Retail space requirements to decline but physical stores will remain vital for many sectors, CBRE reports

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Clothing & footwear is expected to see the largest decline in space requirements at 35%

The pandemic has accelerated the growth of e-commerce in the UK, with online sales increasing by 44% in 2020 and total online penetration reaching 26%, up from 18% pre-pandemic, according to the latest research from global real estate advisor, CBRE.

According to the report, the largest growth in online penetration came from the younger demographic, with the 16-24, 25-34 and 35-44 age groups all reaching online penetration of 30% in 2020. However, every age cohort is expected to carry its online spend share into the future, with most age groups forecast to reach online penetration levels of circa 40% by 2030.

Higher online penetration is impacting the requirements for physical retail space and the research shows a direct correlation between high online penetration levels and a reduction in physical store space. According to CBRE, overall retail space requirements in the UK are anticipated to decrease by up to 16% between 2021 and 2025.

Clothing & footwear is expected to see the largest decline in space requirements at 35%, followed by electricals at 19%. Health & beauty and food & groceries, which are more reliant on in store sales, will be less impacted and are expected to see space reductions of 10% and 7% respectively, having shown resilience throughout the pandemic.

Rhodri Davies, head of UK retail, CBRE, commented: “Retailers are becoming increasingly efficient in their use of space, meaning they can use less space to achieve the same level of retail sales. We have seen significant changes in our sector over the past 12 months and we will see more as retailers continue to adapt and evolve. However, it will not be a ‘one size fits all’ model and the physical store will remain a vital component for many retail sectors.”