Spectacular and surprisingly strong figures, which showed the fastest annual sales growth in more than nine years, have given a much-needed lift to the retail sector but there are other important factors to consider.
Firstly, online sales now account for 12 per cent of sales and that is continuing to grow because of the investment many retailers are putting into their websites. Higher footfall numbers don’t necessarily equate to higher sales! And, of course, some major retailers only have an online presence.
Secondly, many leases granted for 25 years in the Eighties and 15 years in the Nineties will be coming up for renewal. There are decisions to be made as to whether companies renew those leases – and therefore where their future lies. Those decisions will undoubtedly shape the future face of city centres and high streets across the country.
This culmination of factors means that we could end up with a further increase in vacant properties, with far-reaching social and economic implications. It may also present opportunities for developers to snap up cheaper properties as landlords look to ship out, therefore changing how city and town centres look.
Good news for SMEs
There is, however, good news for small businesses which fared much better than many retail giants in the December figures.
Small stores are seeing a consistent gain of 8 per cent annual growth, while large stores are seeing only 2.6 per cent growth. Supermarkets including Tesco, Sainsbury’s and Morrisons saw disappointing sales, while budget and higher-end food retailers and department stores such as John Lewis and House of Fraser did much better.
There are also predictions by retail analysts of new technology which may help high street shops. Online retailers are looking to create a near real experience by developing Augmented Reality Apps.
In response, high street retailers need to leverage new technology to engage customers and build their loyalty which may be their key to survival in the future. Technologies such as Wi-fi hot spots, virtual store fronts and smart shelves are a good way to engage customers in both in-store and online environments.
Retail has gone full-circle leading it back to the old values of caring about its customers, only today that is carried out by capturing customer data rather than over-the-counter pleasantries.
Whatever the outcome, there is a radical retail shake-up on the horizon and big challenges to face. Decisions made by industry leaders today will shape the future for generations to come.
Nick Gross is a corporate lawyer and the chairman of Coffin Mew.
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