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Intu Properties plc Analyst & investor site visit to intu Lakeside
Wednesday 29 April 2015
2
Welcome and introduction David Fischel, Chief Executive
The clicks to bricks phenomenon Jonathan De Mello, Head of Retail Consultancy, HDH
The intu brand Trevor Pereira, Digital & Commercial Director
Digitally connected Gian Fulgoni, Chief Information & Systems Officer
intu.co.uk Karen Harris, Managing Director, intuDigital
Customer experience Roger Binks, Customer Experience Director
Q&A
Asset management Julian Wilkinson, Regional Director
Leisure Julie Pears, Director of Development
Q&A
Tour of intu Lakeside
Itinerary
This presentation contains “forward-looking statements” regarding the belief or current expectations of Intu Properties plc, its Directors and other members of its senior management about Intu Properties plc’s businesses, financial performance and results of operations. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Intu Properties plc and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this presentation. Except as required by applicable law, Intu Properties plc makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in Intu Properties plc’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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Our priorities for 2015
The Clicks to Bricks Phenomenon
April 2015
Jonathan De Mello – Head of Retail Consultancy, Harper Dennis Hobbs
Occupier Demand
The UK is very attractive to international retailers
HDH UK Retail Spend Ranking
Physical retailers with successful online platforms
• Apple • Argos • John Lewis • Next • Estee Lauder Companies £0
£200
£400
£600
£800
£1,000
£1,200
2008 2009 2010 2011 2012 2013 2014
John
Lew
is Di
rect
Sal
es (m
)
John Lewis Direct Sales
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%
Physical Only
Online Only
Online and Physical
% Unique Customers % of Total Transaction Spend
Retailer X: Online vs Physical Transaction Numbers Customers who shop from online and physical channels have higher average transaction values
Shopper Type Avg Physical Spend Per Transaction
Avg Online Spend Per Transaction
Physical Only £63.2Online Only £117.2Online and Physical £79.8 £137.9
Estée Lauder Companies: Bobbi Brown Bobbi Brown have a large and profitable retail ecosystem
Concession/ Wholesale
Online
Free-standing
store
Bobbi Brown trades from concessions or wholesale outlets in specialist beauty
retailers and department stores
Bobbi Brown trades from permanent free-standing stores in
a number of locations
Where suitable, Bobbi Brown also operates pop-up stores – such
as in London’s Canary Wharf
Bobbi Brown trades online, from both its own website and those of other routes to market,
such as department stores
= Maximisation of brand equity and profitability across all channels
The Retail Ecosystem
Store Name Store Sales Growth(2007 to 2013)
Online Sales Growth (2007 to 2013)
US Store 1 118% 70%
US Store 2 70% 45%
US Store 3 69% 60%
US Store 4 52% 18%
US Store 5 50% 26%
US Store 6 47% 41%
US Store 7 34% 30%
US Store 8 34% -9%
US Store 9 33% 10%
US Store 10 29% 39%
Average Growth by Top 10 Stores 53% 33%
US Store 211 6% 0%
US Store 212 1% -12%
US Store 213 0% -26%
US Store 214 -3% 40%
US Store 215 -5% 11%
US Store 216 -7% 16%
US Store 217 -10% 37%
US Store 218 -32% 25%
US Store 219 -49% 50%
US Store 220 -81% 47%
Average Growth by Bottom 10 Stores -18% 19%
Top
10 S
tore
s By
Sale
s Gro
wth
Bott
om 1
0 St
ores
By
Sale
s Gro
wth
E-commerce Growth
E-commerce growth is slowing, and competition is increasing
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
£0
£10
£20
£30
£40
£50
£60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mar
ker
Shar
e of
all
Reta
il Sa
les
(%)
E-co
mm
erce
Sal
es (
£ bn
)
Growth in the UK E-commerce market
E-commerce Sales (£ bn) Market Share of all Retail Sales
Major online players experimenting with physical
• Amazon • ASOS • Ebay • Google • Net a Porter
Kindle Pop-up San Francisco b store Asos pop-up
The eBay Inspiration Shop, New York
Pure plays with successful physical outlets
• Athleta • Bonobos Menswear • Oak Furniture Land • Pro Direct • Rapha • Simply Be/Jacamo
Pure Play Fashion Retailer X: Case Study Retailer X Customers
