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Insights

As big-box retail continues its decline, it's time for a collaborative high-street renaissance

In its current form, the department store retail model continues to fail. Retailers need to respond and focus to changing demand, otherwise more big units will be abandoned – and those already lying empty will never be resuscitated.

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As big-box retail continues its decline, it's time for a collaborative high-street renaissance

Huge, empty retail units are increasing in number, and it’s only going to get worse. Even though the problem of vacant commercial real estate has accelerated in the last five years, we don’t seem close to providing a real response to the issue.

In the coming months, Marks & Spencer is closing at least 110 stores; Debenhams will shutter nearly two-dozen shops; meanwhile, House of Fraser may follow BHS into oblivion sooner than we think, given owner Mike Ashley’s less-than-positive view of his acquisition. Each closure will leave another huge, empty unit behind: one more mausoleum to a business model which, in its current form, does not cater to the modern consumer.

The current state of “recovery”

An obvious saving grace for large units has come in the form of ever-successful large retailers such as B&M, Matalan, TK Maxx and The Range. However, brands like these can’t and shouldn’t be expected to save every vast building, nor can they. The way we now shop is irreversibly different to how it was even ten years ago, and it may only be a matter of time before some of these replacement tenants encounter the same fate as their predecessors, if they don’t listen to customers.

In other (often more affluent) areas, these retailer replacements aren’t being courted just because one used to occupy the same real estate. Instead, units are being repurposed entirely, highlighting a shift in high-street function to better reflect modern demand. Some Debenhams sites, which are slated to close for good in January 2020, are already the focus of conversion. Stratford's store will become an 80-room hotel, Folkestone's will likely become a cinema, while plans have been submitted to convert Canterbury’s former store into a combination of smaller units and flats.

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In Stratford’s case, the move from store to hotel is understandable: it’s the birthplace of William Shakespeare and close to the Cotswolds, giving it nearly three million tourists every year. At the moment, Folkestone only has a two-screen, old-fashioned independent cinema to serve 50,000 locals. Cambridge’s population has grown by 25,000 in the last five years and has a strong independent store scene.

The changes show smart responsiveness from retailers, councils and landlords, who appear to be working together to make simple yet understandable regeneration attempts to reply to basic demands or shortages.

However, the same cannot be said for other newly Debenhams-free locations like Stockton-upon-Tees and Wolverhampton, which don’t exactly provide the same draw for tourists. Retailers as well as landlords and councils should know now, more than ever, that they must work together if these units are to bounce back. To succeed, there needs to be a wholesale cultural change at all levels, specifically adopting a collaborative approach.

How retailers can help: Diversification and collaboration

One thing’s for sure: there’s no longer a need to simply pack stores with goods to attract customers. Stores now need to be as experiential as they are useful, especially if they also operate a strong internet presence – and compete with one. The advantages that bricks-and-mortar shops have all play to a basic principle: the ability to provide a tangible, exciting experience, giving value back to a consumer that has to spend time and money to get there in the first place.

Pop-up stores within large spaces offer incredible opportunities for those with large units: offering an open space to otherwise unrepresented brands on the high street, such as online-only or start-up companies, is a great way to encourage people to enter the store on a regular basis. Even higher-end brands like Rapha are taking Clubhouses around the world through this initiative, while luxury companies like Mulberry are installing themselves in temporary locations. Most impressively, Amazon dropped itself into the heart of London with a daily rotation of products.

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These go far beyond the standard way that department stores do things. It’s not just a case of giving a company a section of a store, or a few rails in one corner: it’s about providing them with a large area with free reign to do what they like, which once again brings footfall. With the right partnerships, there’s potential to provide the space itself for free, benefiting everyone.

It doesn’t need to be all about selling, either. As Puma proves in New York, many people can get involved with a brand or service after being wooed by experiential or product demonstration spaces that complement the brand. While most companies don’t have the money to install F1 simulators like Puma does, certain areas of large units should be considered as stages to demonstrate products. Of course, current department stores provide things such as make-up counters for its products, but this isn’t exciting in the slightest – it’s merely expected.

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This predictability wasn’t the case when we visited Decathlon in London, which regularly goes one step further to host regular events with external organisations to maximise excitement for its complementary product range – most notably, it uses its roof space as a basketball court. The sheer range of day-to-day demonstration zones allow people of all ages to try pretty much any product available; there’s even a regular slot filled by a PGA Tour golfer to teach aspiring players how to drive (using Decathlon’s range of drivers, of course).

