Retail therapy amid trade tensions

Consumer data paints a gloomy picture for the retail sector, not just in Britain, but across the developed world. Stores are quick to blame e-commerce for the death of bricks-and-mortar stores. But could digital technologies end up saving the high street rather than killing it?

So why is retail struggling? Some say it’s unseasonably cold weather; others say it’s Brexit and the faltering economy. But this trend can be traced back beyond a few rainy weekends and far beyond Britain’s current political miasma. Sales are slipping across Europe and declining sharply in otherwise strong economies like Australia, leading many to point the finger at the high street’s most familiar adversary: online shopping.

Predictions that online shopping will destroy bricks and mortar shopping date back to the 90s with the birth of Amazon and eBay. The last three decades have seen the high street weather the global financial crisis, the advent of social media and ever-more elaborate digital sales funnels, and yet it continues to trundle forward and adapt to the times. To understand where it’s heading next, we need to think bigger.

Online purchases still only account for around 12% of retail sales, making the move into bricks and mortar stores appealing for many e-commerce startups. Major new brands such as Allbirds, Everlane, Naadam, and Casper are pursuing ambitious plans to roll out across the US and Europe. Yet these shops aren’t going to look or feel like the stores that currently fill large malls.

Unlike traditional bricks and mortar stores, these new concepts are prioritising experience over transactions. They know that customers will come to the store to check out new products, but are just as likely to buy online as on the spot. This means they can reduce their footprint by carrying less stock, while dedicating more space to events and community building experiences such as talks, parties or other gatherings.

Once consumers are using their phones to log into physical spaces, it fundamentally changes what can be understood about purchasing decisions. In the past, a shopper looking at their phone meant that a physical store is about to be undercut on price. Now, retailers are discovering the value of the data that can be obtained when shoppers integrate their online and offline shopping.

As the lines between offline and online shopping continue to blur, we can expect the retail real estate market to change significantly. Smaller stores with less inventory will become more common, while experiences and events are increasingly enticing shoppers. Online-only stores will venture into the high street with a renewed emphasis on creating destinations worth visiting.

Flagship House of Fraser stores may now lay quiet, but it won’t be long until new concepts take their place. And when they do, remember to bring your phone — otherwise you might not be able to log in.

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