Keeping the consumer at the core of your strategy and embracing the transition into an omni-channel world are essential for retailers and retail landlords in today’s evolving marketplace, according to delegates at June’s EG Retail Summit.
While the surge in online retail was once perceived as a genuine threat to bricks-and mortar businesses, the worlds of online and offline should no longer be viewed as two separate entities, but as elements of a single business model.
Having a concise online strategy and keeping consumers and their need for convenience at the heart of your physical strategy are key to any retail business today, said Roger Wade, founder of shipping container mall Boxpark.
“The reality is that it is going to be omni-channel,” he said. “Any retailer that does not realise that is burying their head in the sand. It is no longer an online and offline world, and it is the omni-channel guys that are doing the best.”
Wade cited John Lewis as an example of omni-channel use though its click-and-collect service, saying its success in embracing both channels was the result of having a clear-cut strategy that was implemented early.
“It was all driven by our customers telling us that they wanted more convenience,” said Jeremy Collins, property director at John Lewis.
“We soon learned that driving an hour to a store was no good, and the great thing about click and collect means that we can reach the customers in a way that is convenient for them,” he said.
Convenience and consumer needs have also become key to Network Rail’s retail strategy. Network Rail’s 577,000 sq ft retail portfolio, spread across 17 stations, now generates £120m in annual income.
Lii Bernovski-Smith, category manager at Network Rail, said: “The end goal is to get that money from the consumer, so we assess the profile of consumers and then evaluate their needs.”
By examining the purpose of the journey and the station from where consumers are travelling, it is possible to evaluate what they are likely to buy, and this dictates the retail landscape of train stations, said Bernovski-Smith.
Manchester Piccadilly is a case in point. It is more affluent than London stations Victoria and Waterloo, and 43% of people who enter the station visit a shop. The dominant travel mission at Manchester Piccadilly is leisure, which dominates the tenant mix.
Bernovski-Smith added: “We focus on the importance of the consumer in the tenant mix.”
Consumer focus is also key when it comes to store branding, positioning and range, which is why Marks & Spencer is trialling a 1,000 sq ft store Food to Go format to cater for the hungry travellers.
M&S franchise, space and display manager Shan Sabendran said: “When you are trying to squish an offer into a store of that size, every range decision we make is crucial. We have to understand eating habits. This is important, as 68% of rail travellers eat while travelling.”
These changes can have an impact on the investment market, and retail landlords would be wise to start realigning their estates accordingly, said John Duxbury, head of retail at M&G Real Estate.
“We have been positioning our portfolio in anticipation of the changes in the retail sector. We have sold out of larger shopping centres and focused instead on flagships and investing in our development pipeline in order to be strong in the destination side of things,” he said.
Similarly, retailers themselves need to make sure that they keep investing into their own brands and offering to make sure that they remain ahead of retail trends. Recent high street casualties Austin Reed and BHS show just how relevant this is today, particularly in the evolving digital landscape. BHS tried, but ultimately failed, to reach a new audience by renovating its online offer.
However, despite recent bad news, one of the UK’s top insolvency practitioners told landlords there would not be a wave of retailer administrations despite recent collapses.
Deloitte partner Neville Kahn said: “Landlords do not need to get nervous about this. We do not think the amount of insolvencies is going to get higher.”
He said the lesson of the past was that retailers, such as Woolworths and Comet, had been left with outdated brands because of underinvestment, and those left are stronger.
“Whereas before the landscape was dominated by the retailers and customers had little choice, in the digital age the choice is huge and it is a global play, which is why it needs a lot of investment.”
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