Hyper-Localism, Cinemas, High Street Regeneration

[00:00:06] You're listening to Retail Disrupted, a podcast that explores the latest industry developments and the trends that will shape how we shop in the future. I'm your host, Natalie Berg. On today's episode I'm talking to Preston Benson, founder of really local group.

[00:00:36] The really local group creates and restores cultural infrastructure by regenerating disused high street locations. Preston founded the company in 2017 and since then he's been busy transforming empty retail units into community hubs across London.

[00:00:54] Now if you're in Southeast London like me, you will know one of these community hubs. Catford Muse was the first site from the really local group. This is, I guess she would describe it as a cinema on paper it's a cinema but I feel

[00:01:08] like we're not doing it just by calling it that because it has a coffee shop, a bar. There's a ton of space for co-working, there's comedy nights, you've got local food vendors. I mean it is so much more than a cinema.

[00:01:24] It is an amazing unique and really community-led space and if you couldn't tell already I'm clearly a huge fan. And before we move on from Catford Muse, I will just give you a little bit of trivia on the podcast.

[00:01:39] It also features in an Ed Sheeran video so there you go, a little claim to fame. But since Catford Muse, a really local group has expanded into a number of locations like Ealing, Packum, Reading, Sid Cup and there are even more venues planned over the next

[00:01:57] couple of years. So I'm thrilled to have Preston with me today. We're going to talk about some of those plans and what comes next. We're going to talk about how we go about revitalizing our homogeneous high-strates.

[00:02:10] We're going to talk about localism and the importance of getting the community involved. And we're also going to talk about the evolving role of cinemas. So let's get started. Preston, welcome to Retail Disrupted. It's wonderful to have you with us today.

[00:02:31] Let us a little bit more about the really local group and what led to the creation of the business. So yeah, I'm Preston Benson, the founder of really local group. We set up really local groups in 2017 to try to make a positive about what was a very

[00:02:48] clear negative that was starting to take over high streets and shopping centers across across this country across the UK. And really, the premise is how do we bring people back to sound centers? How do we provide the community with a space that no matter which sociodemographic part of

[00:03:08] the community they come from, that everyone from the surrounding area would want to come and use our venues? We light it on cinema as the core of our venues because cinema is a proven football driver.

[00:03:23] And if you think about every major leisure development, not only in this country but around the world, most of them historically have been anchored. At least over the last 40 years by a large multi-screen cinema.

[00:03:32] So all we've done is taking that big hundreds of thousands of square foot development. And we shrunk it down. We right-size it and we tailored it to each community that we we work with. Preston, you and I have both lived in the UK for nearly 20 years now.

[00:03:48] And of course, a lot has changed in that time. But I'm curious to know what did you make of the retail scene when you first moved over? I was struck by no matter where I went in this country.

[00:04:00] I would go see friends in different parts of the UK. I was struck by the identicate nature of the high streets here. Didn't matter, no, no matter where I was, it would be the same. There's a pharmacy, there's a fast casual.

[00:04:13] There's a pub chain over and over and over again. And the longer I've been here, the more I've really learned that each community is totally unique. Each has its own needs once, aspirations and desires.

[00:04:26] And so that dissonance between what I was seeing and what I was feeling and hearing when I was speaking to people was a big big part of what led me to this, led me on this journey. Yeah, I totally agree.

[00:04:38] I mean, I moved here in 2005 and I was so surprised at how similar, how homogeneous the high streets were up and down the country. It was the same department stores, same coffee shops. It's just very, very similar.

[00:04:55] I just felt like retailers were taking a real cookie cutter approach to high street retailing. So a lot has changed in that time, but for better and for worse because if we just kind of acknowledge the doom and gloom here, just in the past five years, we've seen

[00:05:13] six thousand stores close. But on the positive side, there has been a ton of reinvention, a ton of repurposing taking place and you know, this is a huge topic, but I guess just a kind of top line question

[00:05:27] to you, Preston, is what can you do as a high street retailer today? What can you do to stay relevant and how important is localism in all of this? I think it's critical moving forward.

[00:05:42] I mean, the high street is going through probably a 10 year restructuring where you know, it's going to shrink and some respects, it's going to evolve new occupiers are going to come in. But most of those new occupiers are going to be local businesses because we live in a

[00:05:55] world now where you're not going to have that massive wave of national multiple coming in to save the high street anymore. So localism is going to be critical to this revitalization and Renaissance. And you do see different neighborhoods at different levels, parts of London right now have

[00:06:13] a really really thriving and dependency. But then you go to other parts of the country and they haven't even begun and you just see, you know, tumble leads and desolation. And those areas in those towns that's going to be a real challenge, it was you know, great

[00:06:27] to see the government come up with the high streets on the town centers fund. It's been less great to see how little of that money has actually been deployed. My concern is a lot of that money is just going to consult and pocket.

