Strategy
Corio’s strategic objective is to create sustainable shopping centres where people enjoy meeting and spending time and money and to which they are pleased to return. Corio is aiming to become a pure retail player. We are well aware that sustainable centres involve more than retail trading alone and we therefore aim for a mix of functions, but the retail segment still drives Corio’s performance. The performance of a shopping centre is largely dictated by the primary catchment area: success is determined locally. In-depth knowledge of the local conditions and environment is therefore essential. It means opportunities and threats are identified earlier, enabling a fast and effective response.
Through effective cooperation between developers, letting managers and centre managers, Corio is able to achieve the optimum retail mix and the best layout, access and design and thus add value. Centres are continually modified and where possible extended, all with the aim of serving the consumer. Corio understands that shopping centres increasingly perform a social function for the local community.
| This insight is reflected in Corio’s strategy: |
| Corio centres are dominant in their catchment areas |
| Management, letting and development of the centres is organised in-house |
| Decentralised management model for the organisation, with business units in each home market: ‘local+’ |
| Critical mass in each home market to support professional in-house management organisation |
| Corporate social responsibility (CSR) in social, environmental and economic terms, as an important guide to action and choices. |
In early 2008, Corio investigated ways of refining its strategy to improve performance and/or reduce risks. Given its accumulated market expertise and market position, Corio came to the conclusion that insourcing redevelopment activities would create added value and help it to pursue a more active investment policy. Centres which no longer had added value for Corio would be sold and the proceeds invested in projects in which value could still be added, an indirect result could be realised. Corio also decided that a maximum of 20% of its portfolio would be invested in emerging markets. Implementing these changes would enable Corio to raise its performance still further without affecting its risk profile.
| In summary, these strategic changes would mean: |
| Insourcing the redevelopment discipline |
| A higher deal flow |
| A maximum of 20% invested in emerging markets. |
The events of 2008 in the financial markets and the wider economy have had an enormous impact on precisely these three changes. Expansion of Corio’s development activities is not the right approach at a time when financial resources are in short supply in the market and a higher deal flow is not achievable in the current conditions on the property market. Although Corio is convinced of the value of its long-term strategy, other priorities are now being set for the short term. In the present economic situation, closer focus on the day-to-day cash flow in our centres and careful management of the pipeline will contribute more to Corio’s value. The operational side of our core business is discussed in more detail below with reference to a number of examples.
Source: Annual Report 2008, Chapter Overview & Strategy, page 28 (PDF, 476 kB)
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