23 Nov 2023 By By Alice Davies
Once bustling hubs of commerce and community, UK highstreets are undergoing a dramatic transformation. Traditional brick-and-mortar stores are facing unprecedented challenges in the wake of the eCommerce revolution. But it’s not just this revolution that’s affecting the high street. The cost of living and rising operational costs are leaving both large and small retailers in a chokehold. Let’s delve into the various factors contributing to the changing landscape of UK high streets, exploring the impact of eCommerce and other key trends reshaping the retail sector.
eCommerce has experienced explosive growth over the past two decades - and this growth is set to continue. The pandemic created growth of 47% for internet retail sales, the fastest rate recorded in the previous ten years. And since this unprecedented event, consumers' buying habits have stayed online. The convenience of shopping from the comfort of one's home, coupled with the vast array of (and often exclusive) products available online, has revolutionised consumer behaviour. As a result, traditional brick-and-mortar stores are grappling with the challenge of retaining their relevance in this digital age.
One of the primary drivers behind the shift towards eCommerce is changing consumer preferences. Consumers now value convenience and variety above all else. With eCommerce platforms offering a wide selection of products and the ability to shop 24/7 (and some even with same-day delivery), consumers are flocking to online retailers. This shift has put immense pressure on traditional stores to adapt and provide unique in-store experiences to draw customers back. eCommerce allows consumers to shop around more too. Instead of trawling from one physical store to another, with a few clicks, you can easily compare products online. In 2023 online, Google has seen a rise in search interest around reviews and ratings - something that’s tricky to emulate in-store.
The COVID-19 pandemic served as a catalyst for the growth of eCommerce. Lockdowns and social distancing measures forced many consumers to turn to online shopping as a safer alternative. Even as restrictions eased, a significant portion of shoppers continued to prefer the convenience and safety of online purchases. This acceleration in eCommerce adoption further exacerbated the challenges faced by brick-and-mortar stores.
Although consumers still tend to lean towards their laptops and computers when making expensive online purchases, mobile devices, such as smartphones and tablets, now hold the majority share when it comes to online eCommerce traffic. Consumers feel more comfortable than ever before when purchasing online via their phones - leaving the high street to take the hit.
The high street, once synonymous with vibrant shopping districts and the best way to spend a Saturday in your local town, is now marred by empty storefronts and declining foot traffic. Several factors have contributed to this decline:
Many well-established retailers have been unable to withstand the onslaught of eCommerce competition and changing consumer preferences. Iconic brands such as Debenhams, Arcadia Group (Topshop etc.), and Laura Ashley have either closed their doors or significantly downsized their physical presence. These closures have left glaring gaps in high streets and retail parks across the country. More recently, Wilko has shut all 400 of its UK stores, but the brand still maintains its online presence.
Operating physical stores comes with substantial overhead costs, including rent, utilities, and staffing. As eCommerce continues to gain dominance, brick-and-mortar retailers find it increasingly challenging to justify these expenses, especially when online sales are often more cost-effective. Paired with the increased cost-of-living, this has and will continue to cause many UK retailers problems. Barclays’ research shows that UK consumers are aiming to reduce their spending by between 25% - 30% before the end of the year, which will have further implications for brick-and-mortar retailers.
Some retailers are adopting a hybrid approach, combining traditional stores with eCommerce strategies. This involves using physical stores as fulfilment centres or leveraging in-store technology to enhance the shopping experience. Hybrid models seek to strike a balance between the convenience of eCommerce and the tactile experience of shopping in-store. According to Barclays, the click-and-collect economy is worth over £42bn, which is 8.4% of the UK’s total retail spending.
Despite the challenges posed by eCommerce, many brick-and-mortar stores in the UK are actively seeking ways to adapt and thrive. These survival strategies are reshaping the high street in innovative ways:
To remain competitive, many traditional retailers are incorporating technology into their stores. This includes using augmented reality (AR) for virtual try-ons, interactive displays, and contactless payment options. These tech-driven enhancements create a more engaging and convenient shopping experience. It also means they’re maintaining the edge with younger generations.
Some retailers have pivoted towards experiential retail, emphasising the in-store experience as a key differentiator. By offering workshops, events, and unique in-store activations, these businesses aim to provide customers with memorable experiences that cannot be replicated online. It’s something that retailers have done for years, but now it’s a real tactic to increase foot traffic and keep brick-and-mortar stores relevant. Whether or not this is successful is another thought entirely.
The term ‘retailtainment’ has been coined recently - used to describe how retailers use entertainment in-store to attract customers. But again, this is a tactic that has been employed for decades - and for the likes of big brand names like Debenhams and BHS, it didn’t work.
According to Fashion Network, 81% of consumers are willing to pay more for experiences that elevate their shopping experience. This rise in the experience economy is exciting to watch, but needs fresh ideas to keep consumers engaged (and willing to spend).
High streets are increasingly becoming hubs for local and sustainable businesses. Consumers are showing a growing interest in supporting local communities and reducing their carbon footprint. Independent retailers and sustainable brands are thriving in this environment, providing consumers with a sense of purpose and connection. This is great for the independent market, especially as, according to Statista, high street retail footfall saw an increase of 8.6% in March 2023.
The fate of the high street is not solely determined by market forces; government policies and community initiatives also play a vital role in shaping the retail landscape.
The UK government has recognised the importance of revitalising high streets and has introduced various support measures. These include grants, tax incentives, and initiatives aimed at rejuvenating town centres. These efforts aim to create a more favourable environment for brick-and-mortar businesses. Whether or not these incentives are enough is to be determined.
Local communities are at the heart of high street revival efforts. Community-led initiatives, such as pop-up markets, street fairs, and art installations, can attract foot traffic and foster a sense of belonging. Building strong local networks and partnerships is crucial for the long-term success of high streets.
As the landscape of brick-and-mortar stores continues to evolve, several key trends and possibilities emerge:
Many retailers are opting for smaller, more curated spaces that reduce overhead costs and provide a unique shopping experience. These spaces may focus on niche products or exclusive collections, drawing in consumers seeking something special.
The lines between online and offline shopping are blurring. Retailers are adopting omnichannel strategies that seamlessly integrate physical and digital experiences. This approach allows customers to shop how and when they prefer, whether online, in-store, or a combination of both. As we’ve seen with the eCommerce revolution, choice is everything for consumers - and retailers have to be careful to remove an option altogether - albeit it being an expensive one to run.
Sustainability is increasingly becoming a competitive advantage for brick-and-mortar stores. In fact, 76% of consumers are calling out for companies to take the initiative to reduce their environmental footprint and 79% of consumers stated they were very likely to choose a particular retailer if they offered a wider assortment of sustainable options in-store. Consumers are gravitating towards eco-friendly brands and retailers that prioritise ethical practices. Incorporating sustainable measures into business operations can attract environmentally-conscious customers.
Data analytics and customer insights are becoming critical for physical retailers. Understanding customer behaviour, preferences, and shopping patterns can help retailers tailor their offerings and marketing strategies. This data-driven approach can lead to increased customer loyalty and sales.
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