What’s happening to the UK’s retail space and why should Marketers care?

By: Chris Middleton

September 1, 2016

Categories:

Customer Experience - Featured -

A recent visit to the town where I was born brought home to me how many once-familiar markets are morphing into new shapes, and, above all, why it no longer pays to be stuck in the middle of any of them!

These transformations are taking place right across the economy, and they present new challenges and opportunities. They’re happening most visibly in places that have been hardest hit by economic upheaval and online disintermediation.

First the history bit (bear with me!). I was born by the sea in Folkestone, Kent, and I’m using the town here as an example of what’s happening throughout the country. Today, Folkestone is best known for being passed by – in its case, by the Channel Tunnel. The once-bustling harbour is now closed to big ships.

When the economic tide is out, people need to get creative and make some new markets, or find new perspectives on the old ones.

The town centre is like countless others throughout the UK and beyond: some of the shops are empty; cut-price emporia fill once-upmarket spaces, a handful of chain outlets do below-average business, and there is a sense that life is happening elsewhere (online, in many cases).

Such problems can be found in any community where the poorly differentiated middle ground of retail is being pulled apart by opposing polar forces.

So what’s happening to the UK’s retail space and why should marketers care?

On the one hand, today’s shoppers value speed, low cost, and convenience – which can be provided just as easily (or better) online as they can on the high street – while on the other, they value innovation, variety, diversity, bespoke services, exclusivity, aficionado products, and originality. These aren’t impossible to find online, but it’s a much tougher challenge.

Any retailer that doesn’t fit into either of these categories – i.e. any brand in the poorly defined and differentiated ‘mid market’ – is being torn apart in a search for relevance and identity now that loyalty and custom are thin on the ground.

If you’re stuck in the middle of a marketplace and offer neither innovation, speed, value, exclusivity, nor high-quality service, then your customers will leave and either head uptown or down.

The mistake that many analysts make is in assuming that these two ‘poles’ map directly onto disposable income. But you’re as likely to find a wealthy, middle-class shopper in a branch of Lidl, Aldi, or Poundstore as you are in M&S or Waitrose, because in today’s demand-led space, there’s no reason to pay a premium for a branded commodity good.

This is the real reason why giants such as Sainsbury’s, Tesco, and Morrisons, have been struggling on the UK high street: all are so diversified, so stretched, that they keep neither their price- and value-focused shoppers happy, nor their choosier clientele.

But back to our test case. Like many places of its ilk, the historic old town is (ironically) where real renewal and transformation are taking place, while the ‘new’ town centres that defined the post-war vision of our communities – pedestrianised precincts, multi-storey carparks, and identikit, mid-market shopping centres – are dying.

Stroll towards the ‘creative quarter’ and you’ll find a new type of retail gathering momentum: a vinyl record shop that also sells fine wines and high-end turntables, and another that is also a record label; a cafe and secondhand bookstore combined; a coffee shop that also sells paintings, picture framing, plants, and artists’ studio spaces; a town hall that is now an old-style repertory cinema; an old harbour wall that has become a precinct full of unusual, niche-interest restaurants alongside an almost New York High Line-style reclamation of derelict land; craft beer outlets that are live music venues; an art gallery with an in-house concert pianist, and so on. No mid-market brand or chain in sight.

And while the hipster aesthetic (the new normal) is detectable in places, in most cases these new businesses are surprising and even a little strange. The town has also forged strong links with artists and people who invest in the arts, and there is a strong sense of local community, of something real.

In short, startup businesses are coming together in new, unusual, community-based combinations, by recognising that to succeed in a market where efficient, general, price-focused retail has been done and dusted, you have to get real, get niche, and get imaginative.

And in an increasingly digital world, old analog ideas are thriving, too, as almost radical-seeming alternatives (slowness and depth as an alternative to surface and speed).

New combinations, unusual experiences, clever links between one type of business and another: the real future of bricks and mortar retail. And if you can link these with an online community too, and with a mobile-first device experience, then you are in the strongest position to succeed.

Changes like these map onto something else: the transformations in all of our lives. Today – partly thanks to new technology – many of us are no longer defined by a single career, age group, social class, or lifestyle, and so it’s no surprise that the same ‘mix and match’ approach to life is helping to rejuvenate our towns.

As work and play merge for many, as automation increases, and as the mainstream becomes a less comfortable place to be, many of us are becoming more niche, more diversified, and more unusual in how we mix and match what we do for a living with how we spend our ‘free’ time.

So if you want to know how markets are changing, don’t always look to the capital or to the big cities, where there will always be passing trade. Look to those communities that really have to think on their feet to survive. They point towards the future.