Our five year strategy

Over the last nine months we have carried out the most comprehensive review that intu has ever undertaken. With the pace of change accelerating in our sector, radical transformation is required, and we have tested our beliefs to develop a clear five year strategy to reshape the business by way of four strategic objectives.

From our half year results you can see that there are currently many changes and challenges in our market, but we have centres where both substantial visitor numbers and their satisfaction ratings are increasing. We understand the issues we face, including how the market is changing, but recognise that we have some fundamental strengths that mean we are best-placed to take advantage of the flight to prime.


The retail property market is impacted by the structural changes ongoing in the retail sector, with some weaker retailers struggling to remain relevant in a multichannel environment. This has led to a higher level of administrations and CVAs which has been exacerbated by the current political uncertainty in the UK and weak consumer confidence. The result of all this on the retail property sector is pessimistic investor sentiment and decreasing property values. On top of this, intu itself faces challenges. We are seen as having too much debt, with a tail of underperforming assets. Our relationships with tenants are seen as old-fashioned and our management structure has stopped us being as agile as we would like to be. We believe our new strategy addresses these challenges and will position us to take advantage of opportunities that arise.

Strategic objective: Fix the balance sheet

To reduce net external debt and create liquidity to deal with the upcoming refinancing activity, with the first material debt maturities in early 2021.

Key actions:

— not paying a dividend for the time being
— disposal and part-disposal of assets in the UK and Spain
— reducing the capital expenditure pipeline

What have we done:
—?no 2018 final or 2019 interim dividend
— part disposed of intu Derby for initial consideration of £109m
— entered second round of sales process for intu Asturias and intu Puerto Venecia
— disposed of £12m of sundry assets with a further £24m exchanged at above book value
— reduced capital expenditure pipeline by £60m, with total to 2023 now £146m

Strategic objective:?Simplify, enhance and drive efficiency

To deliver our strategy and reshape intu, we need to ensure we have the correct leadership team in place, with the right skill sets and teams to deliver this vision

Key actions:
— update management structure for our forward-looking strategy
— deliver a thriving culture of happy and high performing colleagues
— new approach to incentive plans
— focus on wellbeing and ESG

What have we done:
— restructured Executive Committee
— new Non-Executive Directors
— delivered £5m of annualised cost savings
— signed Mind ‘Time for Change’ pledge

Strategic objective:?Sharpen customer focus

To improve our relationships with those who pay us to take space, working closer with them and taking a partnership approach to maximise returns for both parties

Key actions:?
— identifying, nurturing and supporting leading brands
— investing further in data and sharing the insight
— developing new product and service propositions for our customers to reduce their costs, remove hassle and improve sales
— leading the way in modernising the lease structure, to include store generated online sales

What have we done:
— commenced CEO meetings with top 30 customers
— appointed Customer Performance Director
— recruited Head of Insight
— identified new product and service propositions

Strategic objective: Transform our centres

To deliver what future visitors and customers want with a project pipeline for new uses

Key actions:

Within the existing centre footprint:
— improving the visitor experience and dwell time: street food, experiential markets and paid for experiences
— seamless customer offering: direct retail and curated space for pure-play online brands and intu Pocket, a cashback loyalty wallet
Intensification of our landbanks, using a capital light model. Initial focus is on:
— residential
— hotel
— flexible working

What have we done:
— successful intu Lakeside trial of ‘instagrammable’ upside down house, with further roll-out planned
— opened test site for direct retailing with Birdhouse Café in Nottingham
— launched first shopping centre branded cashback loyalty wallet, intu Pocket
— around 6,000 potential residential units identified across eight sites with public consultation launched at intu Lakeside
— seven potential hotel sites identified for around 800 rooms
— six viable flexible working sites identified

Our review of the business looked at how we see the market evolving, and this along with our underlying strengths helped formulate our strategy for the next five years.

The store is not dying, it is evolving

With all the recent media articles around the death of the store, you could believe that no one will go shopping again. However, the right stores in the right locations still play a vital role for retailers. Two statistics tell this story well. First, 85 per cent of all retail transactions still touch a physical store. Second, recent research by CACI has shown that the presence of a physical store can double a retailer’s online sales in that local catchment.

If we look ahead to 2026 and research carried out by CACI and Revo, their research suggests that 78 per cent of transactions will still touch a store in 2026, even with the overall percentage of online sales increasing from 20 per cent to 30 per cent. Although direct in-store spend on comparison goods will grow at a lower rate than other channels (2017 to 2026: +2.5 per cent compound annual growth rate), the growth in click and collect and online sales researched in-store gives an overall compound annual growth rate in sales that touch a store of 3.0 per cent.

This highlights the importance of the store, added to which, if the overall number of stores in the UK declines over this period then the productivity of the remaining stores will improve, and this should be weighted towards the best retail and leisure destinations. As the role of the store changes, then the relationship with our customers will have to change too. As data becomes increasingly important, it is key that we and our customers can join forces and share data to ensure we both benefit and potentially share the risk and reward.

Centres are transforming

The transformation of centres is nothing new, it is a continuous process but the speed of change is increasing. Our view is that the best locations will deliver theatre and world class service, maximising the footfall and dwell time for our customers. These will be the locations that our customers focus on as they rationalise their store portfolios. In addition to the retail and leisure mix, we also see further intensification of sites introducing residential, office and hotels which will increase our centres’ importance at the heart of their communities.

intu’s fundamental strengths

There are many challenges, but there are also many strengths we have to take advantage of. We own nine of the UK’s top-20 centres (source: GlobalData) and on average over one million people a day visit one of our centres where our visitor satisfaction continues to grow. Our centres continue to have high occupancy at 95 per cent. We are seen as innovators – we introduced the first nationwide online shopping mall in the UK, intu.co.uk. All this means that we are a first stop and major provider of space in the UK for many global brands, such as Apple, Inditex, Victoria’s Secret and Abercrombie & Fitch.