According to recent research one in seven shops on the British high street are vacant. Since the start of the pandemic, we’ve seen iconic brands like Gap, Topshop, John Lewis and Cath Kidson shutter stores. So what does the future hold for our high streets?
Tom Gray, chief strategy officer, Imagination
Online retailers are looking to grow customer differentiation and loyalty by offering value-add services in physical stores. The best example of this is Warby Parker – an online-first brand that upended the traditional business model for eyewear. They’re now opening a swathe of high street stores because it’s become harder to differentiate and command a premium online.
Big brands going direct to customers with an experience economy offer. Lockdown showed that we can work and shop in isolation from home, but also that we crave real-world experiences – bookings are surging for restaurants, museums, and events post lockdown. I think we’ll see more examples of former city center retail locations becoming mixed-use entertainment locations – with popular brands offering alternatives to traditional shopping, either with flagship stores or paid-for experiences like the Monopoly Life-sized experience in a former Paperchase building.
Charlie Makin, managing director, PinTarget
A national lockdown was never going to be good news for any retailer with physical stores. However, consumer behaviour was changing prior to lockdown and we had at least ten years’ warning.
We emote about the high street – let’s consider some facts. Retail makes up only about 30% of the high street, the rest is offices, or space for leisure and community use. The high street has shown remarkable resilience with the current vacancy rate of 12.5%, broadly the same as in 2013. The decline in physical shopping was defined by two macro factors: the launch of the iPhone in 2007 and the financial crash in 2008. But there have been many micro issues ranging from myopic management (Debenhams and Arcadia,) high rent prices, business rates and planning legislation. In many respects the consumer is not an issue, we are changing, but we always have.
Working from home and making different career choices will affect how and where people shop. E-commerce is growing, but even Amazon is launching physical convenience stores targeting housing developments because people still need to go into shops. In July, CACI reported that shopper movement is 5% higher than pre-Covid figures, but the data is skewed. London is only at 80% of pre-lockdown, whilst rural towns are 17% higher.
There will be a growth in local retail businesses because people’s lives are going to be focussed on where they live. I also think there will be an explosion in smaller, local businesses as people change their occupations, hopefully an explosion of dynamic retail start-ups. I hope this will be matched with realistic rents and rates. Every successful business will have to be fully omnichannel. We’ll also start to see greater regional variations and a flight from cities, the once derided secondary high streets will boom across the UK.
The issue about the decline of the high street has never been about the consumer, shopping behaviour always changes. Successful retailers understand this and match what they sell to what people want and deliver it in compelling ways.
India Doyle, deputy editor, Canvas8
Lockdown and the need to work fully remotely obviously impacted the highstreets and put huge stress on businesses. But we’ve already seen pop up stores flourish as a model for quickly transforming vacant space into engaging local retail experiences – and that’s not only independent brands, but also larger businesses who pivoted to be present where their audiences are. For example, Costcutter launched a range of pop ups to serve rural areas and TikTok is launching a pop up in Westfield for the summer. As we go into this new chapter, highstreets have the potential to hold huge emotional power through the space for connection and shared experience that they represent. So there is a golden opportunity in this regard: retail has a really important role to play in facilitating friendly, spontaneous interactions with neighbours and bringing back that physical connection that people have been craving.
So the future of highstreets does look hopeful, especially as there’s a new generation of entrepreneurship who are tackling post-pandemic challenges through innovation. For example, 20.5% of high-growth businesses in the North-East are either founded, led, or more than 50% managed by women – the highest rate in England, according to JPMorgan. This innovation mindset will be key for recovery.
Justine O’Neill, senior director, Analytic Partners
From a consumer perspective, today’s world is omnichannel. A buyer may be exposed to a product through a streaming video advertisement, check out the product in a store but ultimately decide to buy it online through their mobile phone. What this tells us is that while consumers may ultimately choose to purchase a product or service online, the customer experience that leads them there is of equal importance. So, while many retailers have been forced to shut doors due to less foot traffic, this will not necessarily apply to all brick-and-mortar shops.
We have seen that there is huge interplay between online and offline performance: e-commerce advertising has a strong impact on offline sales and an increased physical presence can improve online performance. So retailers need to examine the role of what and where their shops are in the new ecosystem.
Additionally, for retailers who have had to close their physical shops, there are now other alternatives available that weren’t previously. We’re seeing more retailers experiment with virtual shop fronts in the metaverse and connecting with consumers digitally.
So, while the future of retail is impossible to predict, it is clear that brands need to ensure that the customer is at the centre of their marketing strategy and that they consistently measure and optimise their impact holistically on all channels.
For more on the reinvention of retail, check out The Drum’s Retail hub, where we explore everything from livestreaming e-commerce to AR shopping and conscious consumerism.