Page last updated at 10:14 GMT, Thursday, 23 October 2008 11:14 UK

Crunch time for luxury mall launch

By Clare Matheson
Business reporter, BBC News

Work in atrium of Westfield centre
Questions have been raised about whether the mall will be ready on time

As a man wanders overhead hosing down the glass roof of the building site that is Westfield London, it is hard to believe that what is billed as Europe's biggest inner-city mall is just days away from its grand opening.

Inside, workers in blue, green, yellow and even the occasional pink safety jacket get down to the business of getting the 1.7bn ($2.79bn; 2.17bn euros) shopping centre ready.

The major big names are already in place - Debenhams, Marks & Spencer, Next - with workers merchandising the stores.

Others, such as Disney, are barely-built shells.

But with "an army" of builders and fitters working day and night, the doors will open at 0900 on 30 October, says Westfield UK Managing Director Michael Gutman.

Now 99% of the retail space is let, and 80-90% of the building will be open for the launch, he adds.

"This is the best time of year to open a mall, in the run-up to Christmas," Mr Gutman adds.

The new centre in west London hopes to bring in as many as 21 million shoppers a year, or 60,000 a day.

Pitching itself at the higher end of the market - no Primark or Peacocks - Westfield hopes to lure in everyone, from hedge fund managers in nearby Notting Hill and Chiswick to local residents in Shepherd's Bush.

Luxury London

However, is it wise for the group to be opening a state-of-the-art temple of shopping - cramming in names such as Louis Vuitton Prada and Gucci - at a time when shoppers are deserting the High Street?

Even more worrying is the fact that even London itself, a city that is usually able to shake off a downturn, has suffered a slide in retail sales recently.


Lessons learnt with earlier centres - some of which can tend to be ghost towns after 6pm - have persuaded developers to make these schemes more vibrant

Helen Dickinson, analyst

According to the British Retail Consortium (BRC), like-for-like sales in the capital fell by 0.4% in September, compared with a rise of 8.6% a month earlier.

"Customers in London were more resilient than elsewhere in the UK, but the turmoil in the City and the fastest rising unemployment have shaken confidence more than elsewhere," says BRC director general Stephen Robertson.

He also warns "there may be worse to come" as the true fallout from current financial sector woes becomes apparent.

High Street gloom

Across the UK, the picture is little better. Like-for-like High Street sales - which strip out the impact of new stores - were down 1.5% nationwide in September, compared with a year ago.

WESTFIELD LONDON IN NUMBERS

43-acre site spanning nine postcodes
96 escalators
265 retailers, 40 of them luxury names like Tiffany and Prada
Almost 50 places to eat
70-strong concierge and valet team
4,500 parking spaces, 220 dedicated to valet parking
7,000 workers

Sales have now been down in six of the past seven months, the BRC says.

As we wander through the dusty upper mall, trying to sidestep the builders and their machinery, a Halifax bank front appears downstairs, a timely reminder that Westfield London could be facing a tough future.

In recent days, M&S has posted a decline in sales alongside Debenhams and Arcadia, Sir Philip Green's retail empire, which includes Top Shop and Miss Selfridge. All these big names have their place in the Westfield Centre.

House of Fraser, another "anchor store" at the centre, is also facing problems, with its owner, Baugur, caught up in the turmoil in the Icelandic banking sector.

"All retailers are going to be greatly challenged now, far more than could be realistically seen when the project was envisaged," says Deloitte & Touche head of site location services Chris Garner.

Downturn
What's the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage

But he does admit that the decision to go upmarket may have been a shrewd one: "London has a very limited offering in the luxury market compared to many other capitals like Hong Kong, Seoul and New York."

Meanwhile the latest high street sales figures from the Office for National Statistics (ONS) have offered little comfort.

According to the ONS sales fell by 0.4% in September, taking annual growth to 1.8%, from 3.3% a month earlier - the slowest annual growth rate for two-and-a-half years.

Brighter future?

Perhaps Westfield itself will shake off the concerns gripping consumers and retailers alike.

ANCHOR STORES
House of Fraser
Next
Debenhams
Marks & Spencer
Waitrose

KPMG retail analyst Helen Dickinson says it could face a tough first year or two. However, she stresses that the developer is in it "for the long term" - and that Westfield has advantages over older developments.

"Lessons learnt with earlier centres - some of which can tend to be ghost towns after 6pm - have persuaded developers to make these schemes more vibrant," she says.

"At Westfield there are a range of upmarket bars and restaurants, which will be open until midnight, while a 14-screen cinema, gym and spa are planned for 2009."

Westfield London also prides itself on being a hub for transport, straddling an interchange of overground rail, underground Tube and bus routes. But critics say its parking facilities - only a third of that at Bluewater in Kent - and road links could cause problems.

Lifestyle choice

Ms Dickinson also argues that "lifestyle and demographic changes" mean consumers now see shopping as a leisure pursuit, and the more pleasant the environment, the longer visitors will stay and the more they will spend.

LUXURY NAMES IN THE VILLAGE
Louis Vuitton catwalk model
Louis Vuitton
De Beers
Gucci
Prada
Versace
Montblanc
Kurt Geiger

"Vital to its long-term success will be the mix of tenants - and Westfield has signed up big names, including those usually associated with Bond Street, such as Louis Vuitton, Dior, and Prada, as well as the more usual High Street names," she says.

Westfield itself aims to be "all things to all people", Mr Gutman adds, pointing out that the luxury Village makes up just 5% of the floor space of the mall.

In fact, he says Westfield would have liked to house more High Street.

"The building is full, we would be delighted to have a name like Primark."

Retail Week editor Tim Danaher also believes that the mall will be "the new destination in London, people will be very enthusiastic".

"Oxford Street is a great destination but very crowded, this is something completely new. Even if they're not regulars, people will want to check it out, it has novelty value."

The Notting Hill set and residents of other nearby affluent areas, as well as those from the Home Counties, keen to shop till they drop, will arrive in droves, he believes.

"Centres in Bristol, Leicester and Liverpool have opened recently and are all very successful, they do create a huge amount of excitement," Mr Danaher says.

The question now, he says, should be how the traditional city centre High Street will deal with the threat.

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