James Ashton: Malls still have pulling power but High Streets are in crisis

Shopping malls were once dull and airless places, but the best in class have upped the razzmatazz with cinemas and restaurants. They have had to: anything to make sure consumers do not take root on their sofas and shop purely online.

The boss class behind these businesses has never had to invent a new narrative, however. Their back stories are inspiring enough, although not always high profile.

There is Sir Frank Lowy, the Holocaust survivor whose rags-to-riches tale saw him introduce the first US-style mall to Australia in 1960. Now he is selling Westfield, the empire he built, to Unibail-Rodamco of France. Some say in the skirmish between out-of-town bricks and Amazon’s clicks that wily Sir Frank has bowed out at just the right time.

Far from retiring is David Simon, the chairman and 20% owner of French malls owner Klépierre, who learned much in three years on Wall Street under legendary dealmaker Bruce “Bid ’em Up” Wasserstein before returning to Indianapolis to revive the Simon Property Group started by his father and uncle. Simon is intent on disrupting the all-share combination of Hammerson, owner of the Brent Cross shopping centre and the Bullring in Birmingham, with Lakeside and Metrocentre owner Intu. The weekend press suggest Klépierre is poised to return with a higher offer for Hammerson after its initial £4.9 billion proposal was given short shrift.

Simon has unfinished business in Europe. His US group might already have owned Intu, then called Capital Shopping Centres, if property tycoon John Whittaker had not taken a 25% stake when his Peel Group injected Manchester’s Trafford Centre into the business eight years ago. Whittaker plays the long game. The Trafford mall took a decade to get planning permission and at its opening in 1998 the tycoon showed his jubilation by abseiling in in a white naval uniform from an imitation cruise liner.

That is the past, but what of the future? Close to one pound in five is already spent online. A battle now over acres of retail space looks ballsy. Most retailers can’t give it up fast enough as higher business rates bite and consumers tighten their belts. Last week was particularly gruesome for the High Street with New Look, Carpetright and Mothercare sounding the alarm that they needed to shrink their estates fast.

Company voluntary arrangements to shut loss-making sites and fix deep discounts on the rental costs of others have become commonplace. Even so-called fast-casual restaurants that were meant to plug the emerging gaps, including pizzeria Prezzo, posh burgers seller Byron and Jamie Oliver’s empire, have suffered from overexpansion.

Ahead of the opening of her 50th store, John Lewis boss Paula Nickolds was forced to claim there was “still a role for shops”, although some of her staff who were awarded the lowest percentage bonus since 1954 might argue for fewer of them. As anchor tenant to many of the malls being scrapped over, you know John Lewis will be fine. The same cannot be said for House of Fraser, which is on the hunt for emergency funding.

The retail industry is at a tipping point. Lord Wolfson said as much the other day. Having survived its toughest 12 months in 25 years, the Next chief flagged that soon his group’s online turnover will surpass store sales. That will give fresh food for thought about how many shops a chain really needs to serve the nation. And for excess square footage, there are only so many in-store coffee bars shoppers can frequent.

The mall owners are banking on a flight to quality: fewer stores in better locations such as theirs, where the weather is guaranteed and footfall remains reasonably high.