COMMENT: I really don’t like shopping, which as a retail analyst is perhaps a peculiar admission and probably not for this piece, but there it is. Apparently though, many people do. So why is the retail landscape seemingly heading face-first into apocalypse, asks EG’s retail analyst James Child.
This year we have seen beloved institutions such as Toys R Us, Carpetright, Mothercare and many more announce mass store closures and fall into administration in what has been dubbed the “year of the CVA”.
According to Radius Data Exchange, that equates to 6.7m sq ft of retail space relinquished to the market to date, costing around 11,000 people their jobs.
The questions, much like the administrations, keep coming. And much like any other national tragedy, people want answers and someone to blame.
With so much goodwill from all, what is causing this Darwinian onslaught and who is at fault for this sorry mess? The inherent spectre of Brexit perhaps? Spindrift consumers? Ill-advised retailers?
It’s the economy, stupid!
This one of the many factors that has culminated in the dire climate of today.
The increasing pressure on consumers and retailers alike from the fallout of Brexit has taken its toll on confidence and costs.
The great British public spent around £366bn last year, according to the ONS, though further analysis alludes to the fact that spend is actually down on the previous year.
Of course, it’s not just what people want to buy, but how they buy it – the share of online spend moved within touching distance of 20% in 2017.
Goodwill for many retailers is strong. Brand loyalty and emotive feelings (Woolworths being the prime example) do give retailers time to adapt, but this alone cannot stave off the inevitable.
We are often told that Generation Snowflake doesn’t save and instead spends all disposable income on avocados and deconstructed coffee. That is, of course, a fallacy.
What is true is a desire and buy-in for leisure and experience. You need to give people a reason to get up, leave the house and go to a store. For those like me who don’t like shopping, you need to prove that you can do what Amazon can’t. Retailers need to adapt to this.
With many retailers trapped in long leases, many are suffocated by extortionate rental premiums for units they don’t want or need.
Over the past decade, average lease lengths have tumbled, with incentives becoming a more important part of the retail covenant.
Using Radius Data Exchange, we also know that the number of physical store openings on our high streets is in decline. Bricks and mortar isn’t dead but it is becoming less important.
The ability for retailers to react to technology and to evolve to consumer wants and needs is the future.
Give customers those reasons to bother to come to your store.
Retailing is no longer just about supplying goods to customers, they want experience. And that doesn’t just mean F&B anymore – Radius Data Exchange figures show an anticipated slowdown in the amount of eateries opening.
However, the amount of space flooding the market due to store closures, as well as a pipeline of 27m sq ft of new space to arrive by 2022, does offer an opportunity.
Retailers that seize this will benefit for decades to come.
It is standing still that will be the death knell of many, even treating water is no longer enough.
As Darwin so eloquently proclaimed, it really is survival of the fittest out there.
Read more: Uncovering retail’s most resilient retail spots
Landlords call for CVA reforms
To send feedback e-mail james.child@egi.co.uk or tweet @jamesChildEGi or @estatesgazette