Index Vs UK(UK=100)
1 Wealthy Urbanites 8.9% 217
2 Maturing Affluence 17.2% 346
3 Prosperous Families 28.8% 241
4 Settled in Suburbia 17.9% 122
5 Mixed Neighbourhoods 8.0% 92
6 Average Families 7.6% 52
7 Students and Graduates 2.5% 46
8 Struggling Workers 5.0% 32
9 Poorer Families 3.1% 29
10 Borderline Poverty 1.1% 11
CAMEO Group 0 50 100 150 200
Pure Play Fashion Retailer X: Case Study
Brand Correlation with Retailer X Customers
Jo Malone 91%
Toast 88%
The White Company 85%
Space NK Apothecary 82%
L.K.Bennett 79%
Jigsaw 78%
Anthropologie 77%
Phase Eight 77%
Noa Noa 76%
Mint Velvet 73%
East 73%
Le Pain Quotidien 72%
Maje 69%
Sandro 68%
Department Store Proportion of Top 4 Groups
Correlation with Retailer X Customers
Debenhams 35.7% 5.9%
Fenwick 50.5% 75.8%
Harvey Nichols 50.4% 65.7%
House of Fraser 41.8% 38.1%
John Lewis 51.2% 89.8%
Selfridges 36.8% 10.8%
UK (%) 35.7% 12.7%
Address
City
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Making the brand count Trevor Pereira, Digital & Commercial Director
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New skills to support the brand
Making the brand count
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Compelling customer experience
Making the brand count
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Brand strategy model
Making the brand count
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Digitally connected Gian Fulgoni, Chief Information & Systems Officer
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The holistic vision
Digitally connected
In-centre footfall & dwell time analytics
Location based services
Business WiFi offering 4G rollout
Click & Collect
Building operational systems
High quality Wi-Fi
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Technically and organisationally ready
Digitally connected
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The vision is becoming a reality
Digitally connected
Delivered Proof of concept Core / Wi-Fi installed and data being captured Collect plus
Large TV’s and media services Customer lounge
Events space Back of house CCTV and access control
CCTV Footfall cameras and counting
Access control Site wide footfall analysis
Digital hoarding Corporate technology
Digital signage (JC Decaux) Flex-e-voucher Wi-Fi devices
Customer service desks Paid for retailer Wi-Fi
Refurbishments and developments Car Club
Building management system Mobile app
Car park systems, payment machines, ANPR and find my car
3G and 4G mobile networks
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intu Lakeside Core/Wi-Fi numbers
Digitally connected
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intu.co.uk Karen Harris, Managing Director, intuDigital
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intu.co.uk and centres
Homepages
Key areas:
• Shop online
• Inspire me
• Shopping centres
• Offers
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Wherever you are 24/7
Shop your intu centre
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Over 200 retailers live
Shoppable store pages
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Weekly ‘intu exclusives’ secured from retailers
Offers & exclusive deals hub
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Strong editorial in-house team
Content strategy
Editorial Features
Health & Beauty
Style
Kids & Family Home
Food
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New content three times a week
Editorial features
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Performance well ahead of industry standards
Email marketing
• Over two million email subscribers • Centre & behavioural segmentation • Email performance well above industry
standards • Over 75% smartphone and tablet usage, and
increasing rapidly
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Media revenues
Advertising & retailing channels
Desktop advertising Mobile advertising Direct sales
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Retail revenues
Advertising & retailing channels
Retailer commission Retailer content tenancy App subscription
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Customer experience Roger Binks, Customer Experience Director
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What is it all about?
