If the headlines were to be believed you’d think the high-street was in terminal decline and everybody was withdrawing at the speed of knots. Store closures across the board and brands shrinking to survive, it’s armageddon on the high-street, they scream!
The retail market has always seen brands or chains crash and burn over the years. It’s part of the retail renewal cycle and allows others to appear and grow.
Left - River Island's new expanded store at Milton Keynes' Centre:MK
"As consumers, we are becoming more and more demanding, each new level of service experienced serves to simply raise the bar even higher. In the UK in February 2018 online accounted for 17.2% of total sales (source ONS). Whilst this is still increasing (15.6% in February 2017) it is still a relatively small proportion of total sales meaning that over 80% is from the high-street. So, it is clear that the high-street is far from dead but it is evolving at a rapid rate - Darwinism on the high-street if you like, where the process of evolution naturally culls the weak whilst the strong prosper and survive,” says Andrew Busby, Founder & CEO Retail Reflections.
Continuing to grow, online retail sales leapt to 18.8% last month - April 2018 - and it won’t be long before it hits 20% and maybe even 30%. For the offline retail optimist, though, it means 80% is left for the taking offline in physical stores.
But, while the focus has been on chains closing stores - M&S announced 100 stores closing by 2022 - there are a few strong and growing brands stealthily tightening their hold and grip on the high-street. The focus is on bigger and better stores in premium locations: less stores but better.
As brands vacate premium sites other brands can cherry-pick and expand into the gaps, but only in the top tier of shopping centres and cities.
For example, both Zara and River Island are carrying out major expansions of their stores at Intu Lakeside. River Island will be doubling the size of its store to 21,000 sq ft while Zara will treble its store size to 35,000 sq ft making the stores among the largest in the retailers’ portfolios. They are the latest retailers to invest in flagship stores at Intu Lakeside since H&M doubled the size of its store to 36,000 sq ft and Next opened an expanded 70,000 sq ft store in Spring 2017.
When Banana Republic vacated Westfield White City, Zara took the opportunity to create the biggest branch in the UK. River Island recently doubled the size of its store in Centre:MK in Milton Keynes. The retailer doubled its existing unit to 20,000 sq ft to accommodate the brand’s full range of womenswear, menswear and children’s fashion ranges.
Nick Tahir, River Island, Head of Menswear Buying says, “We have over 280 stores in the UK. In an increasingly competitive high street, it is important to keep River Island stores looking fresh, relevant and exciting. With 30 years heritage, naturally some stores will require a makeover and in some towns/cities and that has been a key focus for us, we have also been increasing our square footage, to accommodate the needs of our customer and our growing divisions (for example we launched RI Kids and RI Mini only a couple of years back and the demand is consistently growing).”
“Although retailers are seeing an impact on bricks and mortar due to mobile and online, retail is still the biggest mix of sales for us. With our heritage, stores will always play an important role. They are the heartbeat of the River Island. The challenge for us and our peers in the industry, is to keep our customers coming back again and again. We do this by enhancing their shopping experience – whether that’s through pop-ups and exclusive events, or through offering something that our customers can’t find with some of our competitors; take Style Studio for example, our complimentary Personal Shopping service. It is vital for us to keep revamping and improving our store aesthetic to draw footfall, creating theatre through VM and windows and of course constantly refreshing our product offering to stay relevant and exciting.” says Tahir.
As stores grow larger at key shopping hot spots, retailers can give fewer locations more attention and fine tune, update and invest in those locations. But, what this will also mean is many towns will lose their well known names and become secondary as the money is sucked into fewer, bigger places.
“Most retailers with a large store estate have too much space so what we're also seeing (landlord rent restrictions aside) is an expected re-sizing and in some cases re-purposing of space eg. Debenhams considering renting out space to WeWork.” says Busby.
“All this means that the stores which survive will need to be far better than those we currently experience. For example, the poor quality of the Toys R Us stores was a major factor in it collapsing into administration.” he says.
“But the fascinating dynamic is that quality and customer experience in store is largely dependent upon the particular shopping journey ie. if it's a distressed purchase then the customer just wants to get in, find what they need, pay and leave - as seamlessly as possible. However, if it's for say a luxury item they may well welcome, indeed, seek out engagement and advice; being quite happy to spend far longer. Both journeys will be judged by different criteria. The trick for retailers is to recognise what journey we're on and act accordingly. Facial recognition and AI is going a long way to be able to tell what mood we are in when we enter the store.” says Busby.