Once a business sets out to break the mould, it can go even further and reshape its entire proposition. Such is the case with Santander’s new Work Café, which we visited this autumn. With it, the bank – itself in an industry plagued by rampant high-street closures due to changing tastes brought about by the internet – reworked itself around the ever-popular coffee shop culture. As a result, it has maintained a constant popularity in Leeds, while making people aware of the bank and its offerings through clever branding, incredibly helpful staff and all the standard facilities you’d expect from a physical bank.

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Finally, there must always be a means of tying together the omnichannel experience with seamless logistics. Fast, free click and collect in tandem with in-store stock check not only guarantees enhanced footfall, but also provides ample opportunity to sell again. Even external pick-up opportunities, such as the Kohl’s partnership with Amazon in the US, shows how people will visit somewhere solely for the guarantee they’ll get what they order – even if it’s not from that company.

Fundamentally, the reason customers visit the high street is no longer about the products being sold, unless they literally cannot be found anywhere else. Big spaces mean big opportunities to bring a variety of monetised leisure experiences to visitors, just as cinemas and hotels do.

It’s not all on retailers

Left vacant, large units are retail’s equivalent of the “broken windows theory”: they only encourage nearby businesses to up sticks and move elsewhere, making the problem much worse and digging a deeper hole for landlords themselves. They can’t be filled overnight, but they can be put to beneficial use in the interim – while providing a much needed selling point.

Recently, Savills discussed “meanwhile” spaces: units used for “charity initiatives, community facilities, and health and wellbeing enterprises for staff and visitors”. Savills cited how a shopping centre in Exeter donated a unit for a seven-week period to the YMCA, which was “then used the space to train young people in areas such as finance, marketing and customer services in order to help them find employment opportunities”.

Elsewhere, ping pong parlours were run by Table Tennis England; another unit was “used to collect and store unwanted warm coats, jumpers and sleeping bags donated by local people in order to help the homeless”. While it’s not the duty of landlords to kowtow to local causes, it’s a real win-win when there are no deals on the table; footfall is maintained, big units are put to good use, and other businesses don’t suffer.

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Of course, local and national government has a part to play. New ideas are needed to develop a real, localised vision for the future of the British high street. The central focus must be on basic requirements that complement the need to use and enjoy the high street: facilities that make high streets essential, much like they were before the advent of ecommerce. They don’t need to occupy prime real estate; they just need to be there.

Here in Leeds – one of the ten biggest cities in the UK – there’s not one drop-in doctor’s clinic in the city centre; only a couple of private GPs and dentists. Yet people actively need healthcare, and with millions of people working near high streets, it’s only reasonable to make spaces available for people who have limited time to spare to make or fulfil an appointment. It’s time for the government to better enable them to return, especially with so many void units begging for anything useful; even much-maligned betting shops are now closing in their droves.

As Savills explains, there's a real demand for “health and wellbeing enterprises for staff and visitors”. The opportunity for authorities to make a deal with landlords for a floor of their empty large units, in order to support dentists and other healthcare services, would both make landlords’ properties more used, but deliver basic and often necessary services for all.

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Work together, succeed together

Without careful planning, collaboration and open discussions between all players involved with the high street, large retail units will be unable to sustain themselves. But the bottom line is simple: if large units can be filled, they need to respond to modern demand and make the high street worth visiting. If they no longer serve a purpose, they cannot be left empty in the hope something will take the space on – they need to be repurposed.

Despite a somewhat gloomy outlook, what must never be forgotten is that the high street will always be the heart of its community; as such, it’ll still serve as an important place for shopping, entertainment and social gatherings. If it’s to recover – or even sustain itself in the face of both online and offline competition – those overseeing its success must break the habits of the last two generations and develop new, positive and responsive uses for these spaces.

Insights

Impulse vs research: Are you offering Black Friday shoppers the real deal, or damaging their trust in you?

Another Black Friday has come to an end, and in those 12 months, customers are wiser than ever to the deals offered. Yet it appears that some retailers are up to old tricks – and a recent study will only shake consumer trust ahead of a critical Christmas sales period.

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Impulse vs research: Are you offering Black Friday shoppers the real deal, or damaging their trust in you?

Another Black Friday has come to an end, and while the UK may not be seeing the impact on the high street, the sales event is booming online: the average shopper visited a retail site over 38 times, nearly twice as many visits than they made last Black Friday.