Customer experience
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Tell intu shows that …
Customer experience
…customers who are happy with their experience,
stay longer
…customers who stay longer, spend more 30
35
40
45
50
55
60
65
70
75
80
NPS
Dwell time
2-4 hours 4 hours + < 1hour 1-2 hours
Circles represent relative spend (£)
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The intu signature experience
Customer experience
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Building brand profile – national marketing
Customer experience
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Destination shopping – a unique shopping experience
Customer experience
Hyg
iene
fac
tors
Convenience
Safety and security
Cleanliness
Dif
fere
ntia
tors
Signature items
Entertainment
Experience
We compete heavily with other shopping centres on this level
It is here where we differentiate and take
on leadership
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Asset management Julian Wilkinson, Regional Director
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Our vision
intu Lakeside
“To strengthen intu Lakeside’s position as a pre-eminent super regional shopping centre
destination in the South East”
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1.4 m sq. ft. at the heart of Europe’s largest retail area
intu Lakeside
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Operational metrics – December 2014
intu Lakeside
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Letting strategy
Improving tenant mix
Sustainability with key retailers
Achieving ERV on review / renewal + +
1 2 3
The right space at the right rent
Goal
Outcome Tenant re-investment and commitment to the Centre
Consistent growth in rental income
Driving growth through active asset management intu Lakeside
48
Asset management activity 2014
intu Lakeside
Improving tenant mix
Sustainability with key retailers
Achieving ERV on review / renewal
+ +
1 2 3
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Asset management activity 2015
intu Lakeside
Improving tenant mix
Sustainability with key retailers
Achieving ERV on review / renewal
+ +
1 2 3
50
Targeting strong growth in Zone A over the next five years
intu Lakeside
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Active development projects
intu Lakeside
• £9 million investment
• £1 million incremental rent
• c. £18m valuation increase
• Completed 2014
Food court redevelopment Hotel development
• £7 million investment
• Construction commencing Q3 2015
• Pre-let to Travelodge
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Extensions with planning consent
intu Lakeside
Retail extension Leisure extension
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• Valuation £1.25 billion
• Net initial yield 4.4%
• Nominal equivalent yield 5.0%
• Rent £60 million
• Zone A £350 per sq ft
Strong potential for further growth
intu Lakeside
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Leisure Julie Pears, Director of Development
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Major extensions
Nationwide opportunities
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New extended food court at intu Lakeside
New line-up
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• Attracting people more often
• Increasing dwell time
• Providing an enhanced evening economy
• Attracting people from further
Creating compelling destinations
Rationale for development
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The Lakeside basin
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Hotel, retail and interchange proposals
CGI
CGI
CGI
CGI CGI
CGI
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Development site
Leisure proposal
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The game changer
Leisure proposal
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Developing concepts
Leisure proposal
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Leisure proposal
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Leisure proposal
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Leisure proposal
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Leisure proposal The vision
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Executive management
David Fischel Chief Executive
Matthew Roberts Chief Financial Officer
Mike Butterworth Chief Operating Officer
David Fischel was appointed Finance Director in 1988, Managing Director in 1992 and Chief Executive in March 2001. During his 27 year career with Intu, David has gained significant executive experience in numerous aspects of the shopping centre industry including shopping centre acquisitions and developments. He has also been closely involved with the group’s corporate development including equity and debt financings and a wide range of other corporate transactions, including the 2010 demerger of Capital & Counties from CSC.
Matthew Roberts (FCA) joined Intu as Finance Director in May 2010 and was part of the team which acquired The Trafford Centre, Manchester, in the UK's largest ever single property transaction. In Spring 2013 he led the establishment of Intu’s Secured Group Structure with initial issue of £1.15 billion of bond and bank debt. Previously the Finance Director of Debenhams plc from 1996 to 2003, and Chief Financial Officer of Gala (subsequently Gala Coral Group) from 2004 to 2008.
Mike Butterworth was appointed Chief Operating Officer on 3 October 2011. He joined the Group as Chairman, CSC Trafford in January 2011. Mike was formerly the Property Director of Peel Holdings and the Managing Director of The Trafford Centre Limited and is a fellow of the Royal Institution of Chartered Surveyors.
