As Gap and Arcadia close physical stores, leading privately-owned IT and business consultancy, BJSS, considers the future of the retail landscape and the retail space may be reimagined
For years, retail growth was heavily driven by store network expansion. Opening new stores was an easy way to grow sales, especially when using a franchise model. Data analysis could prove when to stop before cannibalising your own stores’ revenues. Yet physical retail has been increasingly eroded through reduced high-street footfall due to e-commerce and the pandemic. This means the appeal of renting space on the British high street has reached an all-time low. After a tough 2020, retail brands such as Gap and Arcadia have been forced to close their physical stores across the country, favouring an online-only strategy. This begs the question of what will happen to all this unused ex-retail space on the British high street?
Here we will explore three possible routes to regaining value from abandoned retail space: reinvigorate, repurpose or reallocate.
1. Reinvigorating the high street with experiential retail:
The role of retail stores is far more than just functional. Retail is a leisure activity. It brings us together. It allows us to relax and enjoy our free time. This ‘retail therapy’ also benefits other businesses on the high-street, including coffee shops and restaurants. So the closure of one high street business directly threatens its neighbours. Therefore, reinventing the high street is crucial to saving retailers and surrounding businesses.
Retailers must change their offer to adapt to the ‘new normal’ by providing a differentiated experience that cannot be replicated by e-commerce. This can be achieved by offering store experiences and services you can’t get online such as Adidas’ Makerlab, where you can customise your trainers right before your eyes.
Alternatively, sharing space with other brands can improve ROI. New footfall can also be attracted through pop up shops showcasing exciting, ever-changing ranges from a new generation of lockdown entrepreneurs.
Finally, brands like B8ta are reinventing the store’s value proposition completely. Besides selling goods and services, B8ta is selling data on customer habits back to their suppliers.
2. Repurposing the space to be used for what people now need more of:
A second route for retailers is to fully embrace the shift to e-commerce and repurpose their former sales space accordingly. Asda recently announced it is repurposing part of its store floor space into stock rooms to become a robotic warehouse space for local e-commerce fulfilment. Decathlon has long since prioritised shopper convenience in its High Street Kensington store by offering click and collect right by the entrance instead of showcasing products.
There is indeed a future where retail store footprints shrink to the bare minimum to allows shoppers to collect, return and interact with staff. Products are likely to be display-only, and all stock is housed elsewhere
3. Reallocating the space for something new
The last option is to reallocate the retail space for other purposes. For example, John Lewis is repurposing some of its store space into apartments to generate cash. It is also using its estate to create office space.
Asda has reallocated its store space for ‘community rooms’ in Colne. Here, locals have access to free space whey they can host meetings, events and training sessions.
Looking to Japan, many shopping centres are now incorporating more cultural activities and health and wellness options as shopper habits demand more than just goods.
In truth, all three options are already happening. How quickly retail can adapt to the new landscape will determine how much space can be kept for retail activities and how much will be lost to real estate. Retailers must examine their value proposition and consumer journeys today to quickly innovate and trial new means to engage shoppers in their stores. Failing to do this will mean the allure of online retail will remain, and we risk seeing the complete demise of the high street altogether.