In this 12-month period, customers have become ever wiser to the deals being offered. Despite this, it appears that some retailers are up to old tricks – and a recent study will only shake consumer trust ahead of a critical Christmas sales period.

In a recent report, Which? discovered that is was “repeatedly shown that deals touted by retailers on Black Friday are not as good as they seem”. Its home products and services chief Natalie Hitchins continued: “Our investigation indicates that this popular shopping event is all hype and there are few genuine discounts.”

After citing numerous examples of “sale prices” being replicated from discounts earlier in the year, Hitchins went on to reiterate a simple fact to consumers: “Time-limited sales can be a good opportunity to bag a bargain, but don't fall for the pressure tactics around Black Friday.”

It sounds like straightforward advice for shoppers, but it should be retailers, not those who visit them, that really take heed of this advice. After all, we said exactly the same thing this time last year.

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In his piece for SHIFT last year, Matt Gardner said that “while consumers love Black Friday, they’re also more than aware of the true value of offers.” He continued: “It’s critical you ensure your offers are genuinely great deals; consumers are savvy enough to know if a deal is something that competitors – or even you! – offer at other times of the year, and labelling a rerun of this sale with a Black Friday banner will insult their intelligence – and undermine your participation.”

It’s these instances of disrespect that consumers are becoming all too aware of. With an increasing number of price comparison tools, cost trackers like camelcamelcamel, or thriving communities such as hotukdeals – which enjoys two million users in the UK alone – the risk is no longer that sales won’t be made during Black Friday; it’s that retailers will do themselves serious reputational damage ahead of an even more critical shopping period.

The most important Christmas in recent memory?

If retail projections are to be believed, retailers’ Black Friday strategies may be hurting them ahead of one of the most difficult times for British retail. While Christmas is usually a saving grace for many, GfK discovered a foreboding sentiment among British citizens ahead of the period.

At the end of October, the market research institute revealed that “UK consumer confidence in October fell to its joint-lowest point in six years amid continued Brexit uncertainty and ahead of the 12 December general election”. Client strategy director Joe Staton said this was “worrying” as strong consumer spending “has been the main driver of economic growth since the Referendum in 2016 against a backdrop of low inflation, low interest rates, low wage growth and high employment”. At the end of November, things didn’t improve – they “flatlined”.

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While election years in themselves have little correlation with sales downturns, certain retail categories are more at risk when people feel put on the political spot. As this research piece explains: “Ultimately, shoppers still need to put fuel in their cars and food on the table. However, most exposed are ‘big ticket’ retailers selling furniture, consumer electronics and automobiles. Fashion clothing and accessories are expected to struggle as such purchases are tied to discretionary spending.”

While SHIFT believes that in the UK, it’s important to pull out all the stops to offer something during Black Friday, it’s better to offer nothing at all rather than advertising non-deals to get people through the doors. It all comes down to remembering the roots of British retail, even as new trends dominate the headlines.

Going back to what you, and your customers, know

Black Friday is a direct product of Thanksgiving, which takes place on the fourth Thursday of November in the US. The public holiday is extended by millions of Americans, who want to enjoy a four-day weekend and make the most of their time off. America infamously “treats paid time off as a perk rather than a right”; employees are entitled to zero days of paid leave, and while companies regularly provide it, the culture is simple: make the most of your time off when you can.

Here, Black Friday is just another working day. Boxing Day, however, is a public holiday and a shopping bonanza that’s stood the test of time, even as online shopping brings internet deals slightly forward in response to Christmas delivery cut-off points. On top of that, those who have most trust – and patience – with Boxing Day sales tend to come from older, less technologically able demographics that are more likely to leave their homes on the day itself to explore the stores they love.

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Patience from retailers pays, too. With Christmas said and done, they can assess excess stock brought in for Christmas, make space for the next generation of product ranges and models, and provide what customers want: actual deals at a time when they’re looking to fill gaps that Christmas presents didn’t cover – or get complementary products to go with their newest acquisitions.

In 2019, trust is more important than anything

There’s a frank bottom line to adhere to in the future: if it’s impossible to provide new and valuable offers to consumers on Black Friday, simply wait until you can. A loss of consumer trust is worse than missing out on a Black Friday event which, because it’s new, Americanised and full of non-deals, is rightly treated with more cynicism than others.

However, if you can still make a mark on the day after Thanksgiving, offer genuine deals to consumers and build that brand loyalty ahead of a strong Boxing day offering. Given the current state of retail, this Christmas will provide a critical headstart for those who need a great 2020 to reverse their fortunes.