The good news for retail property is it’s becoming very clear that - with a handful of the very largest exceptions - the future is multichannel, not pure-play.

There has been a general assumption that the advent of the multichannel age is bad for retail property. And it remains the case that the future of physical non-food retailers lies in fewer, bigger, better stores where a brand can really put its best foot forward.

But equally it’s becoming abundantly clear that except for the very biggest players, the pure-play model isn’t working. The £25m paid for Play.com - which was once valued by some at £400m - and the £11m paid by N Brown for Figleaves show that unless you have the scale of an Amazon or an Asos (or, at the opposite end, are so niche not to be competing in the mass-market) the model is bust.

I think there are two reasons for this. One is that having a physical brand helps consumers have trust in a business and encourage shoppers to turn to them online rather than retailers they haven’t seen on the high street. Unless you’re truly massive, it’s hard to have a brand if it only exists in a virtual form.

The other reason is that increasingly shoppers are identifying click-and-collect as their preferred model for online shopping. While well-executed home delivery will always have a place, too often it’s inconvenient or poorly done, and the customer is quite happy to pick the order up if they know it will be ready for them. The queues at John Lewis’s collection counters, and House of Fraser’s new online-only store format, are testament to what’s hapenning.

Even the biggest online retailers are now starting to dabble in physical manifestations of the brand, whether it’s Amazon with its collection lockers or Ocado’s virtual shopping wall. Asos has never ruled out opening a physical store either. For these companies these plans fall into the category of interesting experiments, but for smaller pure plays, the issue is more pressing.

Bad news for them, but good news for shopping centre and retail park owners. The key is that their holdings are in the right locations and suit the multichannel model - good access is now more important than ever. If that’s the case, there’s plenty of life in the store yet.

 

 

Topics