Accelerated Evolution
If you believed everything you read in the last year you’d think that retail, consumers and the shopping places have all changed for good. We need to keep things in perspective, maintain pragmatism, avoid short term sensationalist headlines and consider the real long term future of retail and the places they operate within.
We were struggling with a surplus of retail space even before coronavirus. What we are seeing in 2020/21 is an accelerated evolution of existing trends that are changing the way we need to view our town and city centres and the amount of retail provision needed to support them. So while there are significant challenges facing these markets in the face of the pandemic and potential for multiple lockdowns, dispersed workers and shoppers and displaced tourism, the fundamentals of many retail and leisure destinations remain sound, subject to rightsizing the right offer in the right place.
That might seem a perverse notion in the current climate, which may see waves of lockdowns over the next year or so, with the potential to significantly disrupt retail and leisure businesses. There will be failure and some could be considerable.
But let’s be clear – it’s not that retail is dead. Boring, irrelevant retail is dead. There remains demand for new retail concepts that fit with evolved consumer preferences and additional space where demand has relocated to. Dynamic retail will survive and mixed use retail spaces will thrive.
This may be hard to see now, and if I am honest I do worry about the survival of some leisure brands in particular the longer social distancing goes on. But at the risk of sounding like I don’t care, and of course I care very deeply, any market failure will be followed by a spate of energetic new concepts that will help revive the sector. It’s always been thus. Through disruption comes opportunity.
Of course, no amount of optimism for the future gets us away from the fact that our relationship with retail is evolving and this might see a change in focus for where we want to buy our stuff.
Consumers are resilient, the sector needs to be too
Over the last decade we have seen the consumer need for value, quality, convenience and experience take precedence. There is no doubt we are seeing swathes move online, become more ethical, more health conscious, more thrifty and yet more indulgent. You would think that we’re all the same. We’re not. In the post-Covid environment let’s not assume that all people will change the same, want the same, behave the same. Consumers are not about to leave shops and restaurants for good. However, it does feel that we have moved forwards 5 years in the advancement of some of these trends and therefore the retail market needs to swim quickly to stay afloat.
The pandemic caused us overnight to change the way we think about how we live, work and play. Early on it seemed that this would be a short term impact, but the longer it goes on the more I think it will leave us with permanent change, even if most of the trends were already underlying and in motion. The biggest change is likely to be how we work. I have no doubt that social distancing will ease, but we have learned that it is possible to do our jobs remotely at least some of the time and this will fundamentally shift spend from city centres to boost the economy of local communities.
An opportunity to revivE
Repurposing redundant retail provides a significant opportunity to breathe life back into town centres, which post-Covid will be more important than ever. We need to reimagine the real function of consumer ecosystems, which will often mean not thinking about retail places as retail only places.
The biggest drive for change as I see it is with the importance of community and social value in all retail places. This can mean lots of things, whether it is improved food and beverage, public realm, civic uses, amenity, public engagement, or stakeholder philanthropy. But how do you put a financial value on social value? How does a landlord articulate the benefits of investing in other functions that are a divergence from traditional landlord and tenant leases?
This is a clear challenge, but we are increasingly moving from a reluctant, to acceptant, to proactive attitude from retail investors and developers. Several owners of retail property are de-risking their investments by exiting the sector, whereas others are adapting to the new world order. It is after all sustainably repurposed or adapted retail assets and places that will survive. Future retail spaces, will be hybrid spaces. Mixed uses benefit all uses by interlinking journeys, creating footfall and operating different day parts. They have the potential to make places that are more vibrant, have greater social value, are more sustainable and more resilient.
So has retail and leisure changed for good? A wise man once told me that the only constant in retail is change. I tend to agree and we need to be very cautious in assuming that the next 12-18 months will represent the new normal. I’m not saying change is easy, but it can be healthy and we have to learn to embrace it. In the meantime the retail repurposing journey will continue and we need to embrace that too.