Revenge retail tastes sweet…… for now
After months of essential-only spending, the public response to retailers opening their doors a few weeks back was, quite literally, overwhelming, with mass crowds and queues that snaked round the block drawing mainstream and social media attention; offering the very boost the beleaguered sector needed.
We were somewhat prepared for this surge; the trend – revenge retail – was coined back in March on the back of early indicators from China, where consumers starved of the physical experience of spending money could all but wait to get their wallets out again when lockdown restrictions eased.
While welcomed good news however, many in the sector fear the level of revenge spending we’re seeing isn’t sustainable and that the spending power of the consumer may dip as rapidly as it rose, as confidence cools when the novelty wears off. And that may be so.
Bricks and mortar retail and reduced consumer spend are not strange bedfellows – the sector has weathered its fair share of downturns and, pre-pandemic, the most successful brands and retail schemes had begun to see that they had something in their arsenal that clicks couldn’t offer.
The very thing that post-pandemic, consumers are crying out for again – physical experience where housebound shoppers are finally able to flex their legs……and wallets.
So what’s next for retail?
The population of 66.5m people in the UK will continue to shop and consume. Retail sales in the UK in 2019 were £394bn; this is not going to stop, it is going to adapt, but this is not new – retail has been adapting for generations. The pandemic has fast tracked in a number of weeks what has been happening slowly and could have taken years. Online sales pre Covid were 19%, it is reported to have risen to nearly 40% during lock-down.
Experiential retail had been hotting up pre-pandemic and there is nothing to suggest it cannot continue to thrive in the post pandemic world.
Millennials like instagramable moments as much, if not more, than they like instagramable items and the baby boomers are moving in the same direction, having accumulated products over many years. By giving discerning shoppers the right mix of brands, bargains and experiences, physical retail schemes and stores are in a really good position to offer something that ecommerce can never offer with its one-click efficiencies. The challenge for retailers and landlords will be to deliver this in a socially distant world.
We will see casualties – many shopping centres and retail schemes may find themselves operating at minimum capacity, facing more empty units than ever before. We have only last week heard the news that Intu, the UK’s most recognisable shopping centre owner, has gone into administration.
For many, plans to incorporate leisure as a means of enhancing and broadening the experience may have to be put on the back burner.
But with challenge comes opportunity and solutions such as pop-ups may just breathe new life into struggling schemes. Pop-ups, whether big brand trials or giving space to local sellers, are both equally of interest to the consumer, and both viable solutions to navigating the new normal of retail in the months ahead.
An advantage shift to outdoor and out-of-town schemes is already being witnessed. Sales at Lotus Property-owned schemes have certainly suggested there’s nothing cold about the revenge retail being served in Northern Ireland. Big brand sports and aspirational retailers have cited two particular schemes – The Boulevard and The Junction – as their top performing store locations in the UK and even Europe in some cases.
This pandemic is creating a defining moment for consumer behaviour. Retailing will look different moving forward. Is this a bad thing? I don’t believe so, and having weathered the ecommerce storm and now a global pandemic, bricks and mortar retail is unbelievably still standing. Retailers and Landlords will be required to build on these changes, adapt for them and work together. With the right relationship between landlord and tenant, bricks and mortar is ready to adapt and ready for its renaissance.
Alastair Coulson, Managing Director, Lotus Property