Interviews, insight & analysis on digital media & marketing

Ecommerce is transforming bricks-and-mortal retail in unexpected ways

Glynn Davis is one of the UK’s most knowledgeable and experienced retail journalists, founder of Retail Insider, and Ecommerce Age’s monthly columnist.

In the early days of online selling the rapidly growing disruptive Ecommerce players were supposedly going to kill off traditional bricks-and-mortar retailing and the doom-mongers were predicting that high streets would become something of a wasteland bereft of anything of interest.

Nobody would dispute the fact that these are incredibly tough times for physical retail stores but we could argue that Ecommerce is contributing to the UK’s thoroughfares up and down the country gradually becoming a whole lot more interesting than they were back in those pre-internet days of the 1990s. At that time most high streets and shopping centres looked pretty much the same with identikit brands dominating the scene and contributing to what was a downright boring environment.

Today we are seeing many high streets go through a period of great disruption and transition that is undoubtedly painful. This is being largely driven by the digital shake-out that involves a continuation of market share of retail shift online. OC&C Strategy Consultants has suggested that once the digital share of a retail sector hits 30-40% then this represents a tipping point whereby brick and mortar store margins become unviable.

With the acceleration of this shift online as a result of Covid-19 OC&C predicts that nearly half of all retail categories will have crossed the threshold by 2025. There has already been a noticeable demise of certain store types, with a recent Experian survey covering over 2,000 retail locations finding the number of electrical stores have declined 53% since 2015, women’s clothing outlets are down 47% and men’s clothing units have decreased 26% over this period.

The upside

Enough of this bad news because the upside is that openings are being created from these departures. We are seeing new brands appearing with more independents and local operators gaining a presence along with exciting formats from established players, experiential pop-ups, and a greater mix of food and beverage operators complementing the retail offering. 

These new stores are much more relevant in today’s multi-channel world and are helping breathe new life into high streets. Experian found dog grooming outlets had increased 154% since 2015, sports clubs jumped 61%, and coffee shops are up 20%. The latter is undoubtedly way higher than this in all the places I seem to find myself.

What is also contributing massively to the gradual renaissance of the high street and shopping centres is the appearance of Ecommerce operators moving into bricks-and-mortar. As many as 40% of pure-play retailers in Europe plan to open a physical store over the next three years, according to Tribe Payments.

The view that brands can operate solely online has been under question for some years and Ecommerce businesses have increasingly recognised the unmistakeable value of running a physical store as a marketing tool, a place to physically project a brand experience, and to also operate as a place for the collection and return of goods purchased online. We have had online rental companies opening stores as well as health & beauty players wanting to boost their engagement levels and retailers of high value goods like Ribble Cycles choosing to open a small number of flagship outlets from where they can also deliver live interactive video links between customers at home and their expert shop-floor staff who can demonstrate the products.

Many pure-plays are taking advantage of the increased availability of high street space, which would have been so much tougher to attain in the pre-internet days. This easier access to property has led to the pop-up phenomenon that enables brands to both run a store as a pure marketing exercise or to test the waters for opening a permanent outlet. Big landlords such as Shaftesbury now recognise the value of using some of their units for pop-ups that help generate buzz and interest on the high street and potentially lead to new long-term tenants. In the case of the most interesting and attractive brands these landlords will offer space on extremely amenable commercial terms.

This is all contributing to a significantly more exciting and interesting mix of tenants appearing on a growing number of high streets and in shopping centres around the UK that very much complements the online shopping experience rather than competes with it.