2019 continues to be an extremely turbulent time for the retail sector. Barely a week goes by when we don’t hear of yet another, long-standing and well-established high street retailer beginning to crumble as it struggles to keep up with a number of online rivals. In fact, new figures released earlier this month showed that more than one in ten shops now lie empty on the high street, the most since 2015.
Whilst competing with the online world may be enough to contend with, fears and uncertainty around the UK’s withdrawal from the EU continue to have a negative impact – with consumer spending currently at its weakest since the mid-90s. As the deadline for Brexit draws closer, with no clear deal in place, shoppers are having to think more carefully about their spending habits.
What’s more, 64% of consumers believe prices on the high street will rise as a direct result of Brexit. More than half believe this will result in the closure of more shops in the near future.
But it is not all doom and gloom. As a number of bricks and mortar retailers are leaving the high street to focus their efforts on a less costly online platform, a new opportunity has arisen for some of the more successful online brands, which are adopting physical retail infrastructures in the hope of providing customers with an immersive shopping experience that simply cannot be replicated online.
Clearly, this is not the death of the high street, but rather, the end of the high street as we know it.
The retail life cycle
Whilst rising business rates and rents have been an ongoing problem for the high street, and one that has previously seen many retailers migrate their services online, trading in the digital realm has presented its own challenges.
Although browsing online from the comfort of your own home can be quick and convenient, it is no substitute for the tangible and social experience a customer can obtain when visiting a physical store. People who visit the high street, rather than buying a product online, do so because they are looking for more than just a quick, hassle-free purchase. Whether that be a day out with a friend, grabbing a coffee in between shops, or getting advice from an expert before making an expensive or important purchase.
In fact, a recent study revealed that 85% of UK customers prefer shopping in-store rather than online. A total of 78% said they would rather see and feel a product in-store before looking online for the best price.
Rocketing levels of returns are also becoming a great concern for online brands. Being unable to try clothing on instore can lead to shoppers ordering multiple sizes of the same item of clothing, trying them on at home, and returning those that did not fit.
Online shoppers will continue to expect to return items when they are unable to have a true visual, physical and tactile experience with a product, assessing the quality, texture and size of what they are buying online. Dealing with this upward trend of serial returns can be extremely costly for retailers not only in terms of profit but also the time invested in reverse logistics.
Back to bricks, but not as we know it
Despite current negativity surrounding the high street, a wave of brands that had previously only existed online are now turning to bricks and mortar stores to connect with their customers on a personal level, providing a unique and tangible experience. This year, eCommerce giant Amazon opened its third UK pop-up store in Scotland, whilst Los Angeles-based womenswear brand Reformation announced it will unveil its first UK store in London.
It is clear the future of bricks and mortar retail is likely to look very different to what it does today. Rather than the large department stores and retail chains we are used to, the high street of the future will be a storefront with minimal square footage, with minimal but customisable products.
Instead of simply offering somewhere for customers to buy products, these shops will provide an interactive and immersive experience where customers can try out products before buying them. The KitchenAid London Experience Store and Showroom is one great example of this. Here, customers can watch free demonstrations and even take part in live cookery classes.
The high street isn’t dying – it’s transforming
It is fair to say the growing success of these established online brands has caused a distinct shift in today’s retail landscape. Where retailers once owned the high street, online brands who are moving into the physical retail arena are now proving more rewarding. By bringing their online presence into a more tangible in-store experience, brands with a niche offering are seeing bigger successes within the high street.
Whilst traditional retailers may continue to struggle, with the likes of M&S, House of Fraser and John Lewis reporting weaker performance than previous years, the high street still holds huge potential for fast-growing online brands. The high street isn’t dying – it is evolving.
Joe Farrell is the VP of international operations at PFS