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Senior management
Trevor Pereira Commercial and Digital Director
Gian Fulgoni Chief Information & Systems Officer
Karen Harris Managing Director intuDigital
Roger Binks Customer Experience Director
Joined the Group in 2007 as Commercial Director, Capital Shopping Centres PLC. He was appointed Group Commercial Director in October 2011, responsible for Operations , Commercialisation and Marketing. Previously worked for airport group BAA plc for 21 years, latterly as Retail and Commercial Director for Heathrow Airport.
Joined the Group in October 2011 as Chief Information & Systems Officer. Before joining Intu, Gian was Chief Information Officer for Lend Lease's European and Middle Eastern businesses. Previously he has held senior roles at De Agostini, Teletext and Hays.
Joined the Group in December 2012 as part of the acquisition of StyleMeTV, an online shopping centre. Previously Founder & CEO of Geronimo PR (one of the UK’s largest PR agencies, sold to Tribal Group in August 2003) and Non-executive Chairman of TVC Group (an integrated marketing agency specialising in broadcast & digital, sold to the Economist in March 2012). In addition to her experience in digital media and broadcast, Karen was listed as a leader in her field in the PR Week Powerbook and is a trustee of a large education based charity
Joined the Group in February 2013 as Customer Experience Director. Before joining Intu, Roger spent 5 years at the Regus Group Plc where he was Vice President of Global Marketing. Prior to Regus he worked for Marriott International leading and developing the UK Customer engagement and experience programs including the hotels chains’ own loyalty program; Marriott Rewards. Prior to Marriott Roger spent 8 years at Dixons Stores Group in a variety of roles covering Marketing, Operations and Sales.
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Senior management
Julian Wilkinson Regional Director
Julie Pears Director of Development
Marc Myers General Manager, intu Lakeside
Rod Webber Senior Asset Manager
Appointed Regional Director in October 2011, with responsibility for intu Trafford Centre, intu Lakeside, intu Merry Hill, Manchester Arndale and Cribbs Causeway Bristol. He joined the Group as Property Director, CSC Trafford in January 2011, responsible for investment and property management. He has held similar positions at Director level over the last 15 years as a retailer and landlord. He was appointed Director of Property at intu Trafford Centre in 2006.
Joined the Group's Development team in 2005, having qualified as a Chartered Surveyor and spent 15 years specialising in retail agency and development consultancy. Former clients include Church Commissioners, Crown Estate, UBS, and Mercury Asset Management.
Joined the Group in 2013 as General Manager at intu Bromley, supporting the successful refreshment programme of the centre. Took over as General Manager of intu Lakeside in 2015. Marc’s has previously managed centres in Ilford and Romford on behalf of The Mall Corporation and Meyer Bergman. Previous to this he enjoyed a successful retail career predominantly with Marks & Spencer were he had roles in both store management and buying. Marc is also very involved in Business Improvement Districts and sits on the Advisory Board of British BID’s representing the Shopping Centre Industry.
Rod has worked for CSC / intu since 2007 initially as a Senior Leasing Manager on the St Davids Centre development project in Cardiff. For the last 5 years Rod has been the Senior Asset Manager on intu Lakeside. Originally qualifying in New Zealand, Rod has 18 years professional experience in the property industry with a 13 year specialisation in the management and leasing of Shopping Centres.
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Senior management
Amanda Campbell Communications Director
Kate Bowyer Director of Finance
Adrian Croft Head of Investor Relations
Amber Sekhri Investor Relations Assistant
Joined the Group as Head of PR and Communications in February 2011. Previously held Head of Marketing and Communications positions with international and UK based large private companies
Joined the Group in 2000 as Group Financial Controller and has managed the Group’s investor relations since 2008 to 2014. She was appointed Director of Finance in August 2014. Kate qualified as a Chartered Accountant with Coopers & Lybrand (now PricewaterhouseCoopers) in 1995, working in their Canadian and corporate finance practices.
Joined the Group in September 2008 and has dealt with most areas of finance on the majority of Intu’s assets, including forecasting, strategic planning and partner liaisons. A qualified Chartered Accountant, Adrian has over 15 years experience of working in finance roles in both listed and privately owned companies.
