What UK Build-To-Rent Can Learn From The High-End Fashion Industry
At first glance, there might not seem to be much of a connection between the UK build-to-rent residential sector and the luxury fashion industry turning out clothes so expensive they make your blood run cold.
Not so. BTR is in its infancy, and there is a great deal it can learn from all kinds of outside industries, not least a fashion sector which inspires loyalty and trust from consumers by providing brilliant customer service and learning what people want, and are willing to pay for.
M&G Real Estate’s Susan Cooney is as well-placed as anyone in real estate to transfer lessons from fashion and retail to BTR. She spent five years as a consultant at fashion brands including Marc Jacobs and Victoria’s Secret before moving to BTR real estate, first at Platform then as a brand manager at M&G.
Cooney told more than 300 delegates at Bisnow’s BTR Expansion & Outlook event that the industry has to build trust from the outset to engender loyalty, and ultimately remain profitable.
“From working in luxury retail, your customer service and brand is what sets you apart from the high street retail offers,” she said. “If something is broken, we fix it for free, when you go into a shop to try on a garment, you get first-class service. Most high-end fashion companies will sell you a dream and if you buy into it, the warranty and customer service is there for life. As an industry, we must be careful that when we sell our product we continue to be customer-focused and operate our buildings with that core in mind.”
This level of customer service of course needs to be combined with an eye on costs. Cooney pointed out that about 80% of a BTR scheme concierge’s time is taken up with accepting parcels, so automating this kind of necessary but mundane task frees up staff to focus on actually helping tenants.
A big part of providing the product people want comes down to paying close attention to how people use space, and giving them what they want rather than what they say they want. And to some degree this entails ignoring the temptation to create interiors that look good on Instagram but are not actually practical.
Cooney is honest about some of the things M&G has not quite gotten right.
“In my previous roles in retail, we would study the movement [of] customers in our stores and would design accordingly. I strongly believe we need to do the same in the BTR sector,” she said. “In M&G Real Estate’s residences, instead of purely designing a space and favourite amenities such as ‘lounge space’, ‘work space’ and ‘cinema rooms’, we are now studying how people move throughout a space and understand what they are drawn to and what they really need.
“Every fixture, even down to chair choice, is thoroughly analysed to ensure it is the right item for its intended use. I have launched amenities previously that were ‘magazine worthy’ but lacked real-life presence as we failed to put enough thought into how the resident would use it.”
Long Harbour Chief Executive Will Astor shared some telling statistics about sexy vs. functional offerings from the schemes it manages.
“Now schemes are operational you are starting to get a feedback loop, but you need to listen to what people say while watching what they actually do,” he said. “We surveyed our residents, and 69% said they want a gym, but less than a third actually use it. So you can provide a space for fitness, but don’t fill it with expensive machinery that will never get used.”
In terms of how this analysis is influencing M&G’s current wave of buildings, Cooney referred to a new scheme that has opened in Manchester, where the walls between the ground floor commercial units and the residential lobby are glass, allowing visibility between the two, and encouraging residents to use them more.
“The residents can see into the hipster barbers, the indie coworking space and the cool oyster bar, and it feels like a community there, a place where everyone is meeting,” she said.
As the BTR industry grows, it will face the same challenges in maintaining its reputation as other industries. How developers, investors and operators manage this will determine their success, Cooney said.
“We can all do the basics well, but an evolution of traditional property management is needed as we are now entering an era like other consumer-facing industries known as the trust economy. Like many businesses such as Uber and Airbnb, our customer’s perception of us and our reputation is our tool to grow.”