Store, Sweet Store

Image source: travellight, Jane Rix, Ton Photographer 4289 - Shutterstock

What's going on?

British department store John Lewis announced on Thursday that it’ll start building its own rental properties.

What does this mean?

John Lewis is the UK’s middle-class go-to for everything from cardigans to kitchen appliances, rugs to rowing machines. But a lot of those products aren’t exactly at the top of Brits’ shopping lists at a time when a tank of gas costs over £100 ($125) and a pint of beer has crossed the £8 ($10) mark. So now the company is aiming to make 40% of its revenue from non-retail sources by 2030, with plans already in place to expand into areas like financial services, furniture lending, and gardening services. But first up is the rental market, as the company pushes ahead with plans to build 10,000 homes above or adjacent to its stores in the next decade.

Why should I care?

Zooming in: Landlord has a nice ring to it.
John Lewis’s career change isn’t just because retail has fallen out of favor, but because the rental market has very much fallen into favor. Strong demand has pushed up the price of rent, with monthly payments up around £100 on average from a year ago, according to property website Zoopla. The retailer’s been clever about the three locations it’s starting with too: all desperately need more housing, while two of them are a stone’s throw from the newly opened Elizabeth Line transport link in London.

The bigger picture: If you’ve got it, flaunt it.
This is the thing about retail chains: they’re not just shopping outlets, but a massive network of real estate. That gives them a tangible asset they can monetize even if the pandemic comes roaring back, or if ecommerce continues to reduce footfall. That real estate will be filled with beds in John Lewis’s case, and with desks in Tesco’s: the British grocery powerhouse just announced that it’s trialing desk space rental under a new deal with flexible office operator IWG.

Originally posted as part of the Finimize daily email.

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