Review: Future of the High Street
It has been a rollercoaster of a ride for the high street since Covid-19 hit these shores with the long-term impact being an upgrade in the perceived value of physical stores but only if they are seamlessly integrated with the myriad digital channels and platforms that now define the retail landscape.
At The Retail Bulletin’s recent Future of the High Street 2024 conference in central London, Andrew Goodacre, chief executive officer of BIRA (British Independent Retailers Association), told delegates: “Covid introduced more new users to online but then they realised shopping is not just to be found on a screen and delivery.”
Ryan Llewellyn-Pace, founder & chairman of Hay Life Clothing, agrees and suggests the pandemic prompted a knee-jerk reaction – not surprisingly – to online but things have since changed and stores are now firmly back in the mix: “I love physical shopping and it’s very important to have it in your plan.”
Return to the high street
This is definitely the case with Aaron Chatterley, co-founder & president of Indu, which he says has very much been created as an omni-channel health & beauty brand aimed at the teenage market. Previously he founded Feelunique and that was predominantly online – with only a handful of stores – but interestingly its purchase by Sephora involves a strategy built around opening stores.
“The purchase was all about moving to a stores business so it has very much become an omni-channel business. The reality is that people are back on the high street, or certain high streets,” he says.
There has certainly been a divergence in the fortunes of different high streets and shopping centres, which has undoubtedly been fuelled by the observation of Daniel Parr, board member of REVO and VP of marketing solutions at CACI, that 52% of destinations are over-spaced in retail. The solution is to create a space that has the right mix of occupiers.
Goodacre says: “People like a high street with diversity. There is a need for broader offerings – with delis, cafes, bakers and butchers – as you then end up with a parade of shops with more vibrancy. If high streets are dominated by one thing such as cafes or charity shops then we get bored. Retail is just part of the mix on the high street and bringing in new brands is essential.”
This certainly involves independents but it can be tough to secure the sites, which is the experience of Ali McAleavy, founder of ZIG+STAR, who says: “As in independent I can’t afford a store. The old model [of leases] is too challenging. Why are we not using more flexible spaces? Why aren’t there consortiums of small brands that can take an empty space on the high street? I’d 100% have a store as my circular retail model requires a physical space but rents and rates are too high.”
Complexity of property
Commercial property at all levels has never been an easy one to deal with as a result of shopping centres being held within pension funds that are run by risk-averse investors and high streets having a very fragmented ownership mix.
Claire Petricca-Riding, head of the planning & environment team at Irwin Mitchell, suggests the planning system is “creaky” at the moment with a lack of flexibility in the use of space with the sticky bit being leases and business rates.
Re-generation of shopping areas is equally complicated, according to Petricca-Riding: “The over-arching policy for town centre re-generation is positive but you have to go through national planning policies and also local development plans. Whether it works in practice or gets sticky can be down to a local councillor…it gets very political.”
This scenario is very familiar to Stuart Harris, CEO of Milligan and board member of REVO, who says: “Regeneration is not a short-term fix. It takes time and local authorities who’ve been successful with regeneration [schemes] have had stable administrations.”
Understanding local needs
Helen Dickinson, chief executive of British Retail Consortium (BRC), believes greater progress would be made if local authorities had more resources and expertise at their disposal. “This would help with change at the local level. Only local people know what needs to be done in specific areas. Local engagement and collaboration is what’s needed,” she says.
Harris recommends that catchment areas must be fully understood in order to create a potentially successful mix and this involves using data sources. “Having access to data and catchment information, rather than ‘we’d quite like to have this’, can be helpful.” Data can give you a base position and then you can look at what is likely to change in the area. You have to have some type of vision but you will see all types of changes over the time of the development that could take seven to eight years,” he explains.
What would absolutely change the scenario would be a reassessment of business rates, according to Harris, but on a more likely level he suggests the greater use of pop-ups in shopping centres would help.
Tim Nash, curator of Shop Drop Daily, is a big advocate for pop-ups that he believes are great vehicles for brand marketing and engagement. “Traditional retail stores were where you went with a commitment to purchase and online is very transactional whereas a pop-up can drive a desire to engage with a brand. They are good for a specific focus, which is not necessarily about selling a product. They create a personal connection or a moment that matters.”
Sarah Buchan, head of VM at AllSaints, highlights that pop-ups used to be about testing if an area could potentially support a permanent store but that their usage has since broadened out to increasingly be used for marketing purposes.
Valuing physical activity
Whether pop-ups for permanent stores Buchan says the value of physical space is that it provides the platform for human interaction. “We want the store teams to interact with customers. Many customers want to speak to people and to try on things. So much of our lives is online and so we want to do physical things,” she says, adding that any technology used in-store has to be handled very carefully so it genuinely adds value to the customer experience.
Chatterley agrees: “It’s easy to get seduced by the technology selling you ‘try before you buy’ [virtual solutions]. Doing this with tech has never taken off. This innovation is driven from the tech perspective and not from the consumer perspective.”
