The Retail Renaissance
Retail has changed drastically over the past few years. Even before the pandemic the state of retail was shifting - stores were closing all over the place as a greater focus has shifted to the online. Department stores that previously dominated the highstreet have gone into liquidation and are closing down all over the place. What does this mean since the pandemic and where do we see retail heading in the future? How can this become an opportunity for independent brands?
Stephen Court is a former Walt Disney Imagineer, Hammerson Retail leadership team and ESS CMO, who now works as a Retail Expert and Property Consultant. His past projects have been marked by generating thousands of jobs and attracting significant inward investment - many of which continue to provide retail, entertainment, leisure, and local services to millions of visitors every year. His origins in theatre production which then led him to assist businesses to sell products using theatrical techniques.
In a recent LDC Accelerator webinar, we discussed the implications of the COVID19 pandemic as well as other, fundamental shifts that have also contributed to the retail renaissance.
Right now retail is in a state of flux for everyone. We have gone through this extraordinary period that no one has experienced before. Everything we once took for granted has been taken from us. Retailers have been able to make a shift to move and work digitally, this was not the case for retail property which ultimately grinded to a halt.
The highstreet was already shifting beforehand so it is interesting to try and understand how things may have been different irrespective of the pandemic. Stephen explained the vast contrast between retail now and retail back in the 1960s. The 60s marked a huge expansion of the retail shopping industry. By the 1990s we were seeing the growth of huge supermarkets.
If retail investment is shifted online then there are less costs that come with that. This is why more and more retailers are choosing to use omni channels. Physical space is still important but going digital is more practical and cost effective.
There is also a generational divide. The younger demographic is becoming more strategic within the digital retail environment, however, the older generation aren’t so equipt to use digital retail.
Even before the pandemic we were seeing a change whereby less physical space was used for retail. The current retail economy is still huge - it’s worth over 400 billion pounds a year. We are starting to see investors paying more attention to non-physical retail. This highlights a change in sentiment. There will be less physical retail in the future. The pandemic has simply sped up this transition from physical to online retail. Once the lockdown is over, people won’t go back to their old habits of physical purchases.
It is important to stress that until COVID19 can be related to any other seasonal illness, caution will prevail. There may be further lockdown, and already we are seeing lots of towns getting close to that point. Now the approach is being regionalised so there is no nationwide lockdown which means there will be less of a drastic impact. Footfall is down and average spending is also down. We are operating at roughly half the capacity. The next 6 to 12 months will most likely look the same in terms of reduced consumer spending and footfall.
Retail is always about creativity and overcoming challenges. There is a future for retail but it will have to change quite drastically. Until there is a vaccine and things are much safer these changes will have to be iterative.
The future of retail will need to focus on customer experience and journey. Independent retailers are hyper-sensitive to the customer. Once you have invested in physical space you need to optimise it. If you find good locations then you must bespoke your offer. Independents will fight for all relationships. One good customer experience in store has a huge domino effect.
Can the property sector respond to this by changing their cost models to accommodate this shift? This would allow the chance for a better, more immersive, retail future.
Stephen went on to offer tips regarding the ways to benefit from these unprecedented times. This is a time to be bold. Don’t be afraid and don’t wait to be asked. Worst case scenario you are rejected. At the moment retail landlords have much more vacant space than they would like so there is more available space up for grabs. Retail landlords also don’t necessarily have the contacts to reach out to people so it is better to just go for it.