As a commercial property lawyer who works with a number of retail clients, I have a strong interest in the rapidly changing nature of consumers’ buying behaviour, and the impact this is having on our high streets.
Everyone knows retailing is facing huge challenges, with many traditional businesses having to completely restructure their operations to keep afloat while others, including once iconic names, have vanished altogether, or re-invented themselves (Habitat in Homebase, anyone?).
In this past year, we have seen the demise of Toy R Us, Maplin and Poundworld among others, while the once mighty House of Fraser has been sold off in a pre-pack administration which will significantly diminish its presence on UK high streets.
In the run-up to Christmas, new figures give the sector little festive cheer. According to the BDO High Street Sales Tracker, sales for October, the first month of the critical ‘golden quarter’ when retailers usually see a rise in sales through Christmas buying, fell by 2 per cent from last year.
While it faces ongoing convulsions, I do believe the retail sector as a whole has a bright future. It is evolving, not dying, and there are a host of innovations and new trends within retailing that show it is possible to remain relevant, and even thrive, in a changing marketplace. The huge surge in online retailing has been seen as a key driver in the demise of the high street. There are, however, signs of convergence between some big online players and more traditional retailers, working together to deliver the best of both worlds to consumers.
In the US, for example, showing the relevance of physical presence, Facebook has recently teamed up with Macy’s to deliver nine pop-up kiosks in the run-up to Christmas, selling only the top performing 100 brands from Facebook’s online platform. This is a low-cost, low-risk entry into traditional retailing for Facebook, which helps maintain footfall into Macy’s stores, positioning it as a retailer which is connected to the brands most desired by consumers.
The reduction in the numbers of multi-store chains on high street outlets is also opening up opportunities for new types of retailer, often independent, more specialised and able to provide a better all-round consumer experience. Nottingham’s Ugly Bread Bakery is a typical example of this new breed. It not only offers great food to customers but also stages regular workshops as well as yoga classes and provides meeting spaces, making the most of their retail space, which also acts as a community hub, driving footfall.
Another current trend is the growth in stores where fashion brands are now taking their goods direct to the market with their own outlets. Consumers benefit as these specialised stores are able to grant exclusive offers, put on events and provide full transparency on the production and carbon impact of their products.
The message coming from the US suggests there is a great future for traditional shops which focus on ‘relational’ retailing. The Dreamery by Casper, an online sleep retailer in New York, provides an ideal practical example of how a digitally-marketed brand can benefit from having a physical presence on the high street. The company opened a store in the city which enables potential customers to book a 45-minute nap on one of their mattresses so they are able to try before they buy. This approach creates a stronger relationship between the retailer and its customers.
An additional positive indicator for the future of the high street is the increase in the types of retail businesses that online competitors cannot recreate. These include barber shops, beauty salons, health clubs, etc, all of which have significantly grown their numbers across the UK over the first half of 2018.
I would not wish to underplay the extent of the challenge facing traditional retailers. It is a revolution and we will continue to see established names rationalising and restructuring their businesses – just as M&S is currently doing here in the UK – and some will disappear altogether.
What we are seeing, however, is not the end of high street retail, but a new chapter as it develops to suit the changing needs of consumers. Retailers can continue to thrive by adapting and being innovative, and I look forward to supporting our clients as this transformation progresses into 2019 and beyond.
Gavin Maclean is a partner at Davidson Chalmers