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    The Valley Group

    Retail marketing group creating powerful in-store solutions, driven by insight, knowledge and creativity

    Retail Recovery

    The last 2 years have been the most turbulent years on record for retail and shopper marketing

    The last 2 years have been the most turbulent years on record for retail and shopper marketing. The unexpected and devastating impact of the COVID-19 pandemic compounded the challenges that physical retail was experiencing, well before the global pandemic, with the impact of online retail and declining footfall.

    As we head into year 3 of the pandemic, physical retail has the opportunity to get into the recovery position, with the hope and expectation that 2022 will trigger steady growth in footfall, as consumers continue to find their balance between the convenience of online and the experience (and social gratification) of physical retail.

    During the first 2 years of the pandemic, retailers and brands were forced into ‘stress-testing’ their ecommerce supply chain, due to heightened demand, making short and long-term investment to ensure their consumer got what they needed through ecommerce.

    Brands and retailers know that the consumer wants a physical retail touchpoint to test and try a product before purchase, therefore there is a building trend of brands and retailers, unveiling their latest retail or flagship brand store experience in the last 12 months.

    Why? Because experience matters. In fact, there are many things that matter, now more than ever. There are several basic reasons why consumers like to shop physically:

     

    1: Touch and feel merchandise

    2: Get their purchase immediately (and a serotonin hit!)

    3: No shipping / delivery fees

    4: In store promotional discounts

    5: Enjoy social interaction

     

    There are differences in how generations view the role of a physical store. Older consumers are more traditional, preferring to visit stores, to touch and feel products and get their goods immediately. Younger consumers though, are seeking experiences, enjoyment, and to be part of events. Note we refer to experiences and not just experience – the consumer needs reasons to go into physical retail, if they are greeted by the ‘same old, same old’ experience, it won’t be exciting or satisfying enough. Experiences should change as often as product assortment – consumers like to see newness.

    The biggest factor driving recovery in physical retail is footfall. One sector of retail that is usually regarded as an indicative yardstick for retail prosperity are fashion sales, since the consumer commonly prefers to shop physically for apparel and footwear purchases, as it means they can try before they buy, outfit build, and get the serotonin hit of in instant purchase!

    So, what are the reasons to be optimistic about the fortunes of physical retail in 2022?

     

    THAT’S ENTERTAINMENT:

    Real world entertainment is vitally important to the future prosperity of physical retail. For decades the theatre of retail has always attracted consumers into stores and in store visual merchandising has always influenced the consumer to make a purchase. Now in the digital age, it’s vitally important for retail trade zones to offer dedicated entertainment attractions to drive footfall and create a buzz.

    Theatre and cinemas have always been an important part of the high street, in recent years, both entertainment sectors have struggled due to the global pandemic and consumer habits in adopting streaming services to deliver their entertainment needs. Similar to the impact that online shopping has had on physical retail, the consumer is becoming more needy when it comes to real world entertainment.  The consumer seeks something different. Something more immersive and experiential.

    One major entertainment development that will help drive excitement and footfall towards the redeveloped Tottenham Court Road end of Oxford Street, is OUTERNET. Loaded with big digital to create an immersive, multi-sensory experience. Within OUTERNET there is also a 2000 seat underground theatre space (the biggest theatre built in decades), allowing OUTERNET to host live entertainment and e-gaming events.

    OUTERNET is anchored by the NOW building, which features the world’s biggest 360˚ 16K LED screens, creating an imposing exterior and interior feature. These screens will broadcast mesmerising content, focusing on film, music, art & e-gaming to spellbound visitors. The sheer scale and immersive impact of this space will drive footfall alone, with locals and tourist eager to experience the digital shows on offer. The recent trend of ‘Deep screen’ digital adverts, prove that people will travel to see and experience a logic defying digital illusion appear in front of them. On a basic level, it’s expected that OUTERNET will have 100m+ visitors per annum, this will be a huge footfall driver for surrounding retail and hospitality!

    Outside of London, it’s becoming more common for entertainment destinations to be created within vacant retail spaces in malls and high streets. In Manchester’s Arndale mall, THE CUBE LIVE will open next month, giving fans of the TV show the chance to experience some of the devilishly difficult tasks. There’s also an increasing trend for ‘BATTLE BARS’ opening around the UK, in cavernous ex-retail spaces.

