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MONTAGU EVANS PRESENTS...NEWS & ARTICLES

| 3 minutes read

UNDERSTANDING YOUR CONSUMER IN THE BATTLE OF 'PANDEMIC ON THE HIGH STREET'

Napoleon is often quoted as calling our country a ‘nation of shopkeepers’, meaning we were a nation of merchant traders at heart with retailing in our blood (a compliment). While the original got lost in translation and was taken as a slur that we weren’t fit for battle, I think he had a point.

According to Retail Economics, in 2019 UK retail sales were a touch under £400 billion with a third of all consumer spending going through retail and with almost 3 million people being employed directly in the retail sector. Of these sales 19% were made online in 2019, which has increased to over 30% in 2020 (so far, albeit under unusual circumstances) but it remains the case that the UK loves to shop and not just online.

Physical retail is in our blood. We like the theatre that only a visit to a physical outlet can provide, the interaction with people, to touch and feel the product, try it on, to ask our friends or family who are shopping with us their views and – as crazy as it seems to some – we are prepared to queue, jostle and bundle our way into shops to get our fix despite the risks of the pandemic.

In these circumstances, retailers have the immense challenge of trying to capture all the positives we require from physical shopping but in a controlled and risk averse way, ultimately limiting entry and capacity in stores and handling of merchandise, against the economics of running the store profitably, with undoubtedly less sales against the significant outgoings of staff, rent, rates, etc.

It’s true that some stores can be loss leaders for retailers not making a profit directly but having a wider impact on the brand through global advertising to the market (here and abroad). Having representation in Bond Street has often been cited here – rents are so high and making a profit can be difficult – but no retailer can have a whole portfolio of loss leading stores unless internet sales are strong enough to sustain this long term, and not many are.

So should retailers carry less stock in their stores, fewer lines, fewer size variations and concentrate on theatre and connection with the brand leaving mainstream sales to be progressed through their internet portals? Should they separate click & collect functions either in store with different entry and exit points or even from the main physical offer?

One national fashion retailer is currently looking at putting click & collect pods in supermarket car parks to solely deal with internet sales and returns without the need to have the expense of a full blown retail offer in markets that can’t sustain it. If customers want to visit a shop with the full range then they go to the nearest large town or city or retail park where parking is free and directly outside of the store and its easier for the retailer to control social distancing in the larger premises.

There are other examples where changes are going to be more difficult. While some customers make appointments to visit stores and in return have a dedicated sales assistant for a set time providing better tailored customer service, is this realistic for value retailers like Primark and Sports Direct who rely on mass market high footfall and regular visits?

Maybe it doesn’t have to be this way because consumers it would seem from the past two days have different perceptions of risk versus reward and for some these changes may not be as important as we might think.

It also remains to be seen how these crowded shops will affect the recovery of both our healthcare system and economy – clearly there are concerns as a result of retail openings as well as opportunities – but this is an important lesson about where retailers’ attention should be. The most successful names will be focused on their own customers, listening to what they are saying and reacting accordingly rather than work on an assumption that one size fits all.

Shoppers rush to the High Street as England stores reopen

Tags

agency, retail & leisure, landlord, tenant, occupier, town centre, covid-19, london, insight