The Future of Retail – Stay Shut or Get Creative

What Is The Future For The UK Retail Sector?

Since COVID-19 the retail landscape has changed, with shops, restaurants, bars and pubs being closed for nearly 3 months. Now with some normality returning, 50% of brands in retail centres are keeping their doors shut. So, what is the future of the high street and retail as we know it? What must businesses do to remain competitive, whilst staying in business. 

The retail landscape had been failing for several years, with the casualties including many of the nations favourite shops, with Mothercare, Debenhams, House of Fraser, Patisserie Valerie and Marks & Spencer among those that have been forced to close or downsize in response to changing consumer habits. Others such as Clintons Cards, Karen Millen, Jack Wills, Bathstore, Carluccios and Frankie & Benny, have filed for a CVA. Now after lock down, as retail centres open again, 50% of brands have their doors firmly shut. Many tenants have negotiated zero rents with landlords for the remainder of 2020, and in many cases into 2021. If the doors open, rents are due and furloughed staff would need to return to work.

With social distancing there is less footfall in underpopulated retail centres, with many consumers not enjoying the experience. COVID-19 has fast forwarded the demise of the retail landscape by 5 years, and retail will never ever be the same again. In January it was predicted that more than 17,000 stores would close their doors for good in 2020. Now mid COVID, that figure is predicted to rise. In June 2020, Intu Properties, one of Britain’s largest shopping centre owners, appointed the accountancy firm KPMG as administrator to make a ‘contingency plan’ if it cannot reach an agreement with its creditors for the Trafford Centre and Lakeside. The pack of cards start to tumble!

This calls for a change in habits. Shopping trends in the UK continue to change, with 82% of us shopping on-line, where 10 years ago, that figure was mid 50%. The UK has one of the highest percentage of ecommerce retail activity, and in December 2019 over 21% of all retail sales were on line, representing £1-in-every£5 spent, according to the Office of National Statistics.

Meanwhile, M&S, the beleaguered clothing retailer prepares to go back to its roots, ditching its clothing stores, which were no longer seen as fashionable, whilst being accused of importing cheap foreign clothing. In a recent TV interview, M&S was criticised for its arrogant business decision, ‘You know, we don’t really need to go onto the internet. People like to come into a store’. Is this a case of RIP for M&S?

Retailers now need to learn how to adapt and change within this evolving landscape. Retail spaces were once destinations where the shopping experience partnered with the hospitality sector. Now with cinema’s, cafe’s, bars, restaurants, and gym’s closed, 2020 may herald the death of the shopping centre or retail park.

New emerging retailers with funky brands no longer want the burden of long leases in shopping centres and retail parks, requiring more flexible and mixed retail spaces, preferring pop-ups, markets, tertiary retail space, smaller retail units and more importantly, as well as a solid on-line marketplace.

What of the future? How can all retailers plan for survival? The online marketplace is the future, and many big brands never saw what was coming, believing shoppers would always walk into a store, but not now. Why did Kodak not see the evolution of digital photography, still making photographic film, when consumers were snapping away with their mobile phones? The same holds true now. 

What Can Retailers Do?

The key to recovery is change. A change in thinking, a change of business model, new propositions, and a review of the retail landscape. Consumers are frustrated with the less-than-satisfactory experience of shopping on the high street. Their main reasons for avoiding physical stores include: too many people in-store, less choice in-store than is available online, shops are too far from home, and shops shut at the time people finish work.

Pre-Covid, with the ramifications of Brexit, consumers were becoming more conscious spend-wise, causing a crisis of confidence in people’s wallets. Many retailers have suffered a natural decline by not offering consumers a reason to shop in their stores, suffering from outdated USP’s, with poor fiscal management and standing still in an environment that demands fast-paced evolution.

The key is ‘re-marketing’ and the need to be to be competitive. All retailers must have a strong web and e-commerce presence, with the ability for shoppers to ‘buy on line’ either for despatch by mail, or for a ‘click & collect’. Next day delivery is now standard, with ‘same day’ delivery becoming an accepted reality.

Morrisons recently opened its cafes as takeaways, launching a new hot-food-to-go service in all 402 of its Cafe’s nationwide, and now becoming UK’s biggest fish and chip shop, selling 2 million portions each year. Now with a tie up with Deliveroo, this true lateral thinking gives the customers what they want, which is food on the table. 

Physical space is expensive. Extortionate rents and crippling business rates place additional financial pressures on those who are already under serious strain, hence brands will seek alternative spaces in which to operate. Argos did this, leaving their stand-alone retail environment, and piggybacking ‘in-store’ with Sainsbury. A win-win for both brands.

Social media has played an important roll in marketing for shops.  Since COVID, many people have started a career as a social media influencer.

What will the future high street look like?

The demise of the shopping centre could herald the rise of the high street, providing exemplary retail spaces, residential accommodation, and all the amenities that modern consumers desire, at affordable rents to the retailer. The high street has the potential to become a new community space, where people can live, work and play in one social arena.

Town centres and high streets must be at the forefront of engagement in their communities. Listening to what people want as opposed to giving them what they think they want. Introduce more living space into central locations, make parking free to encourage further footfall. With workers reluctant to commute into cities post COVID, high streets could offer ‘work hub’s supported by local authorities. Workers then need coffee shops, grab and go food options, dry cleaners, heel bars, small independent retailers, and an eclectic mix of retail.

Technology will be the tool that will transform the town centre, meeting the many different consumer needs, offering everything from free Wi-Fi to improved transport links and electric car charging points. But it seems the key to revitalising the high street lies in the heart of the high street itself with the people who shop, work, and live there.