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Current trends in retailing and the future of retail property
Andrew Bolitho - Property, Energy, Planning and Transport Policy Advisor
Lobbying
Industry data and information
Media management
On Pack Recycling Label
Global Standards
Events
www.brc.org.uk
BRC Membership
The BRC is the authoritative voice for retail recognised for its powerful campaigning and influence with governments and as a provider of excellent retail
information.
The BRC represents
Over 80% of the retail sector
30,000 small and medium sized retailers
Over 75 major retail members
Over 190 fascias
wide range of large to small, out-of-town to high street,
Located in London, Brussels and Edinburgh
Economic overview
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%20
07 Q
1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
2010
Q2
2010
Q3
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
Source: ONS
Source: ONS
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan-0
7
Jul-
07
Jan-0
8
Jul-
08
Jan-0
9
Jul-
09
Jan-1
0
Jul-
10
Jan-1
1
Jul-
11
Jan-1
2
Jul-
12
Jan-1
3
Jul-
13
Cla
imant
count
000's
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
Jan-0
7
May-07
Sep-07
Jan-0
8
May-08
Sep-08
Jan-0
9
May-09
Sep-09
Jan-1
0
May-10
Sep-10
Jan-1
1
May-11
Sep-11
Jan-1
2
May-12
Sep-12
Jan-1
3
May-13
Sep-13
Co
nsu
mer
sp
en
din
g %
ch
an
ge
Co
nsu
mer
Co
nfi
den
ce
Consumer spending Consumer confidence
Source: ONS & GFK
Source: Bank of England
Rolling 3-month average
Source: BRC
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%2
009
20
10
20
11
20
12
20
13
%
chan
ge y
ear
-on
-ye
ar
Total sales LFL sales
Source: BRC
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Aug-11
Oct-
11
Dec-11
Feb
-12
Apr-
12
Jun-12
Aug-12
Oct-
12
Dec-12
Feb
-13
Apr-
13
Jun-13
Aug-13
Online
% c
ha
ng
e y
ea
r-o
n-y
ea
r
Source: BRC
% c
hang
e ye
ar-
on-y
ear
(3 m
onth
ave
rage
)
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Au
g-1
0
Oct
-10
De
c-1
0
Feb
-11
Ap
r-11
Jun
-11
Au
g-1
1
Oct
-11
De
c-1
1
Feb
-12
Ap
r-12
Jun
-12
Au
g-1
2
Oct
-12
De
c-1
2
Feb
-13
Ap
r-13
Jun
-13
Au
g-1
3
Online non-food sales Total non-food sales Non-food (excl. online)
Source: BRC
0%
3%
6%
9%
12%
15%
18%
21%
Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13
Greater London
South East
East Midlands
Scotland
South West
East
West Midlands
North & Yorkshire
Wales
Northern Ireland
Weighted UK Average
Va
ca
ncy
rate
s
£bn as per cent of total
2013
Source: BRC
Source: Bank of England
Rise of online retailing
Expansion of the supermarkets into non-food products and lines
Leases and renewals
Recognition that there is too much retail space
Increase in level of exports
Sir Phillip Green: [on closing 260
stores] “All the landlords may turn up with completely different deals, based on the market being a very
different place.”
Statement: November 2011
“Do you need to build hypermarkets in the UK
when the internet is taking so much growth in electricals, in clothing, in general merchandise?”