    BOOM currently operate 10 battle bars in the UK with a further 13 planned. If you’ve never been to a battle bar before, these are ‘fun pubs’ where players can battle it out in number of different games, such as: AR Darts; Crazier Golf; Shuffleboard and even Axe-throwing! A fun, social (and highly Instagram-able) experience.

    Fundamentally, entertainment is and will play a significant part in the fortunes of physical retail. At a time when it’s all too easy for a consumer to stream entertainment, order a Deliveroo and stay at home, it’s vitally important that physical entertainment and retail ‘get closer’, helping drive the lifeblood of retail. Footfall.

     

    POWER OF THE POP-UPS:

    With so many vacant retail units up and down the high-street, it’s no surprise to see many of them utilised as pop-up stores. Before the pandemic, pop-ups were an effective way for a brand to widen their physical retail presence during peak seasons, such as summer or Christmas trade. Pop-ups have always been an effective way of testing a trade zone without committing to a costly long-term lease, associated rates, and operating overheads.

    Recently, there has been a developing trend for luxury brands to ‘drop’ an experiential pop-up shop in a non-traditional trade zone within a key city. Mega-brand GUCCI implemented a global pop-up project in 2021. With the opening of high-concept luxury pop-up stores in Milan, Berlin, and London. The latter pop-up taking over a Sir David Adjaye designed building on Chance Street, in Shoreditch. Created to deliver an immersive and experiential retail space to showcase their brand, digital and physical art, as well as exclusive collaborations. ‘The Circolo Project’ was conceived to morph from concept to concept over a three-month period, from October to December 2021.

     

    Luxury department store Selfridges have also got in on the act, by establishing their ‘corner shop’ concept, giving luxury brands focal space in the ground floor corner of their iconic store. Whilst far from being a traditional ‘pop-up’ (I imagine it’s not cheap securing the space!) brands have been taking over the space and creating some pretty memorable ‘retail-moments’ designed to surprise, delight (even amuse) their consumer. Luxury Italian skiwear brand Moncler created quite an impact in the corner shop with their November residency.

    You don’t have to be an established brand to ‘pop-up’ in fact pop-up stores are a hugely desirable retail format for online/pure-player brands, helping them to take their first tentative steps in physical retail. Pop-up experts SOOK have established a unique business model where brands can simply book the use of one of their digitally enabled, retail ready stores, by the day or even by the hour, publicise their temporary pop-up in a SOOK store via social channels and wait for their loyal (or curious) fanbase to show, and they do! The queues that are often created when a brand is ‘in residency’ at SOOK prove that a blend of online and offline retail, is truly part of the future retail mix.

    Will we see more pop-ups on the UK high street and in regional mega malls? Most definitely. As the evolution of the UK high street is still in a state of flux, and the consumer begins to establish their own mix of online and physical retail shopping, the way retail units are used or repurposed will be an ongoing conversation.

     

    RETAIL EXPANSION & HIGH STREET DEBUTS

    2022 has the potential to be a transformative year of positive investment for physical retail. Shopper confidence is growing, and retail footfall is rising week by week, in addition to this, the online sale mix is starting to go back towards pre-pandemic levels. Positive signs that indicate that consumers are starting to enjoy shopping in physical retail on a more regular basis.

    We still have the growing issue of vacant retail units, this issue still needs to be addressed in the vast majority of UK towns and cities, a need to not merely ‘fill’ these units but for local councils to ‘place-make’ and create attractive retail and leisure destinations that are attractive to the consumer on a number of levels.

    Looking at the London marketplace it’s positive to see new brands and retailers taking a place in busy trade zones such as: Regent Street; Oxford Street; Westfield Malls and several secondary high streets within Greater London.

    Brands making their high-street debuts in London this year include Gymshark and Ikea, with the former, having just opened their first high street store (in the UK) in Hammersmith. The first phase of a proposed  £1Billion investment in London over the next 3 years.

    Ecommerce mega-brand, Gymshark, will be opening their greatly anticipated first physical store on Regent Street this summer. Gymshark have promised a store built with experience in mind – an enticing prospect, for a brand with a huge, loyal following, a retail concept that will no doubt be successful outside of London, in key retail cities in the UK and in global retail destinations.

