The last 12 months have been unique in the retail industry amidst the Covid-19 pandemic and in this article Ian Reid, Sales & Marketing Director of Sook, the provider of award-winning adaptive retail spaces discusses these changes in the industry.

Profound changes in lifestyles and consumer behaviour will change the face of retailing forever. According to recent figures from the Office of National Statistics, internet sales, as a percentage of total UK retail sales, rocketed from 19.1 per cent in February 2020, to 36.2 per cent in November of the same year. Unfortunately, this accelerated appetite for e-commerce has, in huge part, had a devastating effect on some of the biggest names on the high street. As a result, 2020/21 has witnessed the permanent shuttering of some of the world’s most famous and best loved stores.

And with the vast majority of people including those showing previous reluctance – whether lacking in digital dexterity, or simply preferring the personal touch – now resigned to making more online purchases, businesses without any online presence and/or delivery channel face some tough challenges in the medium to long term.

In the current climate of uncertainty, many brands and retailers are no longer questioning when they’ll be able to open again, but increasingly, how. But what does this all mean for the future of the traditional high street? And equally importantly, how will it impact on landlords, retailers and our local communities?

The closure of stalwarts, Debenhams and Topshop in early 2021 further exposes the beleaguered business model of large, multiple stores with high rental costs, business rates and service charges as unviable. And in turn, fires up the existential debate on what the purpose of the high street actually is? New trends are starting to emerge which will redefine the retail industry as we know it, and with it, huge opportunity for innovation.

The Resurgence of Pop-Up
Remember pop-up retail? 2018 was officially declared the year of the pop-up, when just about everyone in retail was experimenting with a pop-up concept of their own. But as often the case, things that are suddenly everywhere have a tendency to slow, as did the pop-up phenomenon. Until 2020 that is. According to reports, pop-ups are poised to make a big comeback. As commercial landlords continue to face increasing pressure into 2021, the pop-up model provides an occupancy solution, albeit for a shorter term than the typical retail lease.

Retail is in a whole different place than it was 12 months ago, but if anyone can get some brick-and-mortar buzz, it’s Gucci. The brand’s capsule collection with The North Face was on wish lists even before it debuted to a diverse group of creatives, superfans, and passers-by hoping to get a glimpse of the immersive experience inside the brand’s Williamsburg, Brooklyn pop-up. When initial word about the impending release of The North Face x Gucci capsule collection first dropped fans (of both brands) were reeling. With the luxury house’s campy aesthetic and the outdoor apparel brand’s knack for practicality, it’s one of those partnerships one can’t believe didn’t happen sooner.

An interesting experiment from Instagram provided the first example of a bricks-and-mortar shop dedicated to eight digitally native brands that owe their success to the renowned social network. The pop-up shop, which was opened in Selfridges department store, housed a selection of clothes, accessories, beauty products and homeware items produced by the eight chosen brands. Just another example of how the online and offline markets are not two separate worlds, but instead a single large community that can take advantage of the potential of both platforms to increase sales opportunities.

New Agile & Adaptive Retail
Permanently shuttered storefronts, depleted footfall and an increase in WFH, remind us on a daily basis that the world has shifted to new ways of working — and shopping. This represents a short and longer-term challenge for retailers and landlords. The traditional approach to physical retail is proving outdated and for most, a grossly inefficient way of delivering goods and services to market. As a result, and for most, the barriers to occupying physical retail space on our high streets are too many and too high. Urban planners and commercial landlords are now looking beyond quick return on investment and working with business partners that can help create a richer, more diverse retail and cultural offering that’s sustainable and more equitable for both landlords and occupants alike.

What This all Means… For Landlords
Footfall on UK high streets fell 49.5 per cent in 2020 due to the forced closure of non-essential retail, and many of us WFH. Meanwhile, as pure plays snatch major brands out of physical existence and once high street favourites like Cath Kidston, TM Lewin, Karen Millen and Coast dumped stores to re-emerge as pure plays, the question being asked is whether we need shops at all. In the short term, the permanent closure of many of these stores will continue to hit our city centres hard. And with many retail landlords being reported to be receiving around half the usual rent (in some cases even less) from tenants, they have to be more flexible and creative around the management of these assets.

For Tenants
Conversely, occupiers of retail space must continue to adapt to meet customers how and where they shop now, and again two months from now, repeatedly demonstrating new purpose and consumer appeal, while setting a new bar for what retail looks like in 2021 and beyond. Easier and more flexible access will provide smaller traders with the opportunity to thrive – if they can get their offering to the community correct. Adaptability, distinctiveness and agility will become increasingly important, however understanding the needs of local people and responding to the wider social and economic needs of the community will also be key. Businesses of all shapes and sizes will have to modify their approach not only to keep pace with digitalisation of the customer journey, but also the emerging model of agile and adaptive retail occupancy.

For the Consumers
Whilst the requirement for key anchor tenants to draw the crowds back onto our high streets and shopping centres will always exist, Covid-19 has both demonstrated and accelerated shifting consumer behaviour, painting a pretty bleak picture for traditional high street retailers. For physical retail to be truly reborn, consumers will expect to experience the best of what it has to offer – discovery, tactility and excitement; engaging with another human without layers of protection between them. To enable this, we need to make community ownership and access easier, facilitated by more equitable business models that genuinely empower communities to fulfil the needs and drive the future destiny of their high streets.