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Every Baby Boomer knows the building thanks to the internationally famous cover of the Pink Floyd album, Animals. However, there are now high chances that every Gen Z and Gen Alpha also discover this iconic location, but for entirely different reasons.

Built between the ‘30s and ’50s, Battersea Power Station, located in South West London, once supplied a fifth of London’s electricity. It was decommissioned in 1983 and remained dormant for years. Finally, in 2012, the building was sold for £1.9 billion. A £5 billion investment arrived from Malaysia to start redevelopment plans (it is said to have reached £9 billion in the end). The list of investors included PNB (one of the largest banks in India), Sime Darby Property, SP Setia (both Malaysian real estate companies), and Malaysia’s Employees’ Provident Fund.

As is often the case in such commercial development, investors had to contribute to more than the mall itself and had to fund a part of the subway station, the residential scheme surrounding the shopping centre and the ‘Electric Boulevard’ construction (one of the nearby streets). Redevelopment officially began in 2014 to open on 14 October 2022 with half of the commercial units having tenants (Covid delayed the opening from 2020 to 2022).

Following the 2023 IADS General Assembly held in London in November 2023, the IADS team had a chance to visit the premises. Now that the mixed-use project is almost completed and all units have tenants, is Battersea Power Station just another shopping centre or is there more to it? Most importantly, is it viable in the long term? What can department stores learn from this one-of-a-kind venture?

What is Battersea Power Station anyway?

First of all, it’s big. This is the most expensive property deal ever done in the UK, and its dimensions are, even by any continental European standards, unprecedented. Also, it’s way more than a shopping centre as the overall project encompasses:

• A 4-storey shopping centre with a retail space accounting for 289,283 sq. ft., 100 shops including 2 car dealerships and a fine art gallery.
• Grocery with a Marks & Spencer supermarket, a gourmet store and several bakeries.
• Pop-up stores: at the time of the visit Peloton bikes, The Alkemistry jewellery and Creed fragrances had pop-up locations.
• Hospitality with around 40 cafes, bars and restaurants from burger to occasion (including a Gordon Ramsay restaurant and pet-friendly places).
• Entertainment with a 9-hole golf course, virtual reality experience, a theatre, 2 movie theatres, a ping-pong salon, a permanent exhibition space and a lift to go to the top of one chimney to benefit from a 360° view of London (£15.90 for an adult).
• Expensive housing (a 3-bedroom penthouse apartment was sold for £ 6 million). The residential spaces built around are by Frank Gehry and Fosters + Partners, and this comes at a price. Some say the area is the new Chelsea, and Tatler Magazine dubbed it the new Belgravia (considered the richest area in London).
• Services with an optician and a hairdresser.
• Wellness with 3 sports options: cycling, boot camp and a 24,000 sq. ft fitness studio (to open in 2024).
• A hotel designed by famous Spanish designer Jaime Hayon with a rooftop pool (approx. £500 per room).
• A working space offering coworking, ready-to-use flex-office options (open 24/7) and a convention centre.
• A dedicated well-connected subway station.
• Nature with Battersea Park close by.
• An underground car park with 300 spaces.
• Office spaces which include Apple UK HQ relocated to the top level of Battersea Power Station, the US Embassy relocated to the area and 200,000 sq. ft of office space (to be completed end of 2023).

The brutalist building itself is worth the visit. Overall, the quality of refurbishment is state-of-the-art and the level of execution of the whole concept is excellent. The architectural features are understated to emphasize the historic architecture. The remaining pieces of power production are beautifully restored and magnified. Every store has the same illuminated rectangular sign outside with the retailer’s logo in black, so they are easily identifiable to visitors. The design gives consistency and elegance to the brands’ signages. The shopping centre surroundings offer cute, paved alleys with free-standing stores (such as Zara for instance) and beautiful contemporary architecture.

What are the results so far?

What about traffic? According to Forbes, 11 million visitors came to Battersea Power Station in the first year. New residential space and the companies relocating to the area should help provide regular returning customers. But a year after the opening, with such expensive prices, apartments are far from sold out even though more workers should flock to the neighbourhood thanks to the office spaces opening at the end of 2023. All the amenities have been designed to transform the whole location into a destination that attracts tourists and one-time visitors.

