What’s in store for the high street?

It’s been a stormy few years for the high street, and there’s no peaceful harbour on the horizon just yet. From the boarded-up windows on smaller high streets to the large-scale failure of household names, no one has escaped, and few will be immune to the changes that are yet to be wrought on retail by shifting shopping trends. 

But at some point retail will come to the end of this particular upheaval and arrive at something approaching normality. So once new technologies are bedded in and business models have settled with the dust, what will the high street look like? 

The changes will be myriad – some big names will manage to evolve and survive, other newer names will join them, while stores will change in size and scope. Consumers, meanwhile, will keep adapting as mobile technology continues to develop.

“Everyone’s agreed that we are undergoing a transformation in terms of retailing at the moment,” says Crispin Haywood, shopper marketing and analytics director at consultancy OgilvyAction. “We are in a period of massive change, and not just because of the recession, but because the high street is due for a change.”

Future proof

In many ways, the future high street might look superficially similar to how it does at the moment. But look at bit closer and many of the details will be different. Department stores that previously relied on stocking their whole range in-store will now use kiosks and smaller premises to reach some towns, while fashion retailers will have larger stores in fewer locations. 

Mobile technology will be all-pervasive, enabling everything from a bus stop to a tube station wall to act as a shop. And everywhere, the emphasis will be on creating an experience and enticing people away from online shopping into physical realms. 

Online shopping is likely to mop up some of the sales where convenience is the determining factor, Haywood says, meaning bricks-and-mortar will need to compete in other ways. With websites giving customers access to a huge range of goods at any time of day, stores that close at 6pm and have limited amounts of stock will need something else. 

He says: “The area they can compete in is providing an experience, a sensory engagement. Retailers need to make it a destination, and make it a place where people want to meet up. That’s what the retail environment has got to develop.”

Which means everything from events to restaurants to flawless customer service – it will all play a role in encouraging people out. Haywood cites Disney stores as an example of how to immerse shoppers. Staff are in costume, digital technology is used to catch children’s attention and the overall aim is to create a bit of theatre around the shopping experience. 

“You’ve got to provide an immersive, engaging event that people actually want to go to,” he says. “It’s not all about having lots of shelves and lots of products. It’s about creating an experience that educates people, with knowledgeable store staff on hand that are enthusiastic about the brand.” Apple is another obvious example – its whole store experience conspires to support and strengthen its brand experience. 

These kinds of ideas will require creativity and, of course, much of the most innovative ideas in retailing over the past decade have come from etailers. From eBay’s pop-up shops that allow shoppers to buy goods using their mobile phones and QR codes, to Net-a-Porter’s augmented reality window shop, some of the more exciting initiatives on the high street are already coming from online players. 

This is likely to continue, says Haywood, with non-traditional retailers likely to keep entering the market place. Microsoft is likely to open UK stores within the next year or so, while Google has lodged a planning application for a retail store at its European headquarters in Dublin.  

Staying on target

Google head of retail in the UK Peter Fitzgerald says the company’s focus for now is to help businesses use the web effectively. But he adds the onus will be on retailers to use this technology creatively. “You need to make the experience good for shoppers with the right technology – you can make products animated with QR codes or augmented reality, for instance. It’s not about getting as many people as possible into your store, it’s about getting the right kind of people that resonate with your brand.”

And if such stiff competition can be expected from big online names, it’s likely that more traditional retailers will face the chop. Chris Sanderson, co-founder of the Future Laboratory, says the bloodbath of the last couple of years isn’t over yet. “It wouldn’t surprise me if we saw another 20% of the brands we currently take for granted go,” he says. 

In their place, he says, successful brands from fast-growth developing countries like China and Russia will start to creep over to the UK as their economic power continues to grow. 

Russian sports retailer Bosco Sports and Chinese retailer Bosideng have both taken their first steps into the UK already, and Jonathan de Mello, head of retail consultancy at property agency CBRE, says this is likely to be just the start of a slow march of Indian, Chinese and other retailers trying their hand at the UK market. 

A fight for resources

Foreign fascias won’t be the only consequence of the growing power of China and its ilk. As the Chinese middle classes swell, it will have a direct impact on UK shoppers and the retailers that serve them, Sanderson says. “Retailers that service the middle market will find the next 10 years extremely tough,” he says. “We will begin to see the impact of aggressive growth in the middle classes in growing economies.”

These new middle classes will start to demand the services that UK shoppers have taken for granted for years, with the eventual consequence of everything from meat to pineapples becoming almost luxury products in the UK. “It will put enormous stress on the business services that the middle classes in the UK have taken for granted over the past 50 years. The cost of living won’t start decreasing again,” says Sanderson. Prices will increase as more people compete for resources, meaning many UK consumers won’t be able to afford products they’ve previously relied on. 

This means that the polarisation in the retail market that has to some extent already started will continue. Primark and Burberry are two of the UK’s biggest success stories over the past few years, and this sets the scene for the emergence of two wildly different retail strands. Retailers will either need to compete on pure price, or create an experience and product shoppers are willing to pay for. This will in turn lead to two types of high street, says Wendy Lanchin, director of planning at agency The Marketing Store. She says: “In more affluent areas the catchment would be able to support experiential and inspirational retail offers while in poorer areas there might be more emphasis on new forms of trading like ‘swapping’.”

Those stuck in the middle market, Sanderson predicts, will struggle. “We’ll begin to reassess just how much we need when money continues to be tight. This will begin to have an impact on mid-range brands that are based on systems that are based on mass production.” 

As a result retailers will have to think carefully about whether their business model might need to evolve, Sanderson says. “Some retailers will go out of business because they’ll no longer have a market for foods grown half way across the world, for instance. The cost of buying a pineapple will once again be out of reach.”

So locally produced food will become more of a necessity as well as a trend, supporting the current shift that is already occurring as shoppers choose seasonal food. Farmers’ markets will play a role in boosting footfall on the high street and initiatives like ‘cash mobs’ – where shoppers descend en masse on local businesses, organised via the internet – are growing as shoppers act to save certain businesses and services. “The fight is on in some parts of the country to save their local high street,” says Sanderson. “People don’t want to see it die.”

The high street isn’t the only shopping destination that will change – shopping malls are likely to be different too. Lanchin predicts malls will become more differentiated, with each place organised along cohesive themes such as fashion or food rather than every big retailer taking space in a shopping centre. Lanchin says: “Currently we have two Westfield centres in London, but each provides a very similar selection. We think in the future the malls will also take on personalities and truly become brands in their own right.”

However things pan out, it’s both a stressful and exciting time to be in retail. From the gleaming success of Apple to the boarded up windows of Woolworths, a lot has happened over the past 10 years that the industry didn’t expect. And as the winds of change continue to blow, the same will be said of the coming decade – this state of flux shows no signs of settling just yet.