Despite claims forecasting the ‘death of the British High Street’, the outlook for the physical store remains positive, a fact supported by recent research from Verdict and British Land. The study revealed that even though the UK has one of the most developed online markets in the world, 89% of all retail sales still touch a physical store. So instead of online taking over from physical retail, as many predicted, what we’re actually seeing is online and offline blending together, reinforcing the role of the store.
Although some retail brands have disappeared from our high streets completely, many others are thriving. Over 54% of retailers polled by Kantar have cited new store openings as part of their future business strategy, evidenced by B&M, JD Sports and The Co-op, who are all committed to investing in their bricks and mortar estates. And it’s not just British retailers opening more stores. Smiggle, the Australian children’s stationery specialist, H&M, the Swedish fashion-giant, and German discounter Aldi, are all expanding their store network, reinforcing the UK’s status as a sought after retail destination.
And store estate expansion isn’t just happening in the UK. Many British retailers are actively pursuing international growth. For example, John Lewis and Lakeland have both recently announced they are venturing ‘down under’, whilst Primark is fast becoming a household name in the US and accelerating the pace of physical store openings, as the appeal of British-branded products continues.
Physical stores also remain highly valued by consumers. More than three-quarters of respondents to a Kantar retail survey said that they would research items online before purchasing them in bricks and mortar stores, proving that although online is important, many of us still head to the shop to make our purchase as channels become increasingly blurred.
However, this changing consumer behaviour and increasing economic uncertainty has led to many retailers re-assessing what their physical estate looks like, which is especially true of the larger players operating hundreds of stores. Whilst some retailers have reduced the number of locations they operate, others have evaluated how they utilise the space they do have more creatively.
The store-in-store concept is proving a popular way to maximise the use of space and help drive footfall to larger stores. Tesco will utilise its tie-up with health foods specialist Holland & Barrett to make more effective use of its larger, non-urban retail store, meanwhile, Sainsbury’s has linked up with Jessops, the photographic retailer, to entice shoppers to its stores. As retailers recognise the value of these partnerships, and how they help to draw shoppers in more frequently, we’re likely to see more collaborations in future.
Retailers are also strategically re-evaluating their store footprint. US retailer Target is opening smaller stores with a more localised product mix that fits with the demographics of the area. Similarly, Ikea is trialling smaller-site ‘Order and Collection’ stores in the UK, where customers order online and then collect from the physical store. These new collection points offer only a fraction of the retailer’s full product range, but make them accessible to more of the population without the need to invest in expensive superstores. This more attractive, more relevant product mix is proving to be an effective strategy.
Although online plays an important role in the path to purchase, the physical store brings a brand to life in a way that an ecommerce site cannot. Despite their significant investment for retailers, they can strengthen awareness of the brand and boost online sales, driving ROI. It would be short-sighted to dismiss the importance of physical stores, but it’s also key to remember that digital channels are here to stay, and so incentivising customer’s loyalty will be crucial in ensuring shoppers continue to visit the high street in the years to come.