Going the whole hog on the high street
Government and local authorities have to embrace a much more liberal approach to property and planning and allow any businesses to open up on the high street as Covid-19 has highlighted the deficiencies with the current legislation.
Speaking at the BRC Annual Retail Industry Lecture 2020 Mike Coupe, former CEO of Sainsbury’s, called for a major rethink of planning in the UK if there is to be a rejuvenated high street. “I’m a strong advocate of planning restrictions being, not quite a free-for-all, but less onerous. It has to change and be more liberal. I’d go the whole hog and let people put anything on the high street…at the moment you can’t [even] put a yoga studio on there.”
From city centres to local communities
He suggested such changes will depend on the appetite of Government whereas the rental situation is undergoing a serious correction as a result of market forces: “The market will out on rents. Sadly it’s catastrophic failures that are leading to this right now. The market is adjusting to a new normal. We are seeing city rents go down.”
In contrast, Coupe says an equal and opposite effect is taking place in some local communities where rentals have been going up as demand shifts from city centres to more localised markets as a result of people working from home. This is one of the many effects of Covid-19 he has seen as leader of one of the UK’s major supermarkets.
The impact of working from home is certainly being widely felt, according to Coupe, who found many employees at Sainsbury’s were finding it better than having to commute into the office but that 25% were not embracing it – including mainly young people in small properties. He is unsure whether 25% or 50% will ultimately return to the office but he is certain it won’t be 100%.
“There will be a profound impact on city centre stores. But it is benefiting local communities – including convenience stores and take-away foods [providers],” he says, adding that large supermarkets have also benefited from Covid-19 but he is unsure whether this will remain the case in the future.
Changing shopping habits
This return to the big store began in the immediate aftermath of Covid-19 when people chose to shop less frequently but when they did they spent considerably more and visited the largest stores possible. Sainsbury’s had 50% less customers in its stores at this time but the average basket size doubled.
But what took preference over even these larger stores was shopping online. When early demand for food went off the scale – there was 25% more demand than the supply chain could handle for two weeks – Coupe took the decision to prioritise elderly and disabled people for shopping online even though this would inevitably disenfranchise other customers.
“During the crisis we looked through the lens of one year into the future. Making the right decisions with the data we had…If it’s the right thing to do then just do it and at some point there will be payback. This is the way you build a brand,” he suggests.
He expects this move to online shopping to “stick” as it is part of a global trend towards digital and that it will continue to grow post-Covid-19 from its now higher base: “There will be a seamless experience across channels with an increasing role for digital and physical. Big digital players are moving into physical while bricks and mortar retailers have gone into digital.”
Technology impacting retail
Part of this involves a greater adoption of technology by retailers as their customers drive increased demand. “For sure there are technologies out there that will be widely adopted – from autonomous vehicles, drones and [various] in-store technologies. I’d encourage all industries to consider rapid adoption. Contactless payments was zero per cent and then in a very short time customers drove it very hard,” he says.
Coupe also predicts more automation within retail as he regards it as an imperative if the industry continues on its path of paying employees more money: “The relative benefits of high level automation will increase. I can see it happening in the near-term horizon.”
One of the things he does not believe will change as a result of Covid-19 is the valuable role played by people in retail. “This is a people industry. There will be less people employed in 10 years’ time but having great people in the industry will remain. I hope there will be some fundamental change, with diversity, and we’re responsible for making it happen,” says Coupe.
Recognising the need for more diversity is part of taking a more values-led approach to the leadership of business, which is something he believes the current crisis will accelerate. “Our customers will hold us to account on what we sell and our actions. We need to base business on the right set of values around things like sourcing, recycling, re-use and net zero.”
Words by Glynn Davis, photo by Georgia Hawkins
