The future of retail
Hardly a week goes by without more bad news emerging from the retail sector; somewhat gleefully announced by the media, it has to be said, as we look to the future of retail.
What we are likely to be living through, however, is not a blip, but a major realignment of the whole world of retailing. We have the double whammy of an economic downturn which, since 2008, shows few signs of abating, combined with the rise of the internet as a significant retail channel.
The rise of the internet
Whilst everyone predicted the rise of the internet as a means by which to do business, many of us, I suspect, forgot the negative impact it might have on traditional bricks and mortar businesses.
We all remember the early days of Amazon, which offered a much wider range of books than even Foyles or the largest Waterstones. But how many of us predicted the speed of the growth in internet retailing or the way it has spread to almost all product sectors and therefore its impact on the future of retail in the UK? The challenge seems particularly tough for the UK’s high streets, which prompted the Mary Portas initiative.
High streets and shopping centres
But is there now a two-tier physical shopping world: the high street on the one hand and the shopping centre on the other?
The run of the mill UK high street seems increasingly to be home to fast food outlets and coffee shops, both branded and independent; betting shops; pawn brokers and money lenders of all sorts; charity shops; hairdressers; pubs; and, of course, a few independent retailers. Shopping centres on the other hand appear to be home for branded clothes and shoe shops; department stores; jewellers; homeware shops; and toy shops. The one exception seems to be mobile phone shops, of course which seem to be everywhere (or is that Everything Everywhere?).
What shopping centres manage to do very well is to control the overall shopping environment. They are able to provide safe, clean and well managed zones within which people can do what they like to do most, which is to go shopping.
Much was made in a recent BBC Radio 4 programme, the Bottom Line, which discussed trends in the future of retail. This explored the concept of ”creating theatre’, or making shopping a fun and enjoyable experience. This now seems to be becoming the conventional view about how traditional retail might combat (or even complement) the rise of the internet shopping. Of course, experiential retailing is all very well but we suspect it has a much greater opportunity for success in a controllable environment such as a shopping centre than elsewhere.
If we accept the projections, it is likely that most of the UK can be served, at least for comparison goods i.e. non-food goods, by between just 50 and 80 retail branches. This therefore suggests that it is the smaller towns that will suffer the most. Even in the major towns and cities it is the high street which will bear the brunt of the loss.
The net result, of course, is that we have a huge excess of retail capacity on our high streets. Hence we will increasingly see successful brands seeking high quality space in well managed and controlled environments, a.k.a. shopping centres.
The challenges are significant as old retail buildings will need to be re-purposed for residential, leisure or other uses.
Looking ahead – the future of retail
Therefore, the future of retail will depend on understanding people, both as shoppers and as non-shoppers. Understanding their behaviours, attitudes, beliefs and motivations will be vital as we continue to deal with the impact of the depressed economy and the rise of the internet.