Between the ‘loungewear’ emails and the ‘we-give-a-shit-please-buy-something’ emails, some brands have been hoping to offset some of the losses of physical retail with online. Online has the potential to be many brands’ life support machines; keeping some form of cash flow ticking over and the lights on.
Left - Net-a-Porter has closed its American website & warehouse
Dixons Carphone has said sales surged by more than 70% as Britons rushed to buy laptops, games consoles and freezers to cope with the coronavirus outbreak. Online sales in the UK and Ireland surged 72% in the three weeks to 21 March.
“There will be some recovery through online operations but overall the loss of sales will adversely impact our full-year profitability and cash position,” it said. The group said as a result it would still miss out on about £400m of sales between now and the end of its financial year in April.
Fashion has a lot less ‘need’ and as such will be harder hit. Fashion brands have huge amounts of stock sitting in stores, not going anywhere anytime soon. These shops have now become in-town warehouses, but they still need manning and this has become a problem for some brands. Many consumers seem to think that online and offline is separated, robotically picked and magically appears on their doorstep.
The family owned department store chain, Fenwicks said in a statement: "Our people, both employees and customers alike, are at the heart of our business... Therefore, we have taken the decision to temporarily close our website as well as our stores, to ensure the safety of our teams and customers.” Fenwicks only went online in 2017 and pick the items from in-store stock.
Schuh, the footwear retailer, too has closed its website. Chief executive Colin Temple said: “At this point in time, the UK government guidelines include that online retail should ‘still open’ and ‘is encouraged’ along with advice that if staff cannot reasonably work from home, they should continue to go into work.
“However, with the Schuh head office and DC operations based in Scotland and Scottish Government advice conflicting with UK government advice, Schuh management have made the decision to close their website, in addition to their stores that already closed from the evening of Sunday 22 March.”
He added: “A number of DC staff continue to indicate that they want to work within the warehouse to support the Schuh online business, along with other departmental employees offering their support also. However, Schuh management have confirmed that the website and stores will remain closed until there is updated UK and Scottish government advice.”
No doubt demand has fallen overall with many people tightening their expenditure and only buying what they need. But, what about the exclusively online retailers? Most surprising is Net-a-Porter/Mr Porter has closed its American business. Customers visiting the US site are now met with a message that reads: “In line with local government guidelines, and for the health and safety of our community, we have temporarily closed our warehouse. We hope you are all staying safe and look forward to welcoming you back soon.”
This is a nightmare for fashion brands selling products with a shelf life. The discounts have already started, and they’re big, Liberty of London went straight in with 50% off. Some retailers are doing okay at online, but even the best figures won’t replace physical retail, representing a 20/80 split between online and offline. To shift all this stock they will need to discount heavy, eating into profit margins, and consumers, used to a never-ending supply of ‘Just In’ will have to adjust to a new shopping landscape with less choice.
Update - Next, River Island & Moss Bros have announced their websites will close.
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Returns cost money, lots of money. Free delivery and no quibble returns are starting to become a strain on online retailers and it seems ASOS has had enough. The British fast-fashion giant recently announced it was cracking down on ‘serial returners’. An extension in its returns policy - items can be returned up to 45 days after purchase with a cash refund up to 28 days and credit thereafter - was also issued with a threat to investigate and ‘take action’ if it notices anything unusual with people returning more items than usual. If it suspects someone is wearing and returning goods, or ordering and returning ‘loads’, it may deactivate the account.
Left - ASOS' returns are costing them dearly
ASOS is one of the world’s largest online retailers, particularly amongst younger demographics, and its ease of ordering and returning is, arguably, part of the their success and growth story.
Becky, 29, says “I think it’s against the whole nature of online shopping. When you go into a shop you can take 10 items into the changing room and not like any of them, e-retailers need to expect the same thing to happen with their sites and customers should be able to return the items they don’t want.
"I buy a lot from ASOS and return a lot simply because it doesn’t fit right or because it doesn’t look how I expected it to when I bought it.” she says. “If it starts impacting how quickly refunds come through – or if I start having refund requests declined – then it definitely would discourage me. I love ASOS though – majority of my wardrobe is from ASOS, now, where they host so many brands – so I’m intrigued to see what happens!”
This issue is experienced by many retailers. Research conducted by resource planning platform Brightpearl, who surveyed 200 retailers across the UK, found more than a third of shops have seen an increase in serial returns over the last year. As a result, 45 per cent of retailers, including ASOS and Harrods, said they were planning to blacklist repeat offenders. It can cost double the amount for a product to be returned into the supply chain as it does to deliver it and in the UK, it can pass through seven pairs of hands before it is listed for resale. This all takes time and money.
