High Street Hope
4 reasons to believe in the future of our town centres
This week’s post is inspired by 2 things. The first is a terrific discussion with Laura Harris, a passionate advocate for the High Street who has set up a LinkedIn group dedicated to finding positive stories of the rejuvenation of our town centres. The second was a visit (my first ever, in fact) to Retail Week Live yesterday and some of the discussions that arose there.
It is easy, of course, to come up with reasons why our High Streets should survive. They play an important social role, connecting people and bringing vibrancy and life to the places where we live. This post, though, is not about reasons why they should survive but rather about some reasons why they will. And interestingly, those reasons come not from sentiment or wishful thinking but from some objective realities about the economics of retailing and from some insight into the implications of the current wave of technology innovation.
Can’t wait for some reasons to be cheerful? Here are four:
Space matters
An interesting thing happens when retailers who trade largely on edge-of-town retail parks get together - it is the collective realisation that they are struggling to open as many stores as they want to. Retail parks are of finite size, and often restricted from growth by the very road network that keeps them alive. And in recent years, new tenants have arrived as discounters like B&M and food retailers like M&S have started to expand their retail park estates.
The result is shortage of space. And guess what? One of the responses to that shortage of space is that more and more retailers that you would traditionally think of as retail park inhabitants are starting to explore smaller formats that they can open in town centres. Finding a way to create in 3k sq ft what you are used to doing in 10k or 15k sq ft is not easy, but as a response to rising rents and lower availability in retail parks that is exactly what is happening. Ironic, isn’t it, that so many High Streets were decimated by edge-of-town developments in the first place but may now see the gradual return of some of those brands.
That in turn, of course, turns the vicious spiral of the High Street (fewer retailers, less reason to visit, even more closures) into the virtuous circle as new brands give local people more reasons to pop into town.
The economics of omnichannel
I’ve written before about the gradual journey more retailers are going on towards a genuinely seamless cross-channel experience where you can buy online, collect in store, return to store and so on.
Having stores as part of your mix is a key enabler, ironically, of a strong online offering for a simple economic reason - processing returns and deliveries through your own store estate is massively more economic than using delivery companies or the post office.
I spoke to one retailer yesterday who is processing 80% of their returns through their (mixed High Street and Retail Park) store estate - giving them a huge economic advantage over rivals with either a smaller estate or who only operate online.
Ironically, then, this march towards omnichannel operations favours store locations that people can pop back to to pick up an order or process a return - step forward the High Street! Even previously evangelical pureplay retailers are realising this, and many build the business case for a store estate mainly on the amount those stores will save them on both customer acquisition costs and returns processing.
Doubly ironic, then, that Retail Week Live yesterday was opened by Amazon pitching their “more skus, lower prices, faster delivery” online mantra just as the retail industry is realising that a more omnichannel and customer oriented model is the future.
The Human Touch
In the midst of a lot of talk yesterday about how Generative AI will change the world (more on that below), a different truth was visible to anyone who stepped back and looked around.
The mean reason people had come to the conference was to meet each other, share ideas and perspectives and build connections. The stalls that were there were not offering you the opportunity to have a text dialogue with their large language model, they were populated by actual people looking to meet, pitch and build relationships with other actual people.
It is a fundamental truth of retailing that building a connection with customers in your store is the beginning of any sales process. There is lots of research, for example, showing that the fundamental driver of any measure of customer experience in a store visit is whether or not anyone said hello when the customer first walked in - the basic human interaction turns out to be commercially critical.
I was reminded yet again of this basic lesson on a visit to the Lakeland store in Cambridge a few weeks ago. The store looked great, was well lit and well stocked but what really made the visit interesting was that the team in store were absolutely acing customer interaction - saying hello, having a bit of banter about the weather and, of course, answering questions about products and services. It was a real case-study in small-format retailing done well.
Like me, I suspect you see that all the time, but it is a hard thing to get right consistently. It is easier in specialist retail than in a huge supermarket, it is easier (in my experience) in smaller format stores than larger ones and it is easier when an assisted sale is a core part of the experience. And all of these things point back to the High Street. If we can consistently deliver the ‘human touch’ in our stores (whether chain or indie), it gives customers yet another reason to log-off the internet giants and pop down to the town centre.
AI is coming
Predictably, much of the discussion at the retail conference yesterday was about AI, and Generative AI in particular.
Fascinatingly, though, the main conclusion I took away was that over the next few years one of the things AI is going to do is make sophisticated things like customer profiling, segmentation and personalised marketing much more ‘the norm’ and much more accessible to smaller businesses. Rather than the remit of huge retailers with data science teams of hundreds, suddenly your independent business on the High Street will be able to do the same kinds of things.
And that gets really interesting when you marry the last 2 points together. If I just look at three independent retailers where I live (Wild and Rust, The Henley Larder and Laurence Menswear), I’m already lost with admiration for the energy they put into both their in-store customer interactions and their social media feeds. (And I’m sure you know many similar businesses in your town too). If I imagine that energy and customer focus being further augmented by easily accessible AI technologies, it gets harder and harder to imagine how the e-commerce giants can compete with them!
Where next?
So there are 4 reasons why I think the High Street has a future in the UK. And of course, I could have added to that eclectic list the hard work being done by councils, town-teams, BIDs, retailer associations and individual retailers up and down the country too.
None of that, of course, means the future is unambiguously rosy or that any of this will be easy. Commercial property is still an odd market in need of innovation, our planning laws remain ridiculous and of course there is the small matter of Business Rates that needs attending to as well.
But the next time you read a story, here or anywhere else, about a big retail failure and the associated store closures, remember the tens of thousands of retailers up and down the country who are not only still here, but still have plenty of fight left in them too.