Philip Clarke, CEO, Tesco, January 2012
Ten years ago, larger retailers would have
needed stores in about 250 places in the UK to reach customers in most of the country. “Now, with the surge in online shopping, and
with the larger centres getting stronger, many retailers can cover the country with stores in
100 centres,” says Mr Dalgleish. Retail Week: April 2012
Sean Gillies, head of retail at Savills, the
property consultancy, says the contraction is being caused by “structural and cyclical change. The cyclical part is the economic
side, and the structural change is the growth of the internet and multi-channel
retailing. There is also an ageing population profile.” Financial Times: April 2012
0
100
200
300
400
500
600
700
800
900
0
2
4
6
8
10
12
Aug
-0
7
Dec-
07
Apr-
08
Aug
-0
8
Dec-
08
Apr-
09
Aug
-0
9
Dec-
09
Apr-
10
Aug
-1
0
Dec-
10
Apr-
11
Aug
-1
1
Dec-
11
Apr-
12
Aug
-1
2
Dec-
12
Apr-
13
Aug
-1
3
£ m
illi
on
% o
f to
tal reta
il s
ale
s
Internet retail sales, £ millions (RHS)
Internet sales as a % of total retail sales (LHS)
Source: ONS
Source: Eurostat
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
Source: Verdict
Floor space and shop numbers
559
246.6
527
221.2
Floorspace (million sq ft) Shop numbers (000s)
2010 2020
In Town and Out of Town
30,000
7,000
20,700
6,860
In-town Out-of-town
2010 2020
Source: Bank of England
• Technology - Commerce
• e-commerce
• m-commerce
• Social media (f-commerce)
• Technology - Marketing and Advertising
• QR codes
• Near Field Communication (NFC)
• Interaction digital advertising
• Wi-Fi
• Technology - Supply Chains
• Efficient sourcing
• Inventory management
Seamless integration across the multi-channel platform
E-commerce
• Sales growth of 20% per annum
• Accounts for 10% of all retail sales (c. £30 billion)
• Online retail searches growing by 40%
M-commerce
• Sales growth of 150% per annum
• Accounts for 5% of online spend (c. £1.5 billion)
• Online mobile retail searches growing by 214%
• NFC – mobile wallets “Quick Tap”
Social media (F-commerce)
• ASOS first retailer in Europe to open Facebook shop
Desktop
77%
Mobile
109% 23%
Smartphone
102% 57%
Tablet
288% 43%
Total
10% 100%
Growth YOY Proportion
-3%
Retail searches breakdown by device
Source: BRC
Future Developments
3D Printing Retailers • Tesco is assessing the possibility of printing 3D products in-store, with its technology team
currently testing 3D printers to explore future in-store applications. • Amazon has launched a section of their website that sells 3D printer and supplies. • Staples has plans to set up a new service called "Staples Easy 3D“ that will allow
customers to upload their designs to Staples' website, then pick up the printed objects at their local store.
• Sainsbury’s is preparing its 3D printing strategy to be revealed later this year. • We have even seen this technology used to create 3D chocolate faces at FabCafe in Japan
and by ChocEdge in the UK. Fujifilm • In 2012, Fujifilm discussed introducing 3D printers using the established kiosk model
that's been successful for digital photo printing. Kiosks would be placed in retail store and a catalogue of objects would be available for purchase, with the products on offer occasionally rotated to provide variety.
Food • NASA and a Texas-based Systems & Materials Research Corporation are exploring the
possibility of using a "3D printer" on deep space missions to make food in space. 3D printing of food may be revolutionary for the food industry - tissue engineering reduces CO2 emissions with no animals, land use, chemicals or transport and is also heralded as a solution to food shortages.
Future Developments
Rise of the robots
Hointer, a US mens fashion retailer, is leading the way to robots running some of our retail stores. • The store has no salespeople, confusing signs, or stacks of clothes to riffle through to find the right size.
Instead, lines of clothes in hundreds of styles hang for you to browse through. • When you find something you like, you scan the QR code on the tag, pick your size on the Hointer app with
your smartphone, and your selection is automatically delivered to the changing room via a chute from the German robot-operated stockroom.
• To pay, you put your items in a bag, checkout by swiping your credit card at a station, and walk out the door. • The store even offers free automated alterations
It’s as close to the ease of shopping online in the physical world as you can get.
Burberry Regent Street in London brings their online marketing in-store, to create 'Burberry World Live', which claims to offer customers the physical expression of the brand's most innovative digital launches in recent times. • The store’s features include a 22ft-high screen, 500 hidden
speakers and a hydraulic stage. • It also showcases RFID microchips on clothing and
accessories, so when customers try on clothing the mirror transforms into a screen, which shows the garment on the catwalk. Related catwalk footage is also triggered when products are taken near video screens throughout the store.
• There is also a digitally enabled clothing gallery.