The mall itself intends to cater to all kinds of people, needs, cravings and wallets with a rather unusual brand mix. One can find high-street brands such as a 48,000 sq. ft Zara store, Mango and Uniqlo units, but entry-price retailers such as Primark and H&M are nowhere to be seen. Most of the stores are premium such as Lacoste, Theory, Gant and Ralph Lauren. Upscale watches are part of the mix with IWC Schaffhausen, Breitling, Hublot, Rolex at Watches of Switzerland, Tag Heuer and Omega, as well as a Cartier store. The first impression (and lasting) is that the mall is more high-end than the usual mix of high street retailers that can normally be found in shopping centres. In that regard, retailers such as Primark and H&M and restaurants such as McDonald's are missing to truly cater to all. It was probably done according to the developers' plan so that there is not too big of a gap between entry-price retailers and Cartier.

With post-Covid tourism resuming, the mall has benefitted from American and Middle Eastern tourists since its opening. Battersea Power Station also bets on Chinese travellers as the number of upscale watch brand options clearly shows. But what about their spending power at a time when the Chinese economy is challenged and the British government discontinued tax-free shopping? So far, the ones visiting London are spending way less than before the pandemic: according to the New West End Company (representing stores and hotels in the area), in September 2023, Chinese visitor numbers were just 2% below 2019 levels, but their spending was down 58%. It’s unclear if those tourists have been taking a subway trip to the neighbourhood.

At a normal pace, the area should cater to a balanced mix of local, newly located and tourist shoppers. But will locals shop there, especially with inflation hitting hard the British economy? So far, only 20% of the first year’s traffic came from South West London. Also, at the time of the visit (on a weekday afternoon), traffic was extremely slow, and tourists were nowhere to be seen.

What can department stores learn?

Battersea Power Station did not open without questions over the viability of what is ultimately another enclosed mall. The project developers certainly played by the retail trends playbook: a mix of shopping, hospitality and experience, pushing the mixed-use trend to its farthest.

In some ways, Battersea Power Station can be considered inspired by some department store for all (also as the brand mix ranges from mid-range to luxury). It’s something that many operators want to be, but few truly manage. But what works for department stores doesn’t necessarily work for malls: customers are used to seeing luxury beauty and accessory brands on many department store ground floors, they might be afraid of the luxury watch stores and their security guards who are the first ones visitors see when arriving from the Battersea Power Station subway station. A Chanel beauty corner on a department ground floor can be appealing to all customers, but a security guard in front of a Rolex store is a different story.

When it comes to store concepts, some retailers are at their best. Nike opened a community store that can transform into a place to exercise with activities twice a week, yoga sessions and various sports activities. The Body Shop opened a store entirely made of recycled materials favouring loose goods.  A unique place, a unique shop: Zara opened its biggest British unit with a very high-end ‘look & feel’ and many digital options such as fitting room e-reservation, self-checkout and online pickup. It is truly reminiscent of a department store, with true corners to highlight certain ranges (sports, lingerie, home, etc). In that regard, Zara is a retailer to monitor; they are playing the department store concept by the book, they multiply interesting collaborations and, more importantly, venture into more categories (home, cosmetics, fragrances, and recently hair care).

Conclusion: Time will tell

The redevelopment of Battersea Power Station is a significant project in London with economic and social impact, creating jobs, housing, and business opportunities. The moving of Apple UK and the US embassy in the premises (or close) shows the effort put in to ensure the right mix between working, living, shopping and entertainment (which could be the definition of what a neighbourhood should be).

The brand mix remains a key question. Will wealthy local consumers and tourists cross the river to come and buy an expensive watch there rather than enjoy a shopping experience in a flagship store in the city centre where shopping options are endless? Will average Londoners enjoy visiting the shopping centre knowing there might be very few shopping options for them? Only time will tell.

Credits: IADS (Christine Montard)