It is no secret that traditional ‘bricks and mortar’ retailers have come under intense pressure in the digital era. Increasing operating costs and dwindling footfall have eaten into store profitability as consumers gravitate towards the convenience and competitive pricing of online platforms. Layered on decades of store expansions, real estate portfolios look unfit today.
The instinctive reaction from retailers has been to cut stores at an unprecedented rate, and the Company Voluntary Agreement (CVA) has become the instrument of choice. Since 2017 alone, CVAs have been utilised to close over 950 stores in the UK, with household names including Carpetright, Mothercare and Homebase among the actors. Although CVAs buy time, they fail to mitigate the reality that shrinking to grow is not a sustainable strategy in a world where physical stores continue to account for over 80% of total sales.Since 2017 alone, CVAs have been utilised to close over 950 stores in the UK…
Unsurprisingly the high street is now flooded with empty stores, as struggling retailers have dropped their rental commitments. These prime retail locations are unaffordable to independents who simply don’t have the cash, and to successful brands who remain locked into long leases and continue to pay full priced rent on their properties. However, it’s apparent that CVAs are not a solution, if the real problem is poor trading. A brand trading poorly in 300 stores will continue to trade poorly should they close 50 or 150.
So what role should these empty stores play on our high street, and how can retailers keep attracting people to their stores?
One suggestion last week was to utilise space for ‘pop-up polling stations’. Although unorthodox, this would ensure nativity plays go ahead uninterrupted, while boosting Christmas trading (and spirit). Although long term, a polling station may not be the retail destination that consumers crave.
What is clear, however, is that the value proposition of the physical store is changing. To thrive, retailers must combine the traditional advantages of the physical space, leverage innovative technologies and provide an instore experience that appeals to their customers enough to lure them away from their computer. Recently, luxury brands such as Fendi and Ralph Lauren have introduced cafés and restaurants in a bid to maximise in-store time and immerse their customers in a culinary experience aligned to their brand values.
To thrive, retailers must combine the traditional advantages of the physical space, leverage innovative technologies and provide an instore experience that appeals to their customers enough to lure them away from their computer.
Although this tactic attracts customers, it doesn’t necessarily attract buyers. Modern consumers increasingly prioritise spending on ‘experiences’ and may not always convert into in-store sales. Dover Street Market has successfully positioned itself as a luxury destination shop, where quirky installations, mini concept stores and exclusive product launches attract the most die-hard fashionistas from across the globe. H&M, on the other hand, have continued to keep their consumer base interested with their annual luxury brand collaboration; notably Erdem, Balmain and Versace, which famously causes mass hysteria, 36h queues and instant product sell out. And Primark’s new Birmingham store is a testament to the diverse range of activities, including a beauty studio, barber and three dining experiences.
Conversely, digital solutions have been introduced into stores, led by Burberry’s immersive and multimedia ‘walk in website’ on Regent street in 2012. Interactive mirrors, store assistants armed with iPads and digital signage have become the baseline for in-store technology. By creating inspirational settings, tactically integrated with compelling digital touchpoints, retailers can offer consumers a form of escapism and hit high levels of consumer engagement. By integrating these innovative consumer touchpoints within a carefully curated store setting, retailers can fuse the physical and the digital to reposition the store as a cutting edge, compelling brand experience.
Other brands have gone one step further. Anya Hindmarch and Matches Fashion, for example, are turning to installations and events in the hope that customers will make spontaneous purchases. Hindmarch coupled the launch of a new handbag collection with the Weave project, an immersive art installation in a car park, where visitors could climb through a floating net designed to emulate the iconic weave of Anya’s handbags. Although this didn’t take place in store, it coincided with London Fashion Week and triggered a social media sensation, dramatically raising the brands’ profile. Matches Fashion’s London flagship is a retail shop and event space rolled into one. Frequent events, such as Q&A’s with fashion designers, art exhibitions and monogramming products create a way to extend trading hours beyond the standard 10am-6pm timeframe with Q&A’s taking place after 6pm. This makes it easy to tap into new customer segments where interests, such as art and fashion, coincide.
Whilst years of over expansion, combined with the consumer’s love affair with online shopping, mean that we will undoubtedly see the role of stores dramatically change, it is still possible to attract consumers if a fine balance of technology, experience and product is achieved. Ultimately, it is not the store saturation that will keep consumers walking through the doors, but rather how they are used that will keep them returning and spending.