The Sunday Business PostJuly 10, 2016

Property Plus8 Property Commercial

Trading places: how are retailers reacting to the online revolution?

The ongoing revolu-tion in online shop-ping is the single biggest influence on today’s retail property market. Yet the sheer pace of change and the

number of variables involved make it increasingly difficult to predict or react to emerging trends.

The headline figures for the growth of online retailing make for interest-ing reading for those of us who grew up in an era of bricks and mortar. The web is predicted to account for 7.4 per cent of total global retail spend-ing this year (about €1.5 trillion), growing to 12.4 per cent by 2019. And the direction of travel is unlikely to reverse thereafter.

On a domestic level, Irish e-com-merce retailers enjoyed 45 per cent growth in revenue during 2015 , compared to 6 per cent sales growth achieved by non-internet retailers. That’s according to recent research by Wolfgang Digital.

Yet there is still plenty of room for

more growth, as Ireland sits well be-low the EU average for online shop-ping. Just over half of us (51 per cent) bought something online last year, according to an EU Eurostat survey. Compare this to an EU average of 65 per cent, or the record 81 per cent figure recorded in Britain, and you can begin to appreciate the scope for growth in this market.

While these figures in isolation would point towards the slow decline of the traditional retail economy, a new trend is emerging that could prove otherwise. In more mature markets, where online retailing has taken a greater hold, retailers are be-ginning to adapt their strategies away from pure consumer convenience and seek ways to draw customers back into their high street stores. The pendulum of convenience has swung too far in the consumer’s favour, and retailers are looking at ways of taking back some control.

At his company’s latest agm, John Idol, chief executive of fashion brand Michael Kors, spoke for many retail-ers when he said: “Unfortunately

today, e-commerce generates a lower operating profit for us than four-wall bricks-and-mortar. We think that, over time, that will reverse itself, but when the consumer requires free delivery, free return, wonderful packaging and orders multiple sizes of things to try on at home, and then returns them, that all is a negative headwind for us.”

What this means is that the phe-nomenal growth of online sales has come at a price for retailers, name-ly an erosion of their margins. The emerging solution is a greater co-hesion between the online offer and the physical store, or multi-channel retailing, as it has become known. The key to successful online retailing is ensuring that the online offer still provides an incentive to visit physical stores or vice versa.

One retailer to have successfully embraced the multi-channel world is Argos, which operates from 35 stores in Ireland and around 800 in Britain. Originally a catalogue-based retailer recognised for choice, value and con-venience, Argos has embraced the internet age and adapted its model to suit the multi-channel world.

Last year, the internet represent-ed 54 per cent of Argos’s total sales of €3.2 billion, and a further 34 per cent of sales were from online reservations for store collection. So while the majority of Argos pur-chases are made by customers on-

line, it is clear that physical stores are a vital part of its overall offer.

Even the big beasts of e-commerce such as Amazon and eBay are em-bracing the benefits of multi-chan-nel. eBay is rolling out product pick-up points within Argos’s high street locations, and Amazon has established collection lockers in a number of its key global markets and is experimenting with book stores.

These initiatives demonstrate that even the largest online specialists can benefit from some form of physical store presence.

So what does this mean for the Irish retail market?

There can be little doubt that online retailing has enormous potential for

growth in Ireland, bringing us more in line with our European counter-parts. However, is the revolution in shopping habits likely to translate into the evolution of retail space? Retailers are beginning to understand the importance of both an online and a physical presence and the need to create a platform in which both aspects of their businesses co-exist, if not co-depend. Online will remain an essential sales function, while tra-ditional bricks and mortar is still key.

Because of this, we are likely to see a move towards a prevalence of “click and collect” services. The likely di-rection of traffic is signalled by Ikea’s recent decision to open its second Dublin store at Carrickmines, in the form of an order and collection point. At 1,394 square metres, this store is a departure from the traditional big box format pioneered by the Swedish retailer and is part of its plans to test and explore new sales channels in the Irish market.

From a consumer perspective, this trend offers the advantages of on-line shopping and marries them to the advantages of traditional stores, namely the ability to get a product quickly and to see and touch it. For retailers, it reduces distribution costs and increases footfall (and, ultimate-ly, spend) in physical stores.

Jason Miller is director and head of retail at Murphy Mulhall Estate Agency

While e-commerce continues to grow rapidly, physical shops still have an important role to play, writes Jason Miller

More and more retailers

are now moving fast to

embrace the potential of

multi-channel retailing

Joint agents Lisney and Smith Harrington are seeking offers in excess of €4 million for a 44-acre residential development

site on Academy Street in Navan, Co Meath.

The site, which is being sold on the instructions of RSM Ireland, the appointed receivers for John Spicer & Co in receivership, is about 250 metres from the town centre and is less than three kilome-tres from the M3 with direct links to Dublin city. A prime site within the commuter belt, it is close to schools, employ-ment, retail and leisure facil-

ities. The lands are all zoned for residential development in two parts. Part A is zoned for immediate development and Part B for future develop-ment from 2019 onwards. The site will no doubt be suitable for a scheme of large three-, four- and five-bedroom hous-es, subject to planning per-mission.

The agents believe there will be good interest from devel-opers and investors and some state agencies. It is also avail-able in lots. For more infor-mation, contact Lisney at 01-6382700 or Smith Harrington at 046-9021113.

William Har-vey & Co has two warehouse facilities

currently on the market. The first, a detached, mod-

ern, light industrial/ware-house and office facility in the Rosemount Business Park in north west Dublin extends to 1,453 square metres and has a long-term tenancy. It includes 227 square metres of fully fit-ted two-storey offices at the front of the building, including a trade counter and waiting room.

