Open door policy
Given the reported troubles facing retail brands, it may come as a surprise to learn that many are continuing to open new physical stores.
Physical retail still has a huge role to play in how consumers and brands interface. Physical stores give brands the opportunity to educate consumers on their products, whilst also exposing consumers to a host of other products that may not have caught their attention online. This combination, when in tandem with a compelling in-store environment, creates a strength of offer and experience that cannot be beaten by a pure online offer. The role of the physical store is to complement the digital experience, rather than compete with it.
Flagships
Flagship stores remain an important piece of the brand puzzle, helping to tell the brand story, build exposure and dovetail with an online presence. A new era of community flagships is something brands such as Apple, Rapha and Lululemon are at the forefront of, and the stores undoubtedly help in driving total brand sales, building brand equity and creating consumer experience. We have recently seen a number of major brands open flagship stores in Central London, including Browns, Superdry and Mango. Sports Direct has also completed a £10 million refurbishment of its Oxford Street store.
Value Retailers
Unsurprisingly, value retailers such as Lidl and Aldi, who enjoyed increased profits during the lockdowns having been classified as "essential" retailers, have continued with their aggressive, store-first expansion plans and both plan considerable openings. Aldi, plans to reach 1,200 by 2025 with Lidl targeting 1,100 by 2025, up from 880. Whilst both are tentatively building their online presence, their business model dictates physical stores remaining their key route to sales and market share growth.
Fashion Retailers
JD Sports and Flannels have continued their national expansion. JD Sports are leading the way in post-pandemic recovery, announcing record interim results for the first half of 2021 (£3.9bn in turnover), with recent store openings including Croydon and Westfield Stratford City. Primark is another retailer betting on a strong post-pandemic retail bounce back, with plans to open 100 new sites globally in the next five years, growing global store numbers from 398 to 530. The connection these brands have established through the relevance of their physical stores makes them a hugely profitable channel, encouraging increased roll-out.
Amazon
In line with the notion that retail/convenience still have an important part to play within everyday life and shopping habits, Amazon is one of the tech giants seeking to capitalise with its aggressive expansion plans within grocery and the opening of 4-Star stores. The company is set to create 260 till-free convenience stores across to UK in the coming year, using technology as a way of creating a point-of-difference and learning first-hand about the uses, opportunities and limitations of proprietary data, software and hardware. The plan is to expand on an initial nine "Amazon Fresh" store openings this year, and launch a further 60 in 2022, with 100 stores set to open in 2023 and 2024 respectively. 4-Star stores (seen above) offer a further way for Amazon to gain increased data around customer habits, and link online and real-world behaviours. The creation of this insight enables opportunities that would make any losses incurred in the operation of 4-Star stores entirely acceptable.
Although e-commerce is enjoying growing prominence and has undoubtedly benefitted from the past 18 months, physical retail is still unequivocally important to brands and retailers across all sectors.
Moving forward, retailers need to think about ways to better leverage the physical experience to ensure opportunities to learn about existing customers and engage new consumers are maximised.
Will Snowden