    Will we also see another Amazon retail fascia join the UK high street, later in the year? The recent Amazon Style retail format that opened in Los Angeles last month, is the brands take on fashion retail. Showcasing several innovative technologies that Amazon believe will define the future of fashion retail as part of a connected experience, all powered by the consumer’s mobile phone. Intriguingly, their first 30,000 square foot store in the Americana Brand Mall in LA, only shows single items (a bit like a shoe shop) – the consumer is able to scan a QR code to request their size or alternative colours, which will either be made available at the till point or placed in a reserved fitting room so they can try on. The new Amazon style stores will mix traditional retail with ‘e-tail’ with the store also acting as a local market fulfilment centre, for online delivery or pick-up in store.

    Whilst there’s a healthy list of new retailers coming to the UK high street, we must also acknowledge the existing retailers that are making significant investment in their store estate and retail experience. It’s hard to look beyond retailers JD and Frasers Group, who in the last 2 years have opened exciting consumer centric store formats, with an enhanced level of experience and engagement.

    JD’s newest UK flagship in Stratford is a bold and digitally driven showcase for the JD retail mix and their brands, with further new stores in UK and internationally expected in 2022. SPORTS DIRECT are rolling out their newest retail aesthetic at pace following the opening of their Oxford Street flagship in 2020 and regional flagships in the last months. 2022 will end with the opening of their biggest flagship yet, a 5 floor 50,000 square foot store in Manchester’s Arndale centre and before they will opening a new Birmingham flagship on the site of the old PRIMARK store, on New Street.

    Frasers will also roll-out their premium fashion fascia FLANNELS to further new retail locations in 2022, with their huge Liverpool flagship being the pinnacle. Not to be outdone, JD will open a new flagship store for their premium fashion fascia TESSUTI, in the ex-New Look unit in Liverpool ONE.

    Frasers Group will also open further FRASERS department stores in 2022, with locations in Cork, Dublin and Derby already announced.

    Harrods H Beauty will continue its expansion, beyond existing stores in Milton Keynes, Lakeside, and Edinburgh St James, with new stores in Gateshead and Bristol in sites previously occupied by House of Fraser and BHS.

    Marks and Spencer and Next are also investing in new flagships and concept stores. M&S will move into the old Debenhams store in Birmingham Bullring. NEXT will open their new department store concept in the Atria shopping mall in Watford in April this year, with a further locations in the UK yet to be confirmed.

    Overall, some very positive investment in the UK high street. Whilst we know that further investment and reform is needed to help shape and define a mixed-use high street of the future, its positive to know that so many retailers are continuing to make significant investment in physical retail.

     

     

    A WORLD CUP WINTER WONDERLAND

    2022 will end with a never-before-seen retail extravaganza! Christmas + The World Cup! Usually ‘a world cup year’ creates a much-needed retail spike every 4 years, with consumer demand focused towards food and beverage brands as well as electrical products (TV’s have always been a key product focus for many electrical retailers during a World Cup) to help them enjoy the sporting event to the maximum!

    The big Grocers, plus electrical retailers always plan to make the most of the sporting event to boost revenue, promoting products and special offers weeks in advance, crossing their fingers that England go as far in the tournament as possible – there is always a marked decline in demand once England exit the World Cup, England’s early exit in 2014 proved this.

    However, this year, there is a fixture clash, with the World Cup taking place in November and December, the final itself taking place 7 days before Christmas on the 18th of December. A World Cup in the middle of the Golden Quarter!? How will retailers execute this event from a space and promotions perspective? Will we see a tempered World Cup from the Grocers perspective with Christmas taking prime focus, or will we see some clever and creative ways of addressing both seasonal events at the same time? It’s realistic to expect that this World Cup year will be less fruitful than usual, due to the clash with Christmas.

    From a consumer perspective, how will they react? Christmas is already a very expensive time; will they be motivated to consume during the World Cup at the same level as they normally would during a normal summer World Cup? Will the consumer prioritise traditional Christmas needs and social events ahead of the World Cup? It’s safe to say there will be far fewer barbecues in the UK during this World Cup, than usual. Additionally, there will be a reduction in beer garden screenings for a similar reason.

    You can’t ignore the fact that this will be a HUGE Golden Quarter for all retailers, with the World Cup seen as an extra opportunity to make it so. Add to this challenge the restrictions around the promotion of HFSS products, typically associated with ‘World Cup Snacking’ and you have some very physical challenges from a layout and Shopper Marketing perspective.

    Now more than ever, consumers need a reason to go shopping in physical retail. Retailers are fully focused to ensure that 2022 delivers record revenue and profit, helping lift prosperity following two years of challenging trade.

    Every opportunity is a BIG opportunity in 2022.

    Let’s make it happen!

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