Joined the Group in 2012 as Assistant to Matthew Roberts and Kate Bowyer. Amber previously worked for the IR team at British American Tobacco and in commercial property since moving to London in 2004. Responsible for managing logistics for Investor Relations events.
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Powerscourt
Victoria Palmer-Moore Managing Partner
Justin Griffiths Head of Financial Services & Real Estate
Georgianna Vaughan Consultant
Victoria is a Partner at Powerscourt and works across a range of industry sectors and Powerscourt's three practice areas - financial, corporate and special situations. With eight years' experience in international corporate communications, her clients have included the European Roundtable of Industrialists, Ingenious, Highbridge Capital Management, MCPS-PRS (the music royalties agency), SportsDirect, Prudential, RBS Investment Bank and Smurfit Kappa. Her transaction experience includes the IPO of Betfair, three successful bid defences for Aer Lingus against Ryanair, venture capital fund-raisings by Balderton Capital and the London listing move by DCC. Prior to joining Powerscourt, Victoria spent 11 years in investment banking, starting her career in UBS equity capital markets followed by three years in Morgan Stanley equity sales and then four years as a director in Merrill Lynch's pan-European equity sales division. Victoria has an MA (Hons) in Modern Languages from Oxford University and is fluent in French and Spanish.
A member of Powerscourt's senior management team, Justin has over 16 years' experience in advising both public and private companies on their communications and has worked at both an agency and FTSE 100 in-house level. At Powerscourt, Justin leads the financial services and real estate team, working with a range of clients on financial and capital markets communications, corporate positioning and ‘special situations’. Along with Intu, his clients include Ballymore, Bank of Cyprus, Better Capital, Gocompare.com and Cantor Fitzgerald. Before joining Powerscourt, Justin was a Director at Citigate Dewe Rogerson, an international public relations agency, where he spent eight years. He began his career with Tavistock Communications before moving in-house at Cable & Wireless, where he was Group Media Relations Manager.
Georgianna Vaughan joined Powerscourt in 2013 as an analyst and predominantly supports Managing Partner Rory Godson and the Special Situations team. Georgianna has an MA in History from Cambridge and an MSc in International Relations from the London School of Economics. Prior to joining Powerscourt, Georgianna co-founded a risk assessment and crisis management consultancy, where she worked on risk management and M&A assignments with a variety of international clients. She has experience in a number of sectors having worked on communications projects for the United Nations, the Conservative Middle East Council and various international media outlets. She has written for several publications including contributing a study on human migration to a book by the United Nations Association.
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Guest presenter
Jonathan De Mello Head of Retail Consultancy Harper Dennis Hobbs
Jonathan specialises in providing tailored solutions to the retail, retail banking and retail property sectors. Jonathan leads Harper Dennis Hobbs' Retail Consultancy team and has a wide-ranging role, incorporating the recruitment and management of a team of consultants and analysts, spearheading strategic retail consultancy projects for clients worldwide, and creating strategies to help clients to maximise their retail potential. Jonathan has been working as a specialist consultant in the retail sector for over 15 years and his advice has benefited a number of clients, including Aveda, Barclays, BC Partners, Bench, Bobbi Brown, Burger King, Coin, Costa Coffee, Fossil, HSBC, Jo Malone, KKR, Lush, Mac, Marks & Spencer, Monsoon, Nike, Oviesse, Paperchase, Phones 4u, Space NK, Subway and Tiffany. Jonathan was instrumental in developing CBRE's Retail Consultancy offer and prior to joining CBRE held similar roles at Experian, CACI and Management Horizons. Jonathan is a regular conference speaker and has spoken at a number of major events including ICSC-RECON and BCSC. Jonathan has also given lectures at London Business School, Cass Business School and ICSC and BCSC educational events. As well as Jonathan’s client and teaching commitments, Jonathan regularly provides expert commentary on the retail and property sectors in national and international media, having appeared as a retail expert on the BBC, ITN, Sky and Radio 4’s Today Program.