Source: Bank of England
Rise of online leading to changes in distribution
◦ Higher concentration of warehouse vs brick and mortar stores
◦ Delivery to door and click and collect
Enhancing the customer experience
◦ Innovation in retail technology
◦ Multiple consumer offers in store i.e. coffee shops, childcare, health and education
Managing the decline of retail on our high streets
◦ Providing solutions to oversubscription of retail space
Delivery of flexibility within change of use order
◦ temporary development rights for retail to residential – April 2014
Drive towards enhancing energy efficiency in commercial buildings
◦ Minimum Energy Performance Standards
◦ Energy Savings Opportunity Scheme
Greater focus on better town centre planning
◦ Delivering diversity to enhance the high street
◦ Providing long term clarity for investors/developers
◦ Enabling out of hours delivery
Delivery of consistent planning decisions at a local level
Changes in the ways in which we shop
Innovation in the customer experience and multiple in-store offers
Managing the decline of the high street
Ensuring the right level of appropriate retail space remains both In Town and Out of Town
Creating a vision for the future of retail
Source: Bank of England
Source: Bank of England
What is NFC? short-range wireless technology which enables data to be transferred between smartphones and other devices. The technology is still in early development stage, but there is a growing number of retailers trialling NFC in-store – particularly in France. What is the development? French hypermarket, E. Leclerc, has introduced NFC tags on its products in France. Why do we like it? • Shoppers simply tap NFC tags with their mobile phone to add
products to a virtual shopping basket. • NFC tags call up product information, such as allergen
information. • Prior to shopping, smartphone owners can set a shopping
budget which is monitored by the app. • Users also receive discounts or promotions that are embedded in
the tag. • Products can be paid for in-store via the app, and also ordered
for home delivery
What is the development? John Lewis, Ocado and Argos introduced ‘pop-up’ QR code stores in the UK to encourage 2011 Christmas sales. Why do we like it? John Lewis: Rolled out to 129 UK stores; customers could ‘click and collect’
items before 2pm the next day, avoiding the Christmas queues. 54% increase in the use of ‘click and collect’ The QR code stores were placed in Waitrose windows, meaning
shoppers could conveniently combine their grocery and Christmas gift shopping.
Ocado: The UK’s first virtual store. Ocado’s QR code stores make use of empty high street shop
fronts. Argos: consumers point their smartphone at the QR code alongside a
product whilst travelling through London Paddington station, and collect it from an Argos store the same day.
What is the development? Meat Pack, a shoe retailer in Guatemala famous for its heavily discounted designer shoes, in collaboration with Google, launched a discount marketing app called ‘Hijack’ to entice consumers from competitor stores around the mall. Why do we like it? • Using GPS tracking , Hijack recognizes consumers entering
competitors’ stores and triggers a discount that starts at 99% and decreases by 1% each second until they enter the Meat Pack store. Those who reached the stores faster, got better deals.
• Over 600 customers raced to the store, being ‘hijacked’ from competitors, with the highest discount received a massive 86%.
What is the development? PayPal and Zapp, a mobile phone app company, have both independently developed their own mobile payments service without the need for a wallet. Why do we like it? • Zapp: Zapp and Worldpay, a payments firm, have callaborated to provide a service that enables
smartphone users to pay for products in-store with their phone. Consumers can simply enter a code or scan a barcode at the till using their mobile, with the payment taking only 12 seconds.
WH Smith, Lidl, Superdrug, and McDonalds have signed up to the scheme which will be available to the online banking customers of Barclays, NatWest, Lloyds and Nationwide by 2014.
• PayPal: Products can be paid for in-store by checking-in with the app which is then identified by
the stores tills and charged for by the cashier. The customer’s profile is also sent to the till, allowing staff to treat customers as regulars.
Restaurants may give customers access to their PayPal bill, enabling them to add items to their bill without troubling staff.
A ‘Bill me Later’ Service is incorporated so credit is accessible in seconds. Users can pay for products and have them ready for collection before they even enter a
store. PayPal’s app includes all its existing services, allowing consumers to effortlessly switch
between their payment sources. The Bingham Hotel (London) allows users to use a ‘Pay with Your Face’ service by simply
showing their face to the receptionist, and if it matches their PayPal profile photo the room is charged to their PayPal account.
Lego uses augmented reality to boost sales
Lego has introduced augmented reality displays to its own-brand stores, which enable customers to hold a product box up to a screen to reveal what the model looks like when built. The displays are already demonstrating results, customers who engage with them are spending between 20-40% more than customers who don’t.
