For reasons we know all too well, the world of retail has shifted on its axis in the past year.
Many lessons have been learned, often the hard way, as a result of the coronavirus pandemic. Some existing trends have been accelerated, while some new developments have pointed towards the sort of retail landscape that may emerge once the pandemic has receded.
Speaking to some of our tenants in recent months it is clear there has been a shift towards the local consumer. The pandemic has resulted in the growth of what one might call ‘village locations’, where strong town centres and high streets have re-emerged up and down the country. These have outperformed city centres like London, which have seen the usual mix of customers – everyone from office workers to tourists – stay away because of COVID-19.
While high streets are essential, they need to be re-thought. They do not need to be a row of fashion stores. They need to reflect what people want, a place people go to because it is useful to them. That could be more food outlets, more pharmacies, a wider offering of amenities, more experience, more convenience, and more inclusivity. Much of this is in the hands of local government and the planning environment. Despite their best intentions some local authorities have created a situation which has allowed large shopping centres and big retail parks to decimate the high street.
A complete rethink around this is needed. This could involve a range of strategies, including incentives to make high streets places where businesses want to operate and residents want to visit.
Meanwhile store formats are also likely to change. Once we come out of the pandemic there will be a desire to shop, but the way we do it will evolve. People will want a different experience when they go to a store. Store format development may move towards smaller, more intimate surroundings, catering more to the local customer, and less homogenous than before.
The flip side of this scenario is the return of the flagship store. Many of us want a big retail experience in a space which reflects that. The caveat here is that, thanks to the costs involved, the number of flagship outlets a brand can operate will likely diminish. It might go down to one or two for really big brands. And that’s obviously going to have a huge impact on how the city works.
The shift to an omni-channel approach was already underway before the pandemic, but as a result of COVID-19, what should have taken 10 years to happen has come about in 10 months.
This revolution could see stores become less about actual buying, and more about growing awareness and presence. People might not buy anything when they visit, preferring to buy later on online.
However, customer loyalty will be achieved, built up and maintained by that physical presence. As we emerge from the pandemic there are things we can address to improve the prospects of our high streets and the stores we want to see on them. The planning regime needs reforming, and more stakeholders need to be involved in determining what our high streets will look like.
There needs to be greater recognition that retail as an asset class is still viable. Valuations need to be realistic and leases need to be more flexible. Ideally there needs to be more cooperation – and a greater understanding – between landlord and retailer.
Times have been tough, but lessons have been learned. The prospects for high street retail have not diminished, they have merely shifted.
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