Will my high street change in the next 5 years?
By Ray Fowler, Retail Director, Transform UK
Or rather, “HOW will my high street change in the next 5 years?” because of course the answer to the former question is yes.
In a recent blog I made the point that it’s not all doom and gloom but unless some retail organisations change direction and approach, we’ll continue to see some decline.
This ongoing shift in the retail landscape shows no sign of slowing down; in fact customers’ expectations of a consolidated retail experience will remain a challenge for retailers in the UK and globally. Many of these retailers are underway with digital transformation taking their offers into use of social engagement, use of cloud technologies, algorithmic approaches to advanced analytics, leveraging opportunities with the Internet of Things (IoT) and augmented reality.
Large physical store bases are in some cases still the weakness, alongside having the necessary momentum to change. Only five years ago retailers were watching over their shoulders as Amazon was miles behind; now they are stuck in its wake, in the ruts, eating the dirt being kicked-up as the internet champion blazes a trail through the retail heartland.
Retail must choose to step to the left or right of these tracks and develop their own models, their own uniqueness, otherwise the demise of BHS, and more recently American Apparel, will become a reality for them too — as we read in an article in the FT: “Shutters come down on the high street”. We know that big box retailing has met its death; we know that the big grocers no longer carry the power; consolidation and takeovers are rife- just look at Bunnings and Sainsbury’s dismembering the Home Retail group (Homebase and Argos); the rise of low cost operators has appealed to customers in need of commodity products with no frills; and lastly the Scandinavian and Australian invasions are upon us with the likes of Tiger and Smiggle.
Then if you consider the rise of convenience sector retailing and the poor results across the fashion sector, we ask ourselves “Is anything safe?”
Clearly not, when we look at the disastrous news coming out of M&S — international operations ceasing, UK wide closure of stores, slashing the teams in head office and the lack of a credible fashion offer.
“What can we expect on the high street in five years?” becomes more personal when I look at my local city, St.Albans (twenty miles north of London, population of 60,000 and a 20 minute train link to central London). Independents are closing down at a rate of one a month over the last year, the largest being BHS. But figures out this week from the British Retail Consortium and KPMG suggest that online is expanding while store spending falls. More than 20% of spending was online in October for the 10th month in a row, leaving less than 80% in the store.
I’m fairly sure that the high street won’t disappear completely but it’s definitely going to morph over time into something different to its current make-up. A mix of adventure, service, product and entertainment beckons such as:
- Increasing numbers of dining and eating out establishments. The coffee shop market is expected to reach £15bn by 2020 with dining out exceeding £60bn
- Increasing numbers of “throw away” fun stores; Smiggle, Tiger, & Clas Ohlsen
- Holiday shops offering augmented reality experiences as a try before you buy, experiencing the resort/adventure
- Specialist high quality stores from brands such as Unilever and Nestle offering Nespresso and T2 products
- Social exercise with dance studios, pilates and high quality gyms associated with high tech wearables from Nike and Adidas
- Pro cycling shops offering product, experiences, tech, advise and repairs
- Mobile phone stores becoming Smart tech advice centres for IOT and connecting the home to consumer’s lives
- Food will remain strong with supermarkets focusing on specific offers for high street consumers like the meal for £10 offers
- Tesla and other high end car showrooms offering environmental solutions
- Tattoo parlours moving from the back street to take a more significant location
- Consolidated Pick up locations for retailers without a high street presence such as DHL or Doddle. That’s not to say that won’t also offer a drone station for scheduled drops
One of the biggest losers (apart from the general retailers) will be estate agents (real estate) — there are more than 20 in my city centre. Brands like Purple Bricks will see continued growth as trust develops and generation Z become of age and engage directly.
Change is coming. In truth it’s always been here in one guise or another. But now more than ever it’s critical that retailers are brave and embrace the challenge — adopting what’s best for their changing customer base in parallel with the needs of their own business. As we said in our Digital Maturity report this year: feel the fear but do it anyway.