Disneyfication, decentralisation and defamation

Indyref2 v2?  As the discussion about the UK’s independence from the EU seemingly takes a break, another independence discussion is reignited. First Minister of Scotland Nicola Sturgeon announced this week her support for a second independence vote for Scotland by 2021 in the event that either the UK leaves the EU, or Boris Johnson becomes Prime Minister. Although Sturgeon’s support is running high, to achieve this would require a 10-point swing in what, by EU referendum standards, looked like a fairly clear decision by the Scots last time around. Independence would be economically challenging for Scotland, which exports 61% of its products to the wider UK, and whose economy is not particularly well diversified. However, a realistic threat of independence would also create further issues for the rump of the UK. The same Brexit-related challenges with the Irish border would also present themselves to the North, a position unprecedented since 1707. Ruth Davidson, Leader of the Scottish Conservative Party, has pointed to Sturgeon’s apparent renege on her promise that this was a ‘once in a generation’ vote. Tony Blair on the other hand points to a hard Brexit result as being a potential gamechanger and catalyst for weakening of the union. What could be done to strengthen the union, Blair was asked. Merge the English, Scottish and Welsh football leagues, he answered.

 

A platform for innovation  ‘The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth… or adventure his wealth in the natural resources and new enterprises of any quarter of the world that fancy or information might recommend’. This might sound like a comment about the modern wave of e-commerce, but was in fact a comment by John Maynard Keynes in 1920, talking about the early stages of globalisation. This quote was employed recently by Mark Carney in a speech setting the stage for the modern wave of technology-led change and, in particular, the impact it will have on the banking sector. He pointed to three specific focuses. Firstly, the decentralisation of banking, moving away from hub and spoke models, where the major banks dominate, to distributed finance models which are open to new players. Secondly the transition to a low carbon economy, which will require ‘enormous reallocation of capital and massive investments in infrastructure’ (estimated $100 trillion globally over the next 10 years). And thirdly, the rise of AI and big data, and how these can be deployed to decrease systemic risk and improve decision making (banking expenditure on AI is second only to retail at $10bn to 2020). The cumulative impact of these three trends is a big shake up of the banking sector, and significant investment in change. Carney cautions about the knock-on effects on society, noting, ‘When Keynes marvelled at new possibilities, a decade of wealth creation would follow, but its gains gave rise to imbalances in incomes and in trade’

 

Disneyfication  With digital trends delivering new ways of completing processes without the need for real estate, in the future real estate will need to offer the customer something more if it is to compete. If you’re attending one of our Outlook events over the next couple of weeks, you’ll hear me talk about some of the things that real estate investors can learn from Disney in this regard; an organisation that has been at the top of place-based experience for the past 50 years. ‘If traditional retail outlets are in fact to survive and prosper, they must offer customers a shopping experience including features that cannot be readily replicated in an online environment’, says Disney in a patent filed at the end of last year. Their response is to bring some of the immersive features from their theme parks into their retail units. A combination of innovations proposes firstly an interactive display that links live in-store entertainment with a ‘dynamic product display unit’. Secondly, a kiosk unit uses sensors to profile the customer, and create bespoke responses around inventory availability and in-store experiences. In a world where experience is being looked to as the panacea for a faltering retail real estate offer, it is perhaps not a bad idea to look outside the industry for evidence of the best innovations, and to organisations that have proven capability in delivering them.

 

Convenience 4.0  The role of the store has historically been somewhere to stock goods and ring transactions through tills. The former is now optional (see showrooming) and the latter is quickly disappearing. The latest evidence of this comes in the shape of Sainsbury’s prototype store in Holborn (Central London), where there are no tills, and customers can only transact via their smartphone. Apparently 82% of customers are willing to do so. Meanwhile, across the pond, 7-Eleven has reimagined its convenience offering, adding in a taco bar, craft beer on tap and patio seating to its ‘lab store’. In these contrasting offers we see the bifurcation of retailing. On the one hand the functional, quick, frictionless offering, also being promoted by Amazon Go and others. And on the other, the push to add value to the offering and encourage customers to stay for longer. Which is better…? Both. Having clearly marked out territory provides more choice to the consumer and allows retailers to more closely match and respond to the specific needs of their target segment.

 

Clubland  Offices have not always been the preferred venue to carry out business. Particularly for the mercantile and aristocratic classes, whose business typically involved socialising with other wealthy people, the sterile cubicles of the first purpose-built offices (designed for clerks) didn’t serve them well. Consequently 19th century London was full of gentlemen’s clubs; many of which served specific interest groups, such as political and industry affiliations. It seems that the world is coming full circle, with the rise of membership clubs taking over from traditional offices once more. Particularly as sharper emphasis is placed on the importance of the social element of work, new models such as British Land’s ‘Storey Club’ (launched last month) more closely match the modern way of working. This for instance includes propositions around food (private dining spaces), tech support and community management. At present, most of these types of member offers buck the historic trend of exclusivity, but one wonders how long it will be before once again special interest clubs emerge. A real estate industry club would be handy… although some might consider that Fino’s and The Loop Bar in Mayfair already deliver this purpose.

 

Mis-Tweet  20 years ago there was only so much damage that one could do to one’s career through making an inauspicious comment after a few beers. The advent of e-mails, shortly followed by viral emails, undid all that. Those that were in the working world 15 years ago might remember receiving some of the more unfortunate of these, and the heavy HR and PR clampdown which followed. Nowadays, the advent of social media makes the whole thing completely uncontrollable, with the best defence for those unlucky enough to make a regrettable remark being to say that it was ‘mistweeted’. Following Elon Musk’s repeated indiscretions in this regard, he has now, it transpires, agreed with the SEC to have all of his Tesla-related tweets pre-approved by a company lawyer before posting them. On that note, I would like to say thank you to the team of colleagues who perform a similar last-minute role for me each week during the production of this blog. (Mr Golding: your doctor has started sending your blood pressure treatment invoices to me directly these days). They’ll breathe a sigh of relief to learn that both they and I have a week off next week, as I tour the country talking about digital disruption in real estate at our Outlook events. I hope to see some of you there, so that I can defame you in person. #CWPropertyOutlook