We’ve all heard about the great shift in shopping as consumers move online. The Covid pandemic, so the story goes, has accelerated the transition to e-commerce, with bricks losing out to clicks.
But that’s not the whole story. It’s true that our shopping patterns have been changing for some time. And it’s true that this change sped up during the pandemic. But rather than online-only, it’s the ‘omnichannel’ model that’s emerging in the dominant position.
The omnichannel experience
So what is omnichannel? Essentially, it combines online and offline sales for a fuller customer experience. Many of us are already familiar with its most common manifestation – click and collect. This is a hybrid model in which you order online but pick up in store.
Click and collect has huge advantages over pure online orders – for shoppers and retailers alike.
For one thing, it’s usually quicker. Once you’ve ordered, you don’t have to wait for delivery but can just go to the store to pick up your purchases. And that gives you the opportunity to try on the clothes you’ve bought or otherwise benefit from seeing your goods with your own eyes.
It also allows you to make other purchases while you’re in the store. And that’s where a key advantage for retailers comes in. According to industry reports, around 40% of click-and-collect customers make an additional purchase when they come in to pick up their online order – or to return it. And for both parties, click and collect is a more economic option than online delivery, as there are no postage or packaging costs involved.
Convenience is king
This omnichannel experience – combining bricks and clicks – looks set to be the future of retail. It requires physical premises, not only for warehousing and dispatch, but also for pick-up and returns. Out-of-town retail parks provide the ideal location for this, allowing people to pick up and return items on their way home from work without the hassle that a trip into the city centre might entail. And for retailers, the flexible retail warehouse format allows outlets to combine the functions of shop, distribution hub and storage depot.
That’s why Ediston Property Investment Company (EPIC) is increasing its focus on the retail-warehouse sector. We believe this sector is the future of retail. And we’re pleased that it has come through the pandemic in such robust shape – with relatively low vacancies, a rebound in footfall and a rapidly improving outlook. So, having already increased our weighting in the sector from 70% to 80% in the past two years, we’re now looking to become fully invested in retail parks.
For property investors, retail parks offer a whole host of attractions. These include strong tenant demand, a degree of inflation protection and impressive yields. But not all parks are equal. At EPIC, we take a highly selective approach. We’re only interested in what we consider to be the best parks, let off affordable rents, with dominant positions in the best locations.
A good example is the park we built during the pandemic. Haddington Retail Park is located 15 miles from Edinburgh and is the only retail park serving the prosperous town of Haddington and the East Lothian area. It’s now up, running and 97% let. Tenants include Aldi, Home Bargains, The Food Warehouse, Costa Coffee and Euro Garages. Already, the new park has done exactly what we intended it to do: deliver income and value to our investors.
Park your portfolio
Despite all the gloomy headlines, physical retail isn’t dying – far from it. But it is evolving, and this process has been hastened by the pandemic. We aim to harness that evolution on our investors’ behalf. As omnichannel becomes the norm, we’re confident that the best retail parks have the locations, facilities and flexibility to prosper in the post-Covid world and we believe EPIC is well positioned to take advantage of these changes.
The contents of this article should not be construed as legal, tax, investment or other advice. Each prospective investor should make its own enquiries and consult its professional advisers as to the legal, tax, financial and other relevant matters and risks concerning any investment opportunity.
Past performance is not a reliable indicator of future performance – the value of a stock market investment and any income from it can fall as well as rise and investors may not get back the amount invested.
Whilst information contained in this article is believed to be accurate at the date of publication, it is subject to change and does not purport to provide a complete description of Ediston Property Investment Company Plc (the “Company”) or its future prospects or performance. Any forecast, projection or target is indicative only and not guaranteed. In particular, the payment of dividends and the repayment of capital are not guaranteed.
The Company invests in property assets which can be highly illiquid, typically do not grow at an even rate of return and may decline in value, all of which may have a negative impact on the value of the Company.
To the fullest extent permitted by law, The Company, Ediston Investment Services Limited and their respective directors, advisers or representatives shall not have any responsibility or liability whatsoever for any loss (whether direct or indirect) arising from the use of this documents or its contents.
Issued and approved by Ediston Investment Services Limited which is authorised and regulated by the Financial Conduct Authority (FRN:706655)[/vc_column_text][/vc_column][/vc_row]