Meli, 26, says “I’m glad that this prevents people returning used items as I’ve had something sent to me from ASOS before that was definitely used. However I’d hate to be blacklisted for genuinely returning items that don’t fit/I don’t like!
“I often order in bulk with multiple options and different sizes then do a try on at home to see what I like best, and return the rest. I think the real problem is sizing as ASOS stocks so many different brands, it’s hard to rely on standard sizing to be the same across all.” she says. “If I was blacklisted then it would certainly drive me to other online retailers or just shop directly with the brands that ASOS stocks. For now, it will make me think more carefully about exactly what I’d be likely to keep if it did fit.” says Meli.
Earlier this year, Zalando started a trial in which it would attach very big clothing labels to items to make it more difficult to ‘wear and return’ or post on Instagram. That label reads: “Dear customer, feel free to fit this article and try it, but if this label is removed, it will not to be accepted as a return by Zalando.”
Retailers have somewhat encouraged some of this behaviour with their ‘try-before-you-buy’ options. Consumers can order what they like and then just pay for what they keep. This encourages over ordering and a large number of returns. Amazon currently restricts this service to between 3 and 8 items.
Research from Barclaycard found that almost 1 in 10 UK shoppers have bought clothes online with the intent to wear them for social media and then return them. Surprisingly, it was the older demographic, men and women aged 35 to 44, with 17 per cent, revealing that they are guilty of shopping only for their #OOTD. The research also found that is was men who were more inclined to shop and return as they are more ‘socially self-conscious’ than women - with 12 per cent admitting to posting a clothing or accessory item on social media and returning it to the retailer afterwards.
Right - Zalando taking on the 'Serial Returners'' with their large tags
Lois Spencer-Tracey, fashion blogger, says, “Must confess, I'm a bit annoyed by this. I probably send back 80-100% of an order I receive purely because of their sizing and my body shape. Nothing to do with my Instagram or blog.”
Last year, Next announced it would start to charge customers a £1 fee for returns they make through a courier or through a Hermes Parcel Shop. The collection charge will be applied for each collection, regardless of the number of items collected. Returning items at any of Next’s retail or clearance stores in the UK remains free.
ASOS are playing the fashion police by admitting had resorted to checking people’s social media accounts in a bid to catch out consumers who wear clothes before sending them back, and falsely claim they have not received items bought online.
“I’m a massive online shopper. I find it so much easier to just order clothes in and try them on at home because then you can try on a full outfit, matching with the shoes and accessories you want. It’s so much easier to do in your own home rather than in a squished changing room. And usually returns are easy with things like collect+ which is much better than working out when you’ll next be in town to take clothes back to a store.” says Becky.
This is a difficult line for online brands to tread. On the one hand they don’t want to discourage consumers from ordering or being frightened to return things, and, on the other hand, they need to let excessive returners or people who are wearing things and returning them, know they are being monitored. It's definitely easier to return something into a faceless plastic bag than been quizzed by a sales assistant. This is probably an empty threat from ASOS, but does illustrate how serious this issue is becoming for fashion e-tailers. Rather than look at the volume of returns, maybe look at the conversion percentages of sales from shoppers. You don’t want to alienate active and engaged consumers, but neither do you want to service those costing the company dearly.
Read more ChicGeek expert comments - here
As luxury online marketplace, Farfetch, debuts on the New York Stock Exchange, I ask, is it a worthy investment?
This isn’t particularly scientific, but, recently, I was looking for a particular AW18 Dries Van Noten jacket I’d seen, in store, in Selfridges. It wasn’t on their website, so I tried Mr Porter. Nothing. So, then I thought I’d search FarFetch. With over 600 boutiques said to be affiliated to their network, and 375 luxury brands, you’d expect a decent selection to come up. Nothing again.
Left - Is Farfetch high on the list of your luxury searches?
Dries Van Noten isn’t the most ubiquitous of fashion brands, but without a large network of own brand shops, it is usually sold wholesale to designer boutiques and is found in the majority of luxury department stores. It’s big enough. It felt strange nothing was on Farfetch. This isn’t the first time this has happened and the reason why it wasn’t my first place to search.
Farfetch just had its valuation lifted and is set to be valued at between $4.9bn and $5.5bn in its initial public offering in response to investor interest in technology stocks. The shares have a price range of $17 to $19, according to an updated regulatory filing published this week. The original range was $15 to $17.
