By Ben Simmons
Economic uncertainty, technological advances and increasingly savvy consumers mean that the retail landscape is changing at a faster pace than most retailers will be able to respond to.
In the first in a series called The Changing Face of Retail, a new report from Deloitte highlights how the boundaries between physical and virtual space are becoming blurred, and how the traditional role of the store is being challenged. The Store of the Future report suggests how retailers should respond to these issues, and plan their store strategy in a multi-channel world where the connected consumer is king.
It suggests that as the role of stores changes, retailers will need to think about how they can consolidate and re-shape their real estate portfolios. To remain competitive, retailers may have to reduce their property portfolios by 30—40% in the next five years and adapt what remains to meet the changing demands of consumers
Silvia Rindone, director in the retail consulting practice at Deloitte and author of the report notes that the implications will affect the future of retail real estate investment:
“The majority of UK retailers have simply got too many stores. Total floor space has decreased in recent years and this will continue as more and more sales migrate to the internet, with total online sales forecast to reach £43 billion by 2015, accounting for 14% of all retail sales. Some 22% of people did not buy their last item of clothing or accessories in store and only 9% of customers want to see the full product range in store. Such statistics lend support to the proposition that the trend towards slimmer, smarter retail property portfolios is likely to accelerate markedly as retailers start to accommodate changing consumer behaviours.”
Hugo Clark, a director in Deloitte’s real estate practice who advises retailers on their store portfolios, added: “The role of stores is changing but that does not mean they will be less important. The store of the future will be less about driving product sales and more about a holistic brand experience. Stores will need to redefine themselves as destinations, as spaces to interact with customers. However, the physical and the digital must not exist in isolation. A consequence of the fluidity between the virtual and actual store is that less physical retail space will be needed.”
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