- The value of physical retail
- The impact of coronavirus
- How is the role of the physical store changing?
- How is the sector adapting?
The value of physical retail
New research undertaken by intu in collaboration with Javelin Group (part of Accenture Strategy) looks at how physical stores will continue to drive sales on- and offline as we look to 2025. Download the full report using the link above, or read on for a snapshot of our key findings.
The growth of online shopping has placed the role of the physical store under intense scrutiny over recent years. The drop in traditional shop-based sales has been seen as an indication that the future of physical retail is under threat, and its value to brands in decline.
The full picture is far more complex than first meets the eye. As consumers have moved online and started making use of new channels to purchase goods, the role of the physical store is by no means over – it is simply evolving.
Stores now play a significant role in driving online sales, as we move towards a true ‘omnichannel’ retail environment. Our research, in collaboration with Javelin Group research looks at how, in this new context, we should measure the value of stores.
Head of analytics and insight
If you would like further information on any of these topics, or to discuss a bespoke insight piece with us then please get in touch:
The impact of coronavirus
It is important to acknowledge the impact of COVID-19. The outbreak has created huge uncertainty and new challenges for the sector. We do not yet know what the full impact of the virus will be – on the health of retail long term, or on consumer behaviour.
Early research is encouraging. A recent study by intu, in collaboration with psychologist Donna Dawson, for example, shows that many consumers are keen to revert to pre-lockdown shopping and spending habits as soon as is feasible. See more on this in our report - The new normal: retail during and post COVID-19.
It is of course still too early to draw definitive conclusions on the full effects of the pandemic. However, as we move towards a new normal, the insights in our report show the longevity and continued value of the physical store. They should provide confidence to retailers and the wider industry as we navigate a challenging period for UK retail.
How is the role of the physical store changing?
Despite the rise of online shopping, research shows that £8 out of every £10 spent in the UK in 2025 will still be influenced by a physical store in some way.
Whilst in-store sales remain important, they are no longer the only function physical shops fulfil. The figure above also takes into account how a physical store presence now drives online trading – often known as The Halo Effect.
Here's Alex McCulloch, a Director at CACI, to explain more:
How is the sector adapting?
Landlords and retailers are adapting to the evolving role of the physical store in several ways.
1. Developing new models for assessing the value of physical stores
As the role of the physical store evolves, so too must the way we measure its value. Traditional models and KPIs for assessing the success and long term sustainability of physical outlets are outdated and no longer fit-for-purpose. They often fail to consider the significant role now played in driving online sales. We’re increasingly seeing landlords and retailers look for new ways to evaluate their physical assets.
2. Evolving use of space in shopping centres/areas
As people’s relationship with physical retail changes, landlords are adapting how they use space, to keep shoppers enticed and their centres sustainable in the long term. Many, for example, are increasing leisure provision. Our research confirms that now more than ever, shopping is about the experience. Visitors to intu centres are no longer focused solely on the retail; they want a ‘day out’.
3. New rental models: an evolving landlord-tenant relationship
As the role of the physical store evolves, traditional rental models are being challenged, and the landlord-tenant relationship is changing. In a new and fast-moving environment, flexibility is key – for both landlords and tenants. We’re beginning to see this reflected in a move towards shorter leases, with less rigidity around renewal terms.
For more information
Read the full report for our findings here