Joseph Wong, an investor in luxury fashion stocks such as Burberry, ASOS, Bvlgari and Mulberry, says “Farfetch assimilates some of the best independent boutiques into a common platform. What’s valuable is the technology and the list of stores they represent. For that diehard enthusiast, he/she can do a quick search for that elusive Off-White piece or vintage Chanel piece, with a click to buy option.”
The majority of IPOs are often overpriced. They are filled with hot air to give healthy profits to the founders and early investors. Not to mention the fees to the money men to maximise the price and get the listing on its way. Farfetch, established in 2007, is being marketed as more of a tech company, where the prices are higher, rather than a retail marketplace model which takes a percentage from each transaction sold through its website.
The most recent Farfetch results show revenues of $267.5m in the six months to June 30, 2018, and losses before tax of $68.4m. Farfetch had total revenues of $910 million last year.
To put this in the context of the market, Yoox Net-a-Porter (YNAP), which was acquired by luxury conglomerate Richemont recently, valuing the business at €5.3 billion, and matchesfashion.com was sold to private equity firm Apax for over $1 billion last September. In the 12 months ending Dec. 31, YNAP saw year-end preliminary sales reach 2.1 billion euros ($2.5 billion). Matchesfashion.com recorded group revenue of £293 million ($393 million) to 31st Jan 2018.
“From our research of the luxury fashion market, FarFetch led in terms of traffic capture between 2015 and 2017, and maintains a good reputation. It has a sound business model, good commercials and no flagged operational or customer issues.” says Fleur Hicks, Managing Director of onefourzero, a data analytics and digital research agency based in London.
“It is an ambitious listing price, but in the context of the growing luxury fashion market, this could see returns within the next months and years, depending on how ambitious your investment strategy.” she says.
The global fashion industry is, according to a 2017 McKinsey report, valued at $2.4 trillion. If it were ranked, alongside individual countries’ GDP, it would represent the world’s second largest economy. From 2014 to 2018, the luxury fashion industry was expected to grow from 3% to 17% of the total fashion market. Annual online sales growth was expected to be 17% in the US, 18% in the UK, 12% in Germany and a whopping 70% in China, according to the report.
“It’s a good business model within a growing marketplace.” says Hicks. “The return risks of minimised stock and holding outlays look to outweigh the risks associated with reliance upon 3rd party operations, such as delivery. It averages a 30% mark up and thus a 50-odd% margin on operations. Incredible for the fashion industry. Also, the growth rate - 60% this year - is impressive.” she says.
Right - Is the value in Farfetch in its tech?
“Of the competitor set we analysed, Farfetch represented 3.8% of the captured online traffic market, representing the market lead. This competitor set only represented 17% of the potential traffic available (based on digital demand and traffic) and therefore the headroom for brand and revenue growth is huge.” says Hicks.
Farfetch’s future growth is potentially going to come from its ‘White Label’ service supporting brands such as Manolo Blahnik, Christopher Kane, DKNY and Thom Browne in their e-commerce offerings.
Farfetch have announced many strategic partnerships recently to further enhance the value of the company. These include Chanel, Chalhoub Group, one of the biggest distributors of fashion and luxury goods in the Middle East and the modesty luxury retailer, The Modist. They have also partnered with brands such as Harvey Nichols and Burberry. This is spreading their risk and also leveraging their technical expertise. It’s what Ocado has done in food.
Wong says, “You also need to consider what they will be using the cash raised from the flotation for. When Prada was listed, it was to relieve the billion Euro debt, open more stores and provide an exit plan for the founders.”
Farfetch are investing heavily in technology and this does explain some of the losses. They hope they will be able to charge other brands handsomely for this and the ever important 'big data'.
Are there any potential waves on the horizon? “Digital commercial disruptors are most likely to threaten large behemoths like Farfetch.” says Hicks. “This would most likely come from Amazon or AliExpress fashion lines and/or new ways to purchase fashion in a more interactive way. It’s unlikely that this will be a quick transition, so if FarFetch remain on pulse with technological change and consumer movements then they should be agile enough to move with the technical and operational trends as well as fashion trends.” she says.
Wong says, “Businesses are keen to connect directly to consumers, and cut the middlemen: think Kylie Cosmetics, Pat McGrath. This is happening to media industry too: Netflix originals instead of via Sky or Virgin Media. Not sure if Farfetch have addressed such concerns before.”
“There is also the downside for retailers: I once noted a £1500 price difference on a stunning new season McQueen coat: the result of a weak sterling and import taxes levied by a store from the Far East.” he says.
