When Next issued its recent results it highlighted that its physical stores now account for not much more than a third (35%) of its total turnover, which would suggest a business with dwindling interest in high street stores. Far from it. Its stores still represent an important part of the company.
It has over 460 outlets and very actively manages them because they are no longer solely used as locations to sell goods but also act as click & collect hubs for Next’s continually growing online sales. The company values its stores on a number of metrics and not just the actual sales they generate. These determine Next’s position on lease negotiations and whether relocations into other units are a more favourable move in order to support its multi-channel model that it now firmly applies to all its stores.
This changing status of the stores at Next encapsulates the evolutionary role of bricks and mortar on our high streets and in shopping centres up and down the country. Yes, there have been many reports of store closures around the country including one in the Guardian recently that suggested 50 stores a day closed in 2022 and that we can expect very much the same for this year.
Portas is positive
But there is still plenty to be positive about as the physical store continues to find its feet in a world very different from that pre-internet 20-plus years. At a recent event held by retail software specialists Xpedition the retail guru Mary Portas suggested the industry will be focused on “less physical space but better” in the future and that this very much involves retailers incorporating more experiences in their physical spaces.
This has certainly been reflected in the strategy of outdoor clothing and accessories brand Arc’teryx that has just announced it is significantly upsizing its Covent Garden store in order that it can “fully immerse our guests into an elevated experience of our brand”. This involves the new store housing a broader range of products and services including the company’s circularity programme that focuses on care and repair as well as up-cycling of its products.
This action is not unusual as many well-known brands have recognised the value of having a smaller number of large sized flagships rather than a sprawling portfolio of smaller outlets that fail to deliver fully on the brand experience.
This strategy is being felt at many shopping centres including those owned by Unibail-Rodamco-Westfield (URW), with its Westfield London and Westfield Stratford City enjoying a rise in demand from retailers increasing the size of their stores. These include Whistles, beauty brand Rituals, luxury jewellery chain Bucherer, and Zara, which upped its store space by almost 30%, along with EE whose Studio flagship store tripled its original footprint.
Open for business
There is little doubt that bricks and mortar is as crucial as it has ever been in the world of retail. In only the past month both Selfridges and Jigsaw delivered results revealing that they have enjoyed a rebound in sales over the past year that has brought their in-store trading levels close to those recorded pre-pandemic.
Meanwhile, major Covent Garden landlord Shaftsbury Capital announced that 25 new retail, hospitality and leisure stores have opened in the area over the past six months. Among these are some new retail brands, including HOKA, which is opening its first ever retail location in Europe and Balibaris, which is opening its debut West End store in the area. In addition, Lush is returning to Covent Garden after 10 years away with a store that includes the retailer’s Spa concept, which further highlights the growing experiential aspect of stores today.
Michelle McGrath, executive director at Shaftesbury Capital, says: “During our ownership, we have introduced over 250 new shopping and dining concepts to Covent Garden and continue to see excellent demand for our unique spaces, from brands aligned with our strategy to attract world class global, British and independent brands.”
The appeal of the physical store is also seeing a growing number of online-only retailers venture onto the high street. The latest is fashion business Sosander that has announced its decision to adopt a more omni-channel strategy with sites being sourced in what it describes as “affluent towns and thriving high streets”.
Ali Hall, co-chief executive of Sosander, no doubt speaks for many online-only brands when she says: “We know that the added value of being able to touch and feel our clothes will appeal to our target customers. With a clear roll-out plan in place and strict criteria around the location of potential stores, we are confident that our stores will enable us to accelerate our market share and increase the awareness of our brand.”
It is this thinking – along with the recognition of many large brand owners that delivering rich experiences requires physical space – that suggests the future of the store is extremely secure as a vital part of the retail landscape.