go back to the 1900’s when small food retailers
and restaurants where abundant in the city high
streets.
3. Spend more attention on food retailing and food
related concepts in a total retail formula.
4. Incorporate recreational elements in the retail
environment such as food courts.
5. Allot more space to existing retailers in shopping
centers. This can mean lowering the rental fees.
Role of local municipalities
Local municipalities play a pivotal role in a well
functioning retail environment. In recent years, these
municipalities have failed to develop and adopt
policies to stimulate and defend the well being of
retail in their communities. It will take years before
local municipalities have mended these mistakes.
However, this will be crucial for retail in general and
shopping centers specifically as their high
investments and fixed cost base require a sound
local strategy.
11 January 2016 6
7. Opportunities for Retail Property Managers
Beyond traditional real estate management with proactive management services
Traditional management limits earnings
Shopping center management in the traditional way
– mainly focusing on technical and administrative
property management – is rapidly becoming a
marginal business. The earnings capacity for these
services is limited due to the setup of the fee
structure which is generally no more than 3 to 5% of
the total rental value of the property.
Property managers can add more value
In light of the developments in the retail landscape of
recent years, there is a clear and present need for
property owners to make their investment more
future proof. Property owners and investors
understand results are worth more than a low service
fee. Retail property managers are well situated to
add more value to property owners through offering
new management services. These we call ‘proactive
property management services’.
Proactive management services are key
Proactive property management services represent a
new approach on managing shopping centers. It
starts with developing a future vision based on deep
understanding, expertise and market research and
implements this vision for the property owner through
intensive, proactive property management. Proactive
property management is results oriented. It
considers the root causes of vacancy instead of
trying to remedy the situation itself. As such, it is a
fundamental long term approach rather than a ‘quick
fix’. This added value approach translates into a
higher earnings capacity for property managers and
better results for owners and investors.
11 January 2016 7
8. Key activities
Retail Management & Consulting consists of four major activities
Retail Management & Consulting
In order to fulfil the promise of proactive property
management, four pockets of activities are required.
These activities will become an integral part of your
company.
1. Retail data and research
Data lies at the heart of proactive property
management. No shopping center can be managed
to its fullest potential without have deep insights in
the local market and shopper behavior. These
insights drive key decisions on the future
development of a shopping center.
2. Concepting
The outcome of the data analysis and research is
input for a concepting stage. In this stage, we
develop the guiding, creative concept around which
shopping center (re)development is to take place.
Also, it will drive the mix of renters for the shopping
center. An example of a concept is a format around
‘daily needs’. This will attract food and food specialty
retailers rather than non-food retailers. Concept
developers are often freelance professionals
3. Implementation Consulting
Implementation expertise and program management
capabilities are required to implement the new
concept in a turn around of an existing center or the
development of a new center. The proactive property
management services team requires this capability in
the core of its operation.
4. Management*
After the implementation phase, an intensive
property management approach starts. In this phase,
the property management team closely monitors all
developments and actively advises property owners,
renters and other business partners, safeguarding
the commercial well being of the property.
11 January 2016 8* The existing team will partly become part of this new team
9. Key activities
Rotterdam ‘Markthal’ based on the concept of the culinary meeting place
11 January 2016 9
Source: Michael Porro / Getty Images
10. Customers
Key customers for Retail Management & Consulting
Key customers
From the outset, existing customers are key customers for the
Retail Management & Consulting practice. These customers will
be further supported with value added services. The outcome of
which is a well managed shopping center producing high yields.
The Dutch shopping centers are owned by a group of 25 property
owners and investors. Apart form these, there are myriads of other
property owners and investors looking for advanced property
management services.
Local municipalities
Apart from commercial clients, local municipalities constitute an
interesting potential customer group. Municipalities are
increasingly involved in managing and redeveloping shopping
areas in their community. The role of ‘shopping area manager’ is
becoming more common. These officials are responsible for
successful exploitation of these areas. ARRA will need a dedicate
marketing approach for this customer segment.
11 January 2016 10
Property owners
Investors
Municipalities
http://sleutelstad.nl/2015/09/16/winkelge
bied-meer-place-to-be-dan-place-to-buy/
See for example the city of Leiden:
