Retail Trends 2020
At ASC we work with a wide range of retail brands, restauranteurs, café owners, streetfood operators and leisure businesses to assist in finding the ideal location to suit their requirements. We also work with developers to plan new retail quarters, and with local authorities on the debate around the future of the High Street.
Each year we provide our clients with our retail and consumer trends analysis, and to kick-off 2020 we thought we would give a snippet for our LinkedIn friends and followers.
We remain champions of the retail sector and are extremely excited by the ideas and concepts our clients are bringing to market. It is our opinion that the High Street is not dying – although it is certainly changing - but if businesses do not adapt to the shift in consumer demand they will not survive!
New Retail and F & B Spaces
We are still building too many retail spaces, particularly in non-prime locations. We need to move away from shops being the default position for ground floor commercial spaces in new developments and incorporate other forms of tenure to support retail and leisure to make and activate places.
A recent study by Savills reported that three quarters of retail landlords are considering repurposing their assets and schemes but would prefer to explore a revitalised retail and leisure offer before considering alternative uses [1].
Whilst we agree with the sentiment, we feel new developments need to change from the conventional wisdom and create new ways of delivering quality footfall for shops, leisure and hospitality. These businesses will not survive unless strong daytime footfall is created, with new ways of generating excitement and purpose for consumers who have currently given up on the High Street and see it as a last option for their needs.
To be truly fit for purpose new developments need to include workspace and other commercial and cultural space propositions to generate daytime trade and footfall.
Fit Out and Specification
Fit out and specification is the perennial issue with new developments and is where developers always seek to cut corners. Unless you are in a super prime location you cannot just leave units boarded up as shell and core. With many High Streets and city centres having a plethora of readily available retail units, why expect an operator to put in the glass, doors and extraction?
Those who are innovating are fitting out units to white box standard and making them ready for occupation, whilst also providing a range of incentive packages to lease units and build sustainable long-term partnerships with occupiers.
Activations and Events
Shopping centres and High Streets are still poor at putting on innovative activations and consumer experiences to attract new footfall. Despite retail suffering, store owners both large and small are not very good at coming together as a collective to contribute towards events that drive consumers to visit.
We predict that this is set to change in 2020, with shop and restaurant operators starting to understand the power of placemaking and community building, and that following this shopping centres will raise their game as well.
Online
Online shopping has now breeched the 20% of the market with ￡1 of every ￡5 spent online [2]. However, 90% of all UK retail spend is still influenced by bricks and mortar stores [3]. CACI research reveals that customers increasingly want and expect an omnichannel experience.
The key opportunity is where offline converges with online. We are increasingly working with both High Street brands and online retailers to look at how to create new physical retail experiences that meet the changing demands of consumers. We predict in 2020 this will grow exponentially.
Online should not be seen as a threat but as a huge opportunity to bring new consumers to the High Street.
Experiential
Consumers are increasingly spending income on experiences rather than products for example John Lewis has unveiled a new-look department store that sees selling space replaced by “experience playgrounds”, where shoppers can hone barista or pasta-making skills or hang out in a rooftop orchard and farm shop.
The UK leisure sector is set to top ￡141 billion by 2022 driven by consumer quest for experiences [4]. The UK’s leisure market is forecast to grow from ￡129 billion in 2019, as consumers continue to seek “new ways to enjoy themselves and spend time with family and friends”, according to Mintel.
A key growth sector will be where leisure and retail converge to create experiences that friends and family can share. We expect large retail brands will re-allocate much more space in their stores to become experience led, and landlords to repurpose places to include a significantly greater experiential component.
Competitive Leisure
The rise of competitive socialising continues with the growth of key pioneer brands such as Bounce, Flight Club, Swingers, Junk Yard Golf and Dabbers Social Bingo, as consumers seek unique and immersive experiences.
One of the big new trends of the year has been the rise of the escape room. These types of uses are great fit for large units on High Streets and developments to replace retailers and create destinations in underutilised spaces.
We are seeing rapid growth with many new operators in the marketplace seeking new locations. The majority of these businesses are currently small chains with a few sites, but we expect to see serious investor funding in the sector.
We also predict that new formats of e-gaming will become prominent in High Streets and city centres in 2020.
We have lots of clients in this sector looking for opportunities.
Independent Retail
The quality independent store where consumers can get specialist knowledge from staff with real expertise continues to rise, particularly in affluent developments and High Streets, where we are seeing a return of delicatessens, hardware stores, furniture stores, interior design showrooms, bakeries and jewellers.
Consumers are interested in the provenance of goods and products and want to know that products are sustainable and local and make these informed decisions when they are purchasing.
The head of sustainability at Ikea reported consumers now focused on the meaning of buying, as opposed to what they are buying.
This translates as a strong growth of new entrepreneurial operators seeking to capitalise on consumer demands and trends, particularly within bespoke and artisan makers with a focus on food, drink and furniture. In 2020 we predict that the maker will truly become part of the High Street and we will see hybrid spaces that combine a mixture of maker and retail space. Those that can create theatre and then sell it to consumers will thrive.
We continue to see a growth in zero waste and convenience stores that sell unpackaged products, as consumers increasingly expect retailers help them to live more sustainable lifestyles.
Multi-channel Concepts
In our recent study tour of retail in NYC we found that retailers are finding new ways of attracting customers, with most of this focused on incorporating additional services or creating experiences.
In Brooklyn, J Crew have incorporated an upmarket men’s barber shop into the store. Many upmarket convenience stores have incorporated a café, bar and restaurant alongside zero waste/unpackaged food selection.
