A Bright Future for Retail
Well there’s a surprising title at a time when barely a day passes without a gloomy headline about the retail sector. The demise of traditional shopping habits, the rise and rise of online, shrinking profits for department store operators, retailers seeking to renegotiate leases, the questionable use of CVAs, crippling business rates and developers rethinking their plans for shopping developments are just some of the challenging factors that the retail world faces. Of course that all has an impact on retail assets, development and construction.
So where’s the bright future in all of that?
As with all parts of the construction industry there are ups and downs, but of all the construction sectors we are involved in, the retail sector has never failed to adapt. There is no doubt that the advent of the digital age in retail has inspired a significant rethink on how the online world interacts with physical retail stores. However that challenge of omni-channel integrated retail has been coming for ten years and has really manifested itself in the past couple of years with the advent of online purchasing coupled with same or next day delivery.
Social media and smart phone shopping is here to stay, but people are ultimately social creatures and physical retail and leisure schemes bring people together for experiences. One of the most prevalent online retailers Amazon has recognised this and has trialed its physical Amazon Go store. This uses artificial intelligence, cameras, motion sensors and a link to shoppers smart phones to enable an automated check-out process. Most recently they have suggested that 3,000 physical Amazon Go stores are planned.
In China there have been online convenience stores for some time and new food concepts seem to be emerging. Technology will inevitably enhance physical retail in the very near future by improving the experience through bespoke offers and discounting, augmented reality allowing you to visually and digitally “try on” clothes. This can avoid a physical need to check out as well as facilitating delivery of the goods you’ve purchased before you get home thereby allowing you to carry on with the next part of your leisure and retail experience unhindered.
So how will all of this affect construction and development of retail? Back to the change and adaptation point, the physical assets will have to evolve to accommodate and incorporate this new technology. That might be larger or smaller physical stores, certainly an increased requirement for digital connectivity in the shopping centres and high streets, along with a re-think about how storage of goods works to facilitate the best possible customer service rivalling online for flexibility and availability of stock and sizes.
Technology will inevitably enhance physical retail in the very near future by improving the experience through bespoke offers and discounting, augmented reality allowing you to visually and digitally “try on” clothes
Without a doubt there are places where there is just too much or the wrong type of retail, particularly in high streets and there has to be a re-purposing to maintain vibrancy in these areas. The obvious change, and one that is already happening in some places, is the change of retail to residential and this can be an opportunity for incorporating higher quality retail spaces within a development to support new communities. Last mile delivery to help with the huge demand for retail distribution will also be a consideration for the change of use.
In the ongoing evolution of retail, forward thinking and dynamic owners, developers and local authorities (with their mandate to create and maintain employment in their town and city centres) are already active in embracing the future retail challenge and will be well placed to maximise opportunities that this rapidly changing market presents.
Whilst the challenges of property valuation, business rates and disruptive technology are here and looming large, we know that ultimately retail will evolve and adapt, just as it has for the hundreds of years since shops first existed. With that will come the evolution of the physical store and a more integrated and connected service in our towns and cities.
A bright future for retail indeed.