Right - Zara's new store at Westfield Stratford
The shopping centre companies know this too. The recently abandoned £3.4bn tie-up between Hammerson and Intu failed, I think, because Hammerson were probably only interested in a handful of their top sites like Manchester’s Trafford Centre. Trying to offload or revive the others would be costly and a distraction and knowing where the market is heading, it knows it’ll probably be able to bid on what it wants individually if Intu starts to wobble in the foreseeable future.
In order to survive it’s going to be about fewer players with less but stronger sites. As more close, it strengthens those which are left. If you believed the newspapers you’d think that every retailer had given up on physical stores, but the clever ones are only getting started. When the growth in online slows or plateaus, these proactive retailers will be positioned to take full advantage of the eventual return to the high-street.
Read more expert ChicGeek Comments - here
Shopping centres are morphing to survive. Opening cinemas, restaurants and other attractions to get people out of the house and their tenants happy with more footfall, they are trying to move away from being a one trick shopping pony. This is old news.
But, it’s all so chainy and sanitised; the antithesis of what is cool today. It’s basic.
Left - St George’s Market - Belfast
What’s cool today is start-ups, seasonal produce, artisans, craftspeople, farmer’s markets, Boxparks, ethnic food and passionate and motivated people seeing the whites of their customer’s eyes.
Shopping centres need to harness this energy and support it.
I’ve often been jealous of the historical, covered markets they have in many Northern towns. This isn’t poncey, Daylesford Organic type markets, but real markets for everybody, offering quality and affordability. Lots of fresh produce and home made products. I know, if I had one closer, I would use it.
I visited Belfast 18 months ago and fell upon St George’s Market. It was a mid-week wednesday in October and the whole place was buzzing. Built between 1890 and 1896, and supported by The National Lottery, the restoration preserved its Victorian heritage, from the authentic stone bricks to its Bangor Blue roof slates and replicas of original Victorian shops.
As well as restoring an important historical building, the project created a modern market place providing a space to trade and grow for over 170 small local businesses, and supports around 400 jobs each week.
Since its renovation in 1999, St George’s Market has gone from strength to strength, trebling the number of days it trades from one day a week to three. The huge variety and quality of products on offer helps to attract over 600,000 visitors each year. St George’s Market was named the UK's Best Large Indoor Market 2014 by the National Association of British Market Authorities.
There were signs on the doors saying there was a wait-list for stalls. It was a mix of food, arts and crafts, vintage artefacts and unique gifts. Of course, not everything was to the highest taste, but that’s the point of a market, it’s an excitement of discovery and unpredictablity. The opposite of a modern and bland shopping centre. It was thriving and it had an energy that I wanted to spend time in.
I recently visited Centre:MK in Milton Keynes. It’s a busy, 1970s listed shopping centre at the heart of the city. I had a walk around and noticed, huddled under a flyover type structure, was an outside market: little stalls selling vegetables and other types of street market products.
Shopping centres need to bring this inside, polish it up a bit and expand it. But not sanitise it. These types of markets were often looked down upon, much like Primark was - Read more here - but things change and we need a return to a type of frequent shopping that we’ve been doing for thousands of years.
Right - Kirkgate Market - Leeds
This is the modern version of an ancient market. Somewhere I can get great bread, home-made chocolates for presents and authentic products from all the nationalities who have made their home in the UK.
I live in Croydon. They opened a Boxpark over a year ago. It’s fantastic. It’s a large food court which feels like you’re trying something new and getting passion in every mouthful. It’s just food and you congregate on large communal tables in the centre after visiting what feels like an unlimited choice of cuisines.
People are just as tired of chain restaurants as they are of chain stores. It’s time for independents. These shopping centres could support whole armies of people itching to start their own enterprise. There are so many people wanting to follow their dreams and try something new without the prohibitive cost of opening a shop or starting a website. These brands are very active on social media and offer newness and a point of difference.
Large towns and highly populated areas could easily sustain a thriving market type concept. The shopping centre needs to be an umbrella rather than a controller. The other shops would benefit from more frequent visitors and the buzz of the shopping centre. This is also how future brands will start.
Remember Marks & Spencer started on a market stall in Leeds after all.