When department store BHS went bust last year, it left a hole in 164 retail spaces across the country. It’s the latest in a string of big chains to collapse over the last decade. Lots of retailers have sprouted up since, yet none have shown any sign they will build similarly enormous real estate footprints in order to dominate high streets in the same way, regardless of how successful they are. ‘If a new brand in the UK wanted nationwide coverage, it would probably only need 50 stores across the country,’ says David Martin, joint managing director of retail consultancy M Worldwide. ‘That, plus a good digital and online presence.’
Not only do retailers not need to open hundreds of sites, but they couldn’t if they wanted to. Most new retailers are steering clear of identical ‘cookie cutter’ shops, favouring the experience-driven, community-building model instead – which is near impossible to scale. Instead, the retailers born on the internet have seen the value of opening individual shops with their own unique design, character and identity. The futuristic store multitasks as both a marketing and a sales platform, but thanks to everything from training and retaining staff, to in-house baristas, event spaces, and more and more technology, it’s inordinately more expensive than the standard shop format.
In place of flooding the UK’s high streets, smaller companies have been embracing pop-ups, so the brand can make its mark in an area and then move on to somewhere else, avoiding long leases in the process. ‘Now, prime high-footfall locations are becoming less and less important,’ says Martin. ‘With the use of GPS and mapping, we can find our way to anywhere.’ Levi’s is one established brand trialling new formats, from pop-ups to secret shops. John Lewis, meanwhile, is hunting for ways to use up excess space in its department stores; it recently said it might open co-working spaces in some of its outlets.
‘The days of that cookie-cutter approach to store expansion, or what to do with a space, are over,’ says Marie Hickey, director of commercial research at estate agent Savills. ‘[US beauty retailer] Sephora’s just announced a smaller format for more neighbourhood locations. It’s done the big massive Sephora, and realised it should have a different type of offering, with a more personalised service, for a certain market.’
Tesla uses lots of small showrooms rather than larger dealerships to sell its vehicles, with a few exemplary models, and colour and material swatches, in each outlet. UK furniture startups Loaf, Sofa.com and Made also stock a limited product selection in their city-centre showrooms to showcase to their target audience – a young, urban consumer, who can buy online at home.
Fashion retailers are adopting a similar inventory-light model in the US; online fashion rental startup Rent the Runway has a rotating selection of its online range for customers to try on at its five stores, while e-commerce menswear brand Bonobos lets customers pre-book appointments with stylists in-store, where the entire inventory is available to try on – but not take home. Instead, customers can order items to be home delivered later that day. The model means each store is always fully stocked while remaining relatively small. The first ‘Guideshop’ opened in 2012, and there are now 41 across the US.
First appeared in issue 19 Oct/Nov