According to Bain & Company, the luxury goods market reached a record high of €262 billion in 2017. Online sales jumped by 24%, reaching an overall market share of 9%. Bain & Company predicts the market will be worth $446 billion market by 2025. Online’s share is expected to be its fastest-growing segment, rising from about 9% to 25% by 2025.
I think you need to look at Farfetch in the context of being a major player in a fast growing market. The valuation seems to be based upon its potential and the appetite for this type of technology stock.
I don’t think the name ‘Farfetch’ is particularly well known with general consumers. They need to work on the parent brand and getting its name into the luxury consumer’s head for that initial search. They also need to feel like the Amazon of luxury: all the choice on one site, which takes me back to my disappointing Dries Van Noten search. They could do better with packaging and more Instagrammable things to raise awareness of the consumer side of the brand.
There also have a lot of variables. They have different stores buying different things in different currencies and it loses something of that personal touch that other retailers seem to nurture and one of the reasons you go to a retailer.
Left - The online market is growing massively and is set to grow from 9% to 25% of the luxury market
As for selling the tech. to other brands, I think this is where the long-term value is, but they need to be careful not to overstretch themselves and have too many fingers in too many pies. It’s better to do fewer things well. It feels like they are still working out the direction they are going in. They could easily focus on either sides of this business and quietly reduce the other. They need to grow revenues while keeping the costs constant or reduced. They just don't want to lose the momentum.
The price seems, initially, far fetched, (soz), but the long term prospects for luxury online is looking good.
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
It’s subjective, I know, but if you’ve bought something from a ‘luxury’ brand, recently, you will probably notice the quality isn’t quite what it once was. On the unstoppable growth trajectory of higher prices and sales, the quality hasn’t stayed consistent: no doubt increasing already inflated margins.
I’m not naive, I understand you pay a premium for a designer name or brand, but there was always a minimum quality to the product, leaving you, the customer, satisfied and at least without the feeling of being ripped off.
I’ll give you an example. I bought one of those new GG buckle Gucci belts online, 18 months ago. I hadn’t felt it, or seen it, I just ordered it online. It was a simple black belt after all. You think you know what will arrive.
What turned up felt like a free pleather school belt. I’m not being facetious, but there was no quality there. When you’re charging £250 and you can’t even offer a decent strip of leather to take the strain of holding your trousers up, there’s clearly something wrong.
Why didn’t I send it back? When it arrived at home, in insolation, seduced by the packaging, and Gucci was so-hot-right-now, you just shrug your shoulders and think, "okay, so it’s not the best, but it’s what I wanted and it’s cool ATM". (Damn you hype!)
It’s when I look back, and think about that belt, I feel, that if I’d handled and seen it in the shop, I probably wouldn’t have bought it in the first place. I would have felt the quality and moved on.
And, so to my theory - the growth of online is allowing mainstream luxury brands to get away with lower quality products. Consumers are more accepting in their own homes, they have nothing to compare it to at the time and the thought and hassle of sending something back is making people keep things they wouldn’t have necessarily bought in a physical store.
“Shopping is very much a human multi-sensory experience so it follows that we want to use as many of our senses. Emotion plays the dominant role in our buying decisions so the in-store experience will always be far superior to the online experience. As Boxpark MD Roger Wade put it ‘Shopping online is like watching fireworks on TV’ says Andrew Busby, Founder & CEO of Retail Reflections.
There’s no doubt online has contributed to the massive growth of these brands, whether on their own websites or third parties. Last year Gucci’s online sales posted triple-digit growth on their branded website and that’s without all the other online retailers. Gucci didn’t hit €6.2 billion turnover in 2017 on physical stores alone.
“This all depends on your definition of ‘Mainstream Luxury’. The word ‘Luxury’ is banded around all too often. True luxury is confined, generally, to bricks and mortar shopping, hence the resistance of major houses to enter the online market. When I consider ‘Luxury’ I think of brands such as LV, Chanel, Loewe etc,” says Darren Skey, Founder/Director of Nieuway Limited, and former Head of Menswear at Harvey Nichols.
“I wouldn’t class brands such as Off White, Amiri, Vetements as ‘Luxury’. What we are seeing is the luxury brands such as Loewe and LV seeing the growth potential of hype products and as such are designing products with this in mind. This leads to more quantity produced and a lower quality, compared to their main ranges, Fashion details are hard to produce on a large scale. Unfortunately, there is no correlation in price reductions, as you would expect with economies of scale,” says Skey.
It’s hard to prove this point, but it’s an interesting factor to think about. Net-a-Porter group recently introduced a new service for their “Extremely Important People”, where the delivery person waits to see whether you want the item or not, after they deliver it. It’s an instant reaction to the item(s) and it would be interesting to know whether this has increased or decreased returns. Obviously, they want the latter.
