Future proofing retail

    2018 will definitely go down in the annals of history as the year of a ‘seismic shift’ in the retail landscape, writes Fiona Brownfoot, director – retail and leisure, Hicks Baker.

    A structural change within the industry had been spoken about since the depressed times following 2008, but 2018 has witnessed perfect storm conditions that have resulted in that structural change taking place on an unprecedented scale.

    This perfect storm has been caused principally by six elements:

    Increases in

    • business rates
    • online sales
    • wages
    • rent.

    Decreases in

    • footfall
    • sales.
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    However, ‘retailer ineptitude’ needs to be added into the above mix. It’s very easy to blame external forces, however failing to react and adapt to the changing consumer needs are frequently at the heart of a retailer’s demise.

    The same principles for ‘success’ apply to retailers, to shopping centres, to retail parks and to villages, towns and cities – they all need to take account of the concept of friction vs reward; they need to create an experience and they need to provide value for their offer.

    All the players in the retail industry need to tick all of those boxes to survive and thrive. Learn from Amazon – they provide the customer with what they want, how they want it and when they want it. The customer will require different criteria to be met depending on where they are choosing to spend their money – the successful player is the one who understands what their customer wants when and how.

    It’s obviously easier for some of those players to accord with the above principles and adapt than it is for others, and this is dependent largely on the element of control that can be exerted to make changes.

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    To take the principle of ‘experience’, it is relatively easy for a retailer to make changes to their immediate environment and to adapt what, how, and when they sell. However, they have very little control over the wider retail environment that they operate in. If this is a shopping centre then trust is placed in its owners to do all that they can to ensure that the centre remains relevant and attractive (which usually relates to investment and being prepared to accept less than perfect deals for the greater good of the centre); however, if the immediate environment is a high street then changing the environment becomes far more complex.

    By the nature of property ownership in the UK, high streets are usually owned by dozens of different owners, therefore fragmentation of ownership is the single most significant factor in limiting the control that any one body has over factors that make up the general experience, such as tenant mix. Councils can play a part in the experience that the public realm contributes to attractiveness of a retailing location. Of absolute paramount importance is that the location must be considered to be safe. It must also be accessible (friction vs reward) and attractive – it needs to be an environment that people want to visit and that satisfies other needs such as social or cultural or entertainment or learning.

    Fiona Brownfoot

    0118 955 7083

    f.brownfoot@hicksbaker.co.uk

    hicksbaker.co.uk

    Fortunately, we are still social beings, so physical retailing in high streets, villages and shopping centres is far from dead. However some locations will be on the critical list unless they recognise how the market is changing and all stakeholders play their part in adapting and investing in the areas that are within their control.

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