BRICKS-AND-MORTAR RETAIL
T
he collapse of Debenhams and Topshop owner Arcadia has put nearly 25,000 retail jobs at risk and triggered fears for the future of Britain’s high streets. But the outlook of bricks-and-mortar is not all bleak, according to experts, who say companies need to end nostalgic sentiment and embrace the experience economy to create thriving town centres.
The coronavirus pandemic has undoubtedly changed how consumers purchase beauty products, switching from counters to e-commerce. Consultancy company McKinsey estimates that, internationally, online beauty shopping will have grown by 20-30% in 2020. Sadly, the closure of non-essential stores contributed to the loss of more than 158,000 jobs in UK retail last year (excluding Arcadia), reported the Centre of Retail Research. But Britain’s bricks- and-mortar has been floundering for a long time before shoppers even heard of Covid-19. 2020 just exacerbated retailers’ weak points of high business rates, ageing value proposition and long term, unfavourable rental contracts with large areas of floor space that no longer align with consumer demands.
“Debenhams was an example of this. It was a dinosaur, with some stores that looked more like warehouses with a café attached,” says Romulus Grigoras, founder of the #SaveShops campaign and CEO of omnichannel service OneStock. “The pandemic only accelerated shopping preferences that were already shifting to online. These habits are unlikely to change, so retailers need to make store shopping as convenient as possible if they are to compete with pure players with low fixed costs and massive warehouses.” Simon Hathaway, MD EMEA of global retail innovation agency Outform, believes the pandemic, along with historical astronomical rents and high taxes, has created a “perfect storm” for British retail. “The result: the closure, either temporary or permanent, of the key sales channel, the store,” he says. The experts Cosmetics Business spoke with agree that the high street is at the point of no return. But what does it mean for bricks-and-mortar? “To prosper, the role of the store in the sales funnel will have to change once normality resumes,” says Hathaway. “My money is on fewer, better, stores that focus on experience over sale. This means we could see the death of the traditional department store, as experience centres emerge.”
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The challenge for many department stores is a lack of focus: they need to focus on a few departments and really excel with assortment, access and experience
The experiential industry – from escape rooms to nail salons – is a vital opportunity for department stores. In luxury, ultra-premium retailers like Harrods, Harvey Nichols and Selfridges are expected to thrive as destination points post-pandemic as they have already placed their bets on the experience economy and personal services. Selfridges launched its environmental hub in August; Harvey Nichols opened the fragrance emporium in February; and Harrods’ treatment spaces and education centres were unveiled in January. Hathaway adds: “Shoppers expect a certain level of luxurious serendipity and personal interaction in the shopping experience that only a physical space can offer. The beauty store is now a destination, a place of learning and experience – a space to bring communities together and a hub where the sale is no longer the primary aim.” The ‘sink or swim’ moment is for middle of the road retailers, such as John Lewis, which announced the
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