The building is let to Tram-oro Ltd on a 35-year full re-pairing and insuring lease from February 1, 2002 with upward only rent reviews. The next rent review is due on September 1, 2016.

There will be a strong argu-ment for the rent to increase at review as the current pass-ing rent of €77,840 per an-num (exclusive) equates to just €53.57 per square metre (€4.98 per sqf). The unit has an asking price of €880,000

exclusive. The second warehouse and

office facility is being offered either for sale or to let. The former Universal Concepts facility in Kilcoole Indus-trial Estate in Co Wicklow extends to a generous 3,593 square metres and sits on 1.53

acres.The modern facility is cur-

rently fully occupied and has an asking price of €529 per square metre (or €1.9 million). The facility is 15 minutes from Sandyford Industrial Estate in south Dublin and includes 328 square metres of fully fitted,

first-floor offices and staff facilities. It is within walking distance of Druids Glen Resort and some three kilometres from the N11.

For more details on either unit, contact Kevin McHugh at William Harvey & Co at 01-4532755.

The economic recovery is heralding a return of the Property Expo to the

RDS in Dublin this autumn. Given Irish estate agents launched successful proper-ty shows in Britain and New York earlier this year, it stands to reason that the successful show should return to home turf. The Property Expo 2016 takes place on Saturday and Sunday, October 8 and 9, in the RDS Industries Hall from 10am to 6pm, and will at-tract those in the market for

commercial, residential and overseas property.

Buyers, vendors, those who provide finance, advice or any related service in the property sector can meet potential cli-ents over two days at the show, which will also attract build-ers, surveyors and construc-tion companies, solicitors, engineers, interior designers and architects and letting and management agencies.

Free tickets are available at propertyexpo.ie, or lo-call 1890-252831.

By Tina-Marie O’neill

Savilles has brought No 4-5 Trinity Street in Dublin city centre to the market on the instruction of receiv-

ers Deloitte at a guide price of €1.725 million.

The current rent for the high profile Dublin 2 investment property is €110,000 per an-num which, at the guide price, will provide a yield of 6.1 per cent after standard purchas-er’s costs.

The mid-terraced four storey over basement period building extends to 353 square metres and is fully occupied. The building is laid out in re-tail use on the ground floors, with office accommodation overhead.

Property firm Douglas Newman Good (DNG) occu-pies the ground floor and low-er ground floor retail space on a new 20 year lease, which has just signed at a passing rent of €80,000 per annum.

StoryToys, a leading pub-lisher of children’s apps for tablets and mobile phones, occupies the office accom-modation on the upper floors. StoryToys signed a short term lease in June 2013 at a rent of €30,000 per annum or just over €13 per square foot. With the lease expiring in less than

two years’ time, this should provide an investor with the opportunity to capitalise on the strong occupational office market.

The property is situated in the middle of Dublin’s prime retailing and entertainment quarter, within a minutes’ walk of Grafton Street.

It is located opposite the recently revamped French bistro Pichet and surround-ed by other well-known venues such as Trocadero, The Bankers pub, and retail outlets occupied by Superdry, Abercrombie & Fitch, Avoca and H&M’s flagship Dublin store.

Brendan Delaney of sell-ing agents, Savills, said: “This prime investment offers in-vestors the opportunity to acquire a fully let mixed use building with a wault [weight-ed average unexpired lease term] of approximately 7.74 years in a sought after location in the heart of Dublin city. It is an attractive lot size at €1.725 million which we expect will appeal to a wide range of in-vestors.”

In the last quarter of 2014, Savills also sold the nearby Salamanca restaurant on St Andrew Street for more than €2.5 million, representing a net initial yield of 5.88 per cent.

Modern warehouses on market

Property Expo to return to home turf in autumn

Prime Trinity Street property guiding €1.725m

Prime site in Co Meath expected to fetch over €4m

The pendulum of convenience has swung too far in the consumer’s favour

The facility at Kilcoole Industrial Estate in Co Wicklow

Aerial view of the 44-acre residential development site on Academy Street, Navan, Co Meath

The property at 4-5 Trinity Street, Dublin 2

Lot 1. Central Garage Mountmellick Ltd, Co. Laois (In Voluntary Liquidation) Modern Showrooms + Garage 525sqm + Lge car park Ideal for any use Cost €750,000 to build Reserve €90,000 Must SellLot 2. 0.5 acre Development Site, Main Street, Daingean, Co. Offaly 2 houses + former filling station Ideal as small filling station/ shop Title freehold. All services available Reserve €25,000 Must Sell Cheap Land | 1 hour from DublinLot 3. Lackamore, Geashill, Tullamore, Co. Offaly 26 ½ acres top quality arable land Panoramic views, ideal for a house To be sold in 1 or 3 lotsLot 4. Ard, Geashill, Tullamore, Co. Offaly 22 acres good grazing land Guide €6,500 per acreLot 5. Gorteenard, Geashill, Tullamore, Co. Offaly 25 acres top quality arable land Guide €7,000 per acreNote: The above lands are ideal for cattle or horses and all within 25 minutes drive of The Curragh. Maps available from Matt Dunne & Associates.

Matt Dunne & Associates RICS SCSIMain Street, Portarlington, Co. Laois

Phone: 057 8623349 Email: info@mattdunne.ieLicence Number 002572

MuLtI ASSet AuCtIon(Unless Previously Sold)

July 12th 3pm Bridge House hotel, tullamore

BARGAIN!