[00:06:39] And it's actually never going to reach the high streets that's intended to. So people know there's a problem, but have we found a solution for it yet? No. Now, a question with the rise of hybrid working, many of us are living, working just generally

[00:06:54] spending more time in our local communities than ever before. And I'd imagine that that's ignited even more demand for local services and local amenities and this whole idea of hyper-localism, really kind of coming to fruition. Is that what you're seeing at really local groups? Yeah, no, absolutely.

[00:07:15] I mean, now that's the basis of which we set up really local group. I think another change that you're seeing is a diversification in what happens in a space and there's been a massive blurring of lines. You know, you don't just go to a coffee shop anymore.

[00:07:29] You might be able to work from there or you might have lunch from there. You don't just go to buy clothes anymore. There might be a coffee shop in there.

[00:07:35] This whole idea that kind of you do lots of lots of things in one space and our venues are absolutely cured up for that. You come to one of our venues, people will be working there. So they have community meetings there.

[00:07:44] You might take group of young mothers there. And of course, you have people watching films, eating at our food hall, maybe using our private event space. So all that together leads to sustainable and financially viable businesses as we move forward

[00:07:58] and those that cannot evolve or do not have that diversity or activity will struggle. Yeah, and this feels like a good point in the conversation to talk about some of the challenges of trading on the high street today.

[00:08:11] Now, there definitely seems to be a post pandemic high street resurgence. A few years ago, everyone was saying that the future is digital, but I don't know. In my view, I think that if anything, the pandemic really validated our desire for

[00:08:25] in store shopping and all of the things that you can't get from a screen that human touch, community, connection, the ability to engage all the senses, this idea of discovery. So the store is definitely not dead and that's kind of a recurring theme on this podcast.

[00:08:46] But I think we also have to be realist here and acknowledge that some of the inherent challenges of being a high street retailer, things like business rates and labor costs. They're only going to get worse in the next few months.

[00:09:01] So what do you think are the biggest barriers to high street reinvention? And maybe that's not even cost-related at all, but it's really the cultural change required to stay relevant to consumerist today. Yeah, well, the first thing you need to do anything is it's financing and money

[00:09:23] and sadly, we're living in a very difficult, a much more difficult situation. And then we were seven years ago, and definitely we were almost 19, 20 years ago when UNI came to the UK. So financing and affordable, that's going to be one of the biggest barriers.

[00:09:38] And then of course it's occupational costs. You know, staff wages have gone up almost 40%. Since we set up really local group, utility costs have traveled. And then of course, we have been, you know, the ongoing issue with business rates,

[00:09:53] although to be fair, hospitality and leisure businesses have been thrown in other lifeline by the recent decision to extend to 75% rates relief. So if not just getting the money to set up, then you, when you run it as well, you know, people are priced at it.

[00:10:11] There's only so much you can charge for your revenue, which you can kind of heartess back to my original point. If you don't have diversity or revenue or activity, you're going to struggle with this high cost environment. Now you touched on business rates there, Preston.

[00:10:25] And I just want to read out some comments from Mark Constantine, the founder of Lush, the beauty retailer. Now he was quoted in the Times recently, essentially saying that a reliance on business rates and car parking fees had prevented local councils from being able to invest

[00:10:42] in high streets and town centers. His, his, the way he describes it is that we have silent high streets. And he thinks that the government should in order to make town centers and high streets more vibrant.

[00:10:58] He thinks that the government should encourage big tech companies to open more shops. Now, I think that is really interesting because we know that Amazon has this growing desire to open physical stores. It's something that comes up a lot on this podcast.

[00:11:14] And I thought it was interesting hearing from him. This, it's kind of encouraging big tech companies because I think he can see the benefit and the knock on effect. It has on the, the wider high street, the wider community is everyone else has to kind

[00:11:29] of kick into gear and improve their digital offering. And also just this idea that a little bit of newness and innovation and technology, you know, using technology, not just for tech sake, but you know, really using tech

[00:11:45] to enhance the customer experience, these are all positives for the high street. So I'd love to know what you make of these thoughts, Preston. Well, it's interesting. I think, I think he's, you know, corrected his desire to want to see change in the high street.

[00:12:00] I question the amount of responsibility he wants to put on local government. That is just not local government is so stretched right now resource wise. They are so underfunded. It's not realistic nor is it desirable to have the government leading on this initiative.

[00:12:21] What we need is we need a flexible planning regime. We need to be supporting the private sector and entrepreneurs. And we need to be giving people making them feel comfortable to take a risk and actually want to do stuff on the ice street.

[00:12:34] And it's one of the things that was really important to us, what we set up our businesses. We see our businesses as being sort of large scale kind of community hardware where other businesses

[00:12:43] and other community groups can come in and make them plug into what we've already created. And some respects we've taken the bigger risk. And they can come in and they can trade for example and cap for we have a through all.

