A new report from Barclays Corporate Banking predicts a significant boost for the UK physical retail sector, which has been hit hard by widespread closures during the pandemic. The report suggests that over the next 12 months, we can expect to see the opening of 17,000 local high street stores. This news comes as consumers express their eagerness for retailers to open stores in their neighborhoods, with a growing emphasis on sustainability-focused options.
The research shows that retailers themselves are overwhelmingly optimistic about future growth, with 80% expressing confidence in achieving growth within the next year. Of those, 41% are “very confident” in their prospects. Since reopening, 52% of retailers have reported an increase in the average spend of customers, with average purchases up 9% from pre-pandemic levels.
Titled “Retail Unlocked,” the report highlights a trend of British shoppers adapting to a post-lockdown world by prioritizing local businesses. Barclays’ data indicates that UK consumers are returning to physical stores with confidence as restrictions ease. In fact, 68% of consumers say they have felt safe or very safe returning to the high street. Furthermore, 40% plan to increase their in-store shopping over the coming year, favoring it as their preferred way to shop.
However, the report suggests that the benefits of this shift will be most prominent in local high streets rather than in larger cities. This is due to the continued prevalence of home and hybrid working patterns, with 44% of workers expecting these arrangements to continue into 2022. Of those, 16% anticipate working entirely from home, and 28% foresee a part-home, part-office model. As a result, 25% of consumers now believe that the best way for retailers to appeal to them is by opening stores in their local area.
In response to this demand, many retailers are reevaluating their location strategies. The report reveals that 18% of retail businesses with 10 or more employees are considering opening community stores, averaging five new premises per retailer. This presents the potential for up to 17,000 new local stores across the UK.
The report also highlights other key findings, such as retailers’ efforts to entice customers back to physical stores by offering experiences like concerts and exhibitions (29% of retailers). There is also an increasing demand for products promoting a healthy lifestyle (45% of retailers) and a rising interest in sustainable products with reduced environmental impacts (38% of retailers). Additionally, 40% of retailers now use data-led marketing strategies to attract more customers.
Karen Johnson, head of Retail and Wholesale for Barclays Corporate Banking, commented on the findings, stating, “E-commerce has been the undisputed winner of the pandemic, but community high streets are also not far behind, as shoppers seek to ‘look local’ and support the stores in their neighborhood. With the continuation of home working, this trend shows no sign of slowing down, and retailers are now evaluating their store locations to meet local demand.”
Useful links:
1. Safer public places: Urban centers and green spaces – Gov.uk
2. UK shoppers switched to local stores and built better connections with shopkeepers – The Guardian
