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Posted on:
27th July, 2018

Retail is undergoing radical transformation, what can stakeholders do to support the sector?

Jim Hubbard is Policy Adviser for Local Engagement, Property and Planning at the BRC where he leads policy work on devolving powers, transformational change to retail property and the future of high streets. Here he outlines how stakeholders like LEPs can help tackle the changing landscape of retail.

Retail is undergoing  radical transformation, what can stakeholders do to support the sector?

There is too much retail space and there will be fewer shops in the future. In fact, there are nearly 2,500 fewer retail stores in the United Kingdom than there were three years ago. The role of the stores that remain will be different, based on convenience, fulfilment or most likely fulfilling a desire for experience. At the same time, comparatively disadvantaged and less affluent areas, where bricks and mortar retailers are seeing the greatest erosion of their margins due to a combination of high fixed overheads, business rates and declining sales are likely to be the worst affected.

All stakeholders including Local Enterprise Partnerships (LEPs) need to recognise that the future will not be the same as the past, that the focus should be on place, not high streets as purely shopping destinations. LEPs, combined and local authorities and Business Improvement Districts should also take account of the transformation underway in their future Local Industrial Strategies, masterplans and visioning statements, and take a strategic and holistic place-based approach. To assist envisioning the future of retail it is especially important LEPs work to increase representation of retailers on LEP boards and working groups.

The fact there is too much retail space has an impact on places for which people depend on for employment, to shop, for entertainment, public services and cultural events. The retail industry as the largest private sector employer employing three million people across the UK is undergoing a technology driven transformation in the way that people shop. Retail will continue being an important part of places, but in some cases, there will be less emphasis.

Consumers have become increasingly comfortable shopping online and this trend will continue. Online is currently over 15% of retail sales growing by about 10% per year. If the infrastructure and technological barriers to faster growth are removed, the share of online sales in non-food could reach half of non-food sales by 2030 and in food as high as 40%.

Saying digital is taking footfall away from the high street overlooks how digital can be used to positively impact physical places and retail journeys. Today, nearly half of all retail sales are influenced by digital. The internet of things and harnessing the power of data will enable people to shop when and how they want. We are already seeing many traditional retailers invest in and grow their digital businesses and digital businesses move into physical space.

There are those destinations that will thrive and some that will find it much more challenging but their future will likely be less reliant on retail, and more reliant on services, leisure and experiences as consumer expectations change. In some places local leaders may be required to make difficult decisions about an area’s future. This may involve supporting the contraction of retail space available, instead focusing on other commercial uses, services or residential space. Increasingly important is the need for a long-term vision for a place which provides some certainty of an inspiring shared vision.

No two places are the same. We all can identify a place that has performed well under strict curation by a large property owner for instance, but equally can find examples where little interference has resulted in a diverse mix of spaces addressing the area’s needs. We support local authorities, working with LEPs and others, presenting a strong vision for an area and doing more to attract and retain enterprise, however, some flexibility for business is required given the unprecedented pace of change.

The BRC is pleased to support the Great British High Street competition, and encourages LEPs to work with their local authorities to nominate their ‘Champion High Street’ and ‘Rising Star High Street’ before 22nd August. These awards serve an important part in identifying what is working well and sharing good practice with others. Learn more about the competition here.

In our submission to the HCLG Select Committee’s high streets inquiry we made eleven recommendations, some of which have been shared in this post, which would have a positive impact on places across England as we navigate the retail and high street transformation. Recommendations include a ‘Centre of Excellence’ providing local insight, reforming business rates starting with a two-year freeze and improving relations between landlords and tenants.

Jim Hubbard is Policy Adviser for Local Engagement, Property and Planning at the BRC where he leads policy work on devolving powers, transformational change to retail property and the future of high streets. He has developed Making a Success of Devolution to help retailers navigate the devolution of powers in England and to identify opportunities for local engagement.

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