Quality is subjective and brands vary. But I think we’re seeing an overarching trend towards higher margins and lower quality from brands trying to still offer ‘luxury’ and compete with other brands’ stratospheric growth in turnovers.
There’s also a generational shift to think about. Since 2016, the global luxury market has grown by 5%, with 85% of this growth generated by Millennials according to a report by A LINE, a global branding & design studio. These younger consumers don't have as much experience and product to compare the quality to and brands are taking advantage of this.
“The expectation of the younger consumer is also changing and I think this is an interesting observation. For the younger consumers it is more important to have the latest hype piece regardless of the quality. And, as we know, the majority of the Millennials shop online,” says Skey.
Brands have made it easier to return products, but unless it’s the wrong size or nothing like pictured, I think people are more accepting in terms of quality.
“I don't think that shoppers are unwilling to send things back once purchased online. Fashion is not cheap and I don't believe we are in an economy where this can be an option. I also think retailers are making the process of sending product back easier,” says Skey.
‘I am predicting a backlash to the returns culture we are currently witnessing - both from retailers and environmentalists. The average returned purchase in the UK passes through seven pairs of hands before it is listed for resale. According to Iain Prince, supply chain director at KPMG, "It can cost double the amount for a product to be returned into the supply chain as it does to deliver it”.’ says Busby.
What brands have to remember: when you’re not cool or hot anymore, the thing that will keep consumers returning is quality. This lowering of quality is short-termism and greedy and will ultimately be a big factor is diminishing future sales and brand loyalty.
I’ve also written about brands which offer great value, like Fiorucci. here
News on the grapevine New Look is close to going under. I don’t think this will mean that New Look will disappear, it’ll probably be pre-packed into a slimmer and more nimble retailer while shaking off its debt. It has 600 stores, which seems rather top heavy in this current retail environment.
Ironically, when it’s not cold enough many retailers blame the weather for not shifting clothes, and this week, the whole week, or even two, will be a write off, for the majority of retailers, particularly fashion, because people aren’t leaving the house or simply can’t get to the shops due to the snow and many items there won’t be suitable anyway. Two disruptive weeks could push a few more retailers over that administration edge.
Left - Expect to see more of these and for longer
I think we’re at a tipping point for physical retail, particularly larger shops with big overheads. These gaps are big and aren’t being filled. 102 of the 164 BHS stores that went out of business are still un-let nearly 2 years after its closure. Add in Toy R Us and the announced store closures from many retailers such as Marks & Spencer and Debenhams and you have a very gappy and unattractive grimace to the majority of shopping areas or high-streets.
This downward spiral simply speeds up the death of these areas: fewer shops, means fewer visitors and therefore fewer shops.
Any retailers who sell the same items as Amazon seem to be in trouble and fashion has to acknowledge that the ASOSs and Boohoos of this world have taken a massive chunk of spend and continue to do so.
Fashion retailers are damned if they do and damned if they don’t when it comes to the internet. Even the best website in the world will still eat into physical stores. The bigger and better you make your online offering will only encourage people not to visit your stores. It’s a feeling of struggling to stand still, and, with many cases, going backwards.
I live in Croydon and there’s been talk of a big, new Westfield for a long time. The town centre is very dated and run down and needs the investment and also the ‘Westfield’ name to put it back on the map. But, Westfield has gone very quiet. They’ve kicked the development back to start in 2019, not really sure why, and having just been taken over by a French company it wouldn’t surprise me if they wanted to relook at any new developments.
Croydon is a risk. It isn’t White City. While it has good transport links, it also has many shopping centres close by. I’ve said to people buying into ‘up and coming’ Croydon, not to buy thinking a Westfield is definitely coming. John Lewis was always muted as an anchor tenant and they’ve said they don’t want to open anymore stores ATM. If it does happen, it will affect the Bromley, Kingston, Bluewater and even Brighton shopping centres. The pain will be felt somewhere.
So, what to do? These units are too big. Shops and shopping centres will have to contract. These spaces need redesigning and dividing. What we need is housing and leisure facilities. The future of physical retail will be ‘want’ and not ‘need’. It’ll will be about service and human interaction - Read TheChicGeek's Human Cookies. Online is unbeatable with need, and its dominance will speed up even more with automation and driverless delivery. But, we’ll still want to get out of the house, see what’s new, try and touch things. It’s just unfortunate that some of these larger retailers and their footprints are unsustainable.