Retailers must be very careful, according to Andrew Mann, co-founder of North Bailey, who says customer expectations can often move faster than retailers who are therefore unable to keep up and complicating this even further is the fact technology companies are continually developing new products and directing them at retailers.
Chris Noice, director of communications at the Association of Convenience Stores, suggests there is one area of technology that improves efficiencies and another that looks cool and impressive. Ideally retailers should be looking for solutions at the intersection of these two.
Improving customer journeys
“Just because ‘stores of the future’ [with their technology] look nice does not mean that customers will like them,” he says, and cites a positive example to counter this. Decathlon and Uniqlo have both introduced self-service into stores using RFID that involves customers simply throwing goods into a ‘bin’ where the labels on the items are read and this really helps customers on their shopping journeys.
Dan Saunders, head of performance marketing at Evergreen Finance London, is a fan of such technologies that help with logistics. “It causes the most headaches in retail so use technology to track products. If you can get the back-end right then it lets you focus on the front-end,” he says.
He highlights Instagram as falling into this trap of undervaluing the logistics aspects of retail when it launched shopping on the platform. “It thought it was the new Amazon but it had not thought about the logistics. The physical logistics had not been understood and it did not have the technology to support it. It was not the [shopping] revolution that it should have been,” suggests Saunders.
Luke Phillips, IT director at Townhouse, is another advocate of technology being primarily about improving the customer experience. To this end the company introduced kiosks into its nail bars to replace a front-of-house person, which has enabled customers to check-in and make bookings. “It makes people’s lives easier. The technology underpins what we do,” he says.
Youngsters embracing change
This will no doubt be well received by younger customers who Giles Smith, board member of the MACH Alliance, says are much more willing to engage with technology. They will happily share their data and are willing to be tracked if they believe it enhances their safety and security.
“I’m interested in proximity involving really practical things like [parents] tracking [their] children in shopping centres using technology. Gen Z’s will share everything. Receiving a personal welcome at a store will be embraced. It’s older customers who are holding it back. Young people being tracked is seen as a level of protection,” he argues.
Regardless of the technology, Smith says it must be intuitive to users. “Whenever I see trainers going into a store to train people on the Point-of-Sale I know the product is not good because it should not need any training. For instance, nobody needs training on any of the apps they use on their phone,” he says.
This thinking very much chimes with Brian Abplanalp, manager of account management and mid-market UK & EMEA at Lightspeed Commerce, who says: “Technology has become a necessity in the retail world and staff can’t be spending all their time training people. We focus on ease of use. Employees want the easy ability to put through transactions on tills. They can’t be expected to know all the in-store promotions so that’s why pop-ups and loyalty programmes will be surfaced automatically on the tills.”
Handling change
One of the biggest issues for retailers introducing technology of any description into their businesses is that it is perceived by employees as the harbinger of change and the majority of people are uncomfortable with this. It is for this reason that Scott Taylor, executive director of marketing at American Golf, named the programme of change the company is currently undertaking as the evolution programme.
He has also involved the employees in the programme from the beginning as this increases their willingness to accept change. “They will embrace change if they have been involved in the decision-making,” says Taylor.
This has been particularly important for American Golf as there are a lot of older team members and part of the programme involves introducing a digital black book that enables them to call up the past purchases of customers and other details in order to improve the level of personal service they can deliver. It is also bringing in live chat that can be hosted by the team members from the stores.
Managing the channel mix
Developing such channels to market is increasingly important for retailers as the sector develops. Penny Grivea, former CEO of Rituals, referenced the term opti-channel that suggests retailers should optimise the channels they utilise rather than taking the approach of operating across all channels that might not be particularly efficient.
Whichever channels are used Greg Tufnell, founder of Prime Advantage Capital Partners, suggests investors like management’s to have their hands on the levers of various channels and to not be afraid to consider all of those available depending on market conditions.
This is sensible when considering the shifting sands of channels over time. This has certainly been experienced by George McNeil, managing director of the retail division at Johnstons of Elgin Cashmere, who says the wholesale business has had a tough time over recent years as a result of the closure of many department stores in the UK. But he points to a great opportunity for the business in the US through a partnership with Nordstrom department stores.
The company is also focusing on developing its own-brand that runs alongside the work it does manufacturing the products for many top brands including Dior. This strategy of boosting its own-brand sales involves an ongoing variety of collaborations such as working with designers on exclusive ranges and celebrities, including Claudia Winkleman.
Although there are undoubted challenges in the retail sector there are also opportunities, according to Dickinson at the BRC, who says: “Retail is a lot more complicated than it was 10 years ago when it was simply online versus stores. It’s about empowering people and being agile rather than being about the authority-driven retailers that it was 10-20 years ago. There is an opportunity to re-skill and re-engage local communities. There is all to play for in the whole industry.”
Pictured left to right: Tim Nash, Sarah Buchan, Dr. Anamika Datta and Darren Sanderson-Williams (chair).