The key theme is that operators who are already renowned for a good product are carefully curating additional products and services that they want to introduce their client base to. Alongside this new product offer, the operators are also monopolising on other services that they know their customers already spend their money on elsewhere, by bringing them conveniently under one roof.
We have seen this in Shoreditch and Soho for years with shops including a café offer, but in NYC this has now been taken to the next level of collaboration.
Boutique Fitness
Even with the continued growth of residential gyms, home gyms and national chains we are finding that people spend more of their disposable income in the fitness sector, particularly in specialist boutique fitness centres that can be paid for by the class and without a membership or a contract.
The evolution and growth of yoga studios, boxing gyms, spin class centres and high intensity training centres continues at pace. We also are seeing an increase in requirements for climbing centres.
Operators have a strong appetite to expand in the right locations and this sector will undoubtedly continue to develop this year.
Wellbeing
Wellbeing is another major growth sector that continues to perform well and increasingly these uses are coming to the rescue to fill empty retail spaces.
The nail bar is now an essential and thriving part of every High Street and we predict these will develop into a more upmarket offer going forward. These will create a real destination and better experience for the consumer, which meets their lifestyle aspirations. We expect to see more operators such as Wah Nails, Guys and Dolls Parlour and Shoreditch Nails.
We continue to see a growth in mid and luxury market barber stores, as male consumers continue to increase the amount they will spend on these services. The beard is not being shaved off any time soon, and this sector will continue on an upward trajectory for the foreseeable future! We expect to see growth in brands such as Ted’s Grooming Room and Murdock London.
We also are seeing growth in health, wellbeing and beauty operators including tanning, hair styling and affordable spa treatments.
We predict that over the next year we will see many new operators move into the market to capture this consumer spend. We think the winners will be those operators that can provide mid-market prices in a luxury setting.
Music Venues and Clubs
The simple message is that we need more music venues, and despite lip service from local and regional government many operators are struggling to find locations where they are allowed to open new sites.
We have lots of operators willing to pay good rents, with some who are prepared to buy a freehold or long lease. The footfall generation and destination making of these venues has such a massive impact that should not be underestimated.
Services and Convenience Retail
It might not be the most exciting part of your tenant line-up, but services and convenience retail are important facilities and community places. These always become the stalwart of developments and High Streets and they can afford to pay the rent! Convenience is the key driver for getting consumers to a high street or a parade.
These are the workhorses of any location: the nail bars, the vape shops, dry cleaners, hairdressers, bottle shops and convenience stores. These remain a critical component for the success of a place and a key sector where consumers continue to spend and visit.
Food & Drink
Streetfood
The onward march of streetfood continues at pace but the original concept of alcohol and fast often unhealthy food needs to change, as consumer trends shift towards healthy food and drinking fewer alcoholic drinks.
We will see more healthy options along with vegan/vegetarian streetfood locations. In certain areas we are potentially reaching saturation of streetfood operations and we may see some consolidation in the market.
There is also likely to be more collaboration with experiential, competitive leisure and socialising operators.
We also believe that there will be growth in upmarket streetfood based in luxury settings; think Timeout Market in Dumbo, New York. Alongside this, more high-quality chefs will enter the scene to capitalise on its popularity and attract new customers.
We also think that shopping centres are now ripe locations for major streetfood operations, as they have the space and infrastructure to create exciting destinations.
Casual Dining
The national chains are really struggling, and, in many cases, covenants are not worth the paper they are written on! Certain shopping centres now look like graveyards to the national chains.
Of course, there are still superstar chains that are growing relentlessly such as Franco Manca and Pizza Pilgrims, but we feel a major chain now has a lifespan of less than 10 years. Chains such as Pizza Express that have been an enduring part of the High Street for decades will not happen again.
The chains that do thrive will be the ones that can constantly adapt to ever changing consumer demand. We feel there is still lots of opportunity particularly if operators pick up on key trends such as healthy eating, vegan and vegetarianism, the provenance of their product and creating a sustainable proposition. It is our view the High Street is crying out for a more restaurant-based version of Leon.
Single Product Specialists
The single product specialist, particularly within the ‘Grab and Go’ sector, has been one of the High Street and F & B performers of the year.
Think of brands such as and Pasta Remoli, Mr Bao and Island Poke. One product done really well with great provenance and quick service – most of these are still small operations currently, but we expect some serious investor funding and new concepts in 2020.
Cafés
We still don’t have enough cafés! Cafés have become the new work and meeting places and the sector remains buoyant, particularly for high quality independent operators.
There is plenty of space in the market for great operators who can provide a lounge like setting that caters for freelancers and workers as well as demand from people that simply want to drink coffee in a nice setting.
We also predict that next year coffee shops will start to open much later into the evening to capture the people who want to go out, but not to a pub, bar or restaurant. We still cannot get our heads around why people with prime real estate don’t work these places harder!
We have several great operators looking for opportunities to expand their businesses in this sector.
Bars, Pubs & Cocktails
Great operators are still seeking interesting pubs, and certainly in London closures seem to have stabilised - we now actually have more operating pubs that we did a year ago.
The tap room concept continues to grow as consumers remain keen to drink craft beers and lagers. We are also seeing growth in new wine bar concepts and particularly natural wines. Certain parts of London seem over saturated with cocktail bars, but consumers will always want fun and interesting places to drink and the sector will continue to grow in the next year.
[1] Re:Imagining Retail, Savills, 2019
[2] Office for National Statistics (ONS), 2019
[3] The Halo Effect, CACI, 2019
[4] Mintel Press Office, 2018