The Internet is a transformative technology. It is changing retailing. At IPM we have been lucky enough to have access to Springboard’s historical footfall data. We have analysed over half a billion shopper movements, and the overall picture is that town centres and traditional retail areas like High Streets are in decline.
Whilst much has been made of the ‘restorative power’ of innovations such as click and collect, in general retailing is shifting on-line and out-of-town. Springboard’s footfall figures from Black Friday demonstrated this, measuring a 10% decline in High Street footfall, compared to the same day in 2014. In 2015, many multi-channel retailers were keen to offer higher discounts online, perhaps to avoid the more shameful displays of in-store consumer behaviour we have seen in previous years. Similarly, many shoppers picked up a car boot-full of bargains, enjoying the convenience of driving to their local retail park (where footfall was up 3%, compared to Black Friday 2014).
Whilst national statistics can be very useful, averages can be misleading. When we drilled down into the Springboard data we found many centres with stable or increasing footfall, even over the Christmas period. And we think we know why. Those centres with a clearer collective offer perform significantly better than those whose offer is unclear. So far, we have identified 3 generic types of centre offer from their footfall profiles. Comparison, speciality and convenience/community towns. Comparison shopping towns still have significant retail floor space. The anchor is clearly retail. These towns and cities are where multichannel retailers are concentrating their offer. In contrast, speciality towns are not anchored by retail. They tend to have a strong tourist offer instead. Convenience community towns are anchored by services that people need frequently, if not daily. Like transport hubs, employment or food retail.
What’s interesting is that size does not always predict centre type. We are releasing a report early next year with our findings but the headline message is this….
“retailers will perform better if their offer is congruent to the overall offer of the location”.
In other words, if retailers collaborate with other stakeholders and help deliver the overall experience customers want from a location, they will attract more footfall. For example, a failing comparison centre should be concentrating its retail offer geographically if the catchment usage and profile suggests the town needs to adjust to becoming a convenience/community town. The Internet makes this possible as so much comparison shopping has already shifted from smaller centres online. Shops selling stock have a big physical footprint – they take up space (remember the size of an average Woolworths?) Without so many of these ‘public warehouses’, centres can shrink and become more walkable and convenient for regular – in some cases, daily visits. Some comparison retailers should be thinking of more congruent store formats to suit convenience/community or speciality locations. The big four grocery retailers have already showed how they can shrink the size of their operations significantly and slot into existing units in traditional centres.
We see many opportunities for the disruptive power of the Internet to save some of our failing physical retail environments. However, in many instances we are concerned that it just won’t happen. Strategic decision making skills and the analytical skills needed to use evidence to inform change are poor – so many of the positive opportunities technology can bring will be missed. Through our High Street UK partnership with 10 UK towns, we have already identified the 25 priorities that will improve footfall in physical retail centres and technology can facilitate many of these. For instance, intelligent waste disposal and more responsive or even automated street cleaning can improve levels of cleanliness. And these seemingly basic aspects of the customer experience take on even more importance when people have a choice not to visit physical locations at all.
In summary technologies can help physical centres – but they need grasping and integrating. And this shouldn’t be just the responsibility of the local authority. Because if retailers invest in strengthening the locations they are in, in the way our research suggests, they will see a return on investment, in the same way they invest in back-room operations to improve the bottom line.