[00:12:52] We didn't charge any fixed rent for the first four years, but just charge a percent of turnover. We gave everybody all the kit they needed, they bring in their fridges, they bring in their food,

[00:12:59] they bring in their concepts and they can get you know, get trading in almost a frictionless way. It's that type of thinking we need coming from the private sector. Supported by local government that's going to help kind of move this forward.

[00:13:10] Let's talk about your first site in catford, I mentioned it at the start and I'd love to hear a little bit more about how you came up with the idea for the concept. And also if you could share how it differentiates from a typical cinema.

[00:13:25] Sure, so cat reviews is our first venue. We were the first cinema in the borough of Luce. Luce should have a cinema for almost 20, multi-screen cinema for almost 20 years. So we were bringing back what you used to existing catford, cat with catford used to have three multi-screen cinemas.

[00:13:40] And we chended up choosing the venue we were in because back in the 90s it was called cat for abuse and it was a large scale. I wouldn't say flea market but large scale market with lots and lots of different things. There's a speedy shop, there was food.

[00:13:53] And when we did our community consultation we heard this time and time again about the music and cat for abuse and how it was such an important part of people lives at that time.

[00:14:02] So what we did is when we took the unit which was a pound land, a trading pound land, pound land vacated. We decided to create a cat for abuse but for the 21st century.

[00:14:10] So instead of coming in and buying goods it was a place to exchange ideas and to be entertained and to be with each other and to kind of promote the community in that way. So we turned the store room of the pound land into a three-screen cinema.

[00:14:23] We turned where the retail spot and the pound land check out is that's our coffee shop and a food haul. We're all the soap sewer and all the Turkish delights and all the other stuff that you might get it upon land, that's now a bar.

[00:14:34] And then in the back room we have some extra space as well in the first floor which we're going to use for future future, future, kind of virtual reality live music type venues. So it really is a multifunctional space.

[00:14:46] The widthness of setting by it is because it is such a large space. Everyone from the local area feels comfortable. It feels welcome to come in and to do whatever they need to do

[00:14:55] so we have lots of young, young parent groups. We have lots of community groups coming in. We have a youth club that comes in. There's lots of activity to come in and really in some respects.

[00:15:04] Whilst we've created a cinema we brought back that cultural infrastructure, the space itself is a luxury, the space itself is the most important amenity that we've provided in the area and we got people from all over the burrow coming back to capital which is something that absolutely

[00:15:18] was not happening prior to our occupation. I want to get your thoughts now on cinemas more generally because cinemas seem to be one of those fairly recession proof businesses and one of the latest buzzwords that keeps popping up is

[00:15:32] fundflation. It's this idea that consumers will still splurge on experiences even when times are tough, even in a challenging economic climate. Now I suppose to some extent this is the lingering effect

[00:15:46] of the pandemic. This kind of desire to get out and to have an experience to make up for lost time. We're all social creatures. We don't all want to be stuck at home doing everything behind a screen so I think that's probably helped cinemas to a certain extent.

[00:16:03] Then you've got Taylor Swift and Beyonce and things like Barb and Hymer that I'm sure will have boosted this industry in the past 12 to 18 months or so because it's not just about going to watch movie anymore but especially with Barbie of course you know is the whole

[00:16:23] going with friends, dressing and paying, taking selfies, grabbing a glass of per seco and making a whole night of it. It feels like cinemas are having a moment. I suppose it's my point.

[00:16:36] I'm curious Preston to know what you make of this evolution and also how you see things progressing in the future. Well the cinemas industry has been uniquely impacted by the pandemic and the secondary tertiary effects of the pandemic and I could trace the current or the

[00:16:57] just completed writers and actors strikes back to the shutdowns and a lockdowns. So we've been really, really damaged as an industry which has not been helped by during lockdowns, the studios self they had to go straight to streaming on demand thereby passing the cinemas entirely even

[00:17:16] those cinemas make ten times the revenue on average of going straight to video on demand. They thought they needed to do that and they did that for their own interest because they went from those

[00:17:25] streaming platforms etc. We're now moving back to a more traditional model where the studio's value, the exhibitor experience and we're now seeing that theatrical window we're seeing all movies including some movies that even went straight to Disney plus for example are now

[00:17:41] being re-released in theaters early next year so that's great. The funflation point is an interesting term I think for us we keep our average ticket price at £7.50 and we feel like financial inclusivity and financial accessibility is a really really key important part of our offer. Every

[00:17:59] time you raise the ticket price by a pound you're excluding another part of the population from enjoying the cinema and you're enjoying the experience so while some of our competitors are charging

[00:18:09] up where the 20 pounds and even some are charging 25 pounds for a quote and quote normal movie we are intentionally keeping our prices low because we think this is the best thing to do and this is

