By Paul Ockrim, real estate partner at Addleshaw Goddard
RECENT news of the demise of Jamie’s Italian marks the latest in a long string of chains struggling and apparently unable to fit in with the demands on today’s consumer. It’s one of several previously-successful national brands increasingly failing to capture the minds and wallets of generation Y – seemingly not in tune with the desires of a consumer base turning its back on what it sees as unfashionable one-size-fits-all experiences.
However, while chains increasingly find themselves drowning – struggling to evolve and burdened with increased competition, labour and material costs – the smaller independent market is booming, with new bars, cafes, delis and restaurants popping up every week across Scotland.
Small and flexible enough to pivot with demand, with a focus on quality over quantity, these establishments offer unique experiences which are proving a hit with consumers. Coupled with changing consumer appetite, the wider economic landscape favours smaller, local leisure groups, which represent the latest evolution of the sector.
Unlike larger UK-wide groups, smaller operators are not tied to large suppliers – opting to work with local businesses, many of which are also thriving. They are shielded, to an extent, from wider macroeconomics thanks to smaller, more manageable operations. This is in stark contrast to some of the bigger operators whose models are reliant on filling larger more expensive units – often based in city centres, retail parks and shopping centres.
Look no further than Glasgow’s own scene as a case study. Ongoing regeneration of the city’s Clydeside/ Finnieston area, a blossoming café culture in the southside and an increasing choice of east end bars in around the famous Barras area – all bolstered by the ever-popular west end, and to a lesser extent, city-centre establishments, Glasgow is a hotbed for the latest food and drinks trends. Consumer spending might be down overall, and people might drink less, but Glasgow’s leisure sector demonstrates a willingness for consumers to part with their cash if the experience is right.
Recent acquisitions by Ashton Properties – which owns Glasgow institutions Brel and Sloans – of two additional premises in Hyndland and one in Finnieston – is testament to the strength of the sector and the success of the smaller players. Independent deli/sandwich operator, Piece, and East coast based Bross Bagels, also go from strength to strength, with both now operating an increasing number of branches which manage to retain a strong, independent and artisanal feel.
Both models successfully feed off consumer demand to try new places, support local businesses and invest in high-quality food and drink. Location also appears to play a key role, with traditional city-centre hotspots seeing a decrease in footfall as customers migrate outwards to the city’s other districts – looking for the “village” type experience – buoyed by the more unique characteristics inherent in neighbourhoods.
It will be interesting to see how bigger chains evolve in the coming years. The current environment certainly favours those on the smaller scale of the market and we’ll continue to see successful existing independent venues change hands, with plenty of new ventures being launched in what is a very active sector.
Larger operations, while slightly different in offering, should pay close attention to emerging trends reflected by smaller, naturally faster moving leisure groups. As the market continues to evolve, the only thing for certain is the customer remains king, and all operators must respond to their demands, or risk falling by the wayside.
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