[00:18:20] the best thing to give everyone an opportunity to enjoy film. The reason why this ticket price kind of madness is happiness because a lot of the larger exhibitors have very high cost space

[00:18:34] when you have less movies out and you of course closures out you need to make money and therefore that kind of inflation is happening. This people are trying to keep up with all of the additional

[00:18:42] costs of running their venues so that kind of answers are why we're seeing this increase in ticket prices. The ticket is simply on say that's an interesting thing. Events cinema has been well established

[00:18:54] prior to COVID as an interesting use of cinema screens when there aren't films and it was great to see the tailors so if they come out and happens so quickly it was during a period where some

[00:19:04] of the bigger releases like due into were supposed to be out so we actually really were grateful but there was something to show during a period when there were no new films out and the price

[00:19:14] 1989 that was set by Taylor obviously in a reference to her studio album we didn't have any say and what that price was we just sort of did as we were told and we were grateful for being able

[00:19:25] to provide that to our audiences. Preston I'm glad you mentioned financial inclusivity and accessibility because it leads us really nicely to my next question. Now last year Amazon announced a partnership with Odin where Amazon Prime members get two cinemate tickets for 10 pounds.

[00:19:45] Now it's only midweek and it can only be used once a month so there are limitations. Having studied Amazon for as long as I have the first thing I'll say is that this comes as no

[00:19:59] surprise. Amazon is always looking at new ways of delivering value to their prime members. They need to keep surprising them and delighting them and offering them not just value but unexpected

[00:20:14] value and they need to keep doing this so that every year come renewal time shoppers think you know what yes I am going to pay the 80 pound annual fee again to have access to things like free shipping,

[00:20:29] digital content, member only sales everyone shops the prime day sales these days. Things like discounts on my deliveru subscription, discounts on my cinemate tickets etc etc and I know I'm digressing here but what are my favorite quotes from Jeff Basos was when he said that

[00:20:50] the aim of Amazon Prime, the goal is to offer such good value that shoppers would be irresponsible not to be a member. So the use of irresponsible in that context is pretty bold but that just

[00:21:05] shows what they're trying to do and sort of the overall model. So from Amazon's point of view makes perfect sense right? Now my question to you to bring this back to cinemate is as you already mentioned, catford muse is offering incredibly good value for money to begin with.

[00:21:24] But what happens if these larger cinemate chains start to become that little bit more accessible? Does your focus on the community help to insulate you from some of these competitive threats? It's a good question I think to consumer taste with respect to multipactors we're changing

[00:21:42] before the pandemic and there's definitely or it appears to be a preference for customers to be in smaller quote unquote cozier environments. So instead of being in a 300 seat Auditorium it does feel based on our research, the preferences to be in a smaller Auditorium.

[00:22:04] For us to have this smaller Auditorium is 60 to 100 seats. This that's overhead is less cost and you can fill them more. And so the economics behind this have been I've been trained now for quite a while.

[00:22:19] Those bigger multiplexes, many of them are quite old and you know I expect that we're already starting to see closures, validation in the industry, a spec illacy that continuing into 2024. We've been quite selective about where we go,

[00:22:38] we're focusing on areas where there probably isn't a huge amount of supply. Like I said we're the first cinema in the effort in 20 years. Just like when we opened up an e-ling you're the first

[00:22:48] cinnamon e-ling in 15 years. So in terms of that we think our offers quite unique, our price point is unique and the diversity of what we offer will continue to endeare loyalty from our customer base.

[00:22:59] We've talked a lot about cinemas but you've also acquired peckham levels. Now if you live in Southeast London, you'll know that this is a very trendy, very hip and very unusual space. It used to be a multi-story car park and today it has shops, restaurants, office space,

[00:23:20] it has an artist studio, a rooftop bar and I have even done a Pilates Retreat There. So it really serves a wide number of needs. Now I'm curious to know Preston what have you learned

[00:23:35] by taking on such a diverse space and how might you apply those learnings to future projects? Yeah, it's a great question. So we were asked to take over the lack of levels when their parent

[00:23:47] company went into administration at the end of 2021. Again a business model that was set up precovid and was needing to evolve and to move with the times. The learning with the second is that

[00:24:04] how important it is to keep the community on-site and to bring people with you as you make that journey. Peckham's largest employment space, Peckham levels is largest employment space in the area.

[00:24:16] It's very, very important offer and we're very proud to be part of it. So I think for us you know we're sort of assessing where we go on 2024, you know it was only meant to be trading for six years.

[00:24:30] It was meant to be a meanwhile space and that six years has just ended so you know we see an opportunity to make additional investment and to tweak the model to make sure that it's still

[00:24:40] relevant for the next 10 to 15 years. Thank you for listening to Retail Disrupted. If you enjoyed this episode and would like to support the podcast please leave a rating or review or share it with others. It really makes a difference.