Research commissioned by Webloyalty looks at the impact of mobile on multichannel retail. This section looks at how the High Street is responding.

1. 4
The high street

2. High street losing its retail crown
Other locations and channels are weakening the high street’s traditional dominance of retail
1994 2014
Gone are the days when the high street was the main port of call for
consumers shopping needs. In the early 90s around three quarters of all retail 4.9% High street 12.3%
spend made in physical stores was carried out on the high street. Since then
the proliferation of OOT centres has diverted some of this spend to the 23.9% Neighbourhood
peripheries of town and city centres. By 2010 the high street’s share of 40.2%
physical store sales had fallen to 47.3%. Meanwhile the growth of online
50.2%
commerce over the last decade has seen the high street’s share of total retail Out-of-town 31.7%
spend fall from 49.4% in 2000 to 42.7% in 2010.
21.0% Non store
By 2014 we forecast that the high street’s share of retail spend will have fallen
by a further 2.5% points to 40.2%, mostly at the expense of more sales going 17.9%
through OOT centres and online.
Percentage share of total retail spend by location
High street stores Neighbourhood stores Out-of-town stores Non store
Losing share of spend: Losing share of spend: Gaining share of spend: Gaining share of spend:
42.7% to 40.2% of spend (2010-2014) 16.2% to 15.7% of spend (2010-2014) 31.4% to 31.7% of spend (2010-2014) 9.6% to 12.3% of spend (2010-2014)
The high street will continue to be the Though neighbourhood’s share of spend Out of town remains a convenient and Retail spend through non store channels
largest retail location. However it will lose will dip slightly between 2010 and 2014 the popular channel for consumers. Retailers continues to grow, mainly driven by the
share going forward at the expense of long term trend is that there will be a especially of big ticket items and home growth of sales through the Internet.
other locations and channels. resurgence in local shopping as consumers related goods will continue to open more Improvements in online offers, greater
Migration of spend online for some look for convenience and concerns about stores in these locations as they provide flexibility in delivery and new technologies
categories such as music and video will see local sourcing and food miles grow. Chain ample space to display ranges effectively including smart phones, will make
these stores gradually disappear from the stores and independents are improving and rents are comparatively cheaper than shopping more mobile and convenient and
high street. shop fits and store environments to cater high street locations. further drive more spend through non
for growing local demand. physical channels.
18

3. Location changes
High street underperforming other locations
The high street has always been at the heart of most shopping trips and will +4.4% 2000-2009
continue to account for a significant share of retail spend. However retailers’
location strategies are changing. Typical high street retailers are closing
stores and consolidating their store estates as more sales go online. Other 2010-2014
retailers such as Mothercare are moving to OOT retail parks, where it is easier
and cheaper to open larger footprint stores. In terms of physical stores more
retailers are now reaching the consumer through out of town and this is +2.4% +2.3%
reflected in out-of-town’s higher average annual sales growth over the last
+2.1%
decade compared to in-town locations.
+1.5% +1.4% +1.3%
High streets are the weakest retail location and have particularly struggled +0.8%
over the last few years due to their greater exposure to discretionary spend
compared to out-of-town and neighbourhood locations, which generate a
larger proportion of sales through food. In 2009 high street sales declined
Physical Out-of-town Neighbourhood High street
3.6% following the collapse of major chains such as Woolworths, Zavvi and
Rosebys. While the location fared better in 2010 with sales up by a marginal
stores stores stores stores
0.2%, the growth marked the weakest uplift in high street sales since 1991. Average annual retail growth and forecasts across shopping locations
Space continues to contract on the high street and has worsened during the
recession due to vacancy rates rising significantly as weaker players dropped
out of the market. Between 2000 and 2009 space on the high street declined 2000-2009 2010-2014
by 8.9%, this compared to growth in out-of-town space of 34.0% over the
same period. Looking ahead, high street space growth is set to decline by
4.0%, while out-of-town will grow by 4.8% as major retailers scale back on
high street stores opting instead for out-of-town sites, which have +34.0%
comparatively lower rents per sq ft. Bigger stores located out-of-town allow
space for better merchandising and also provide parking facilities (often free
of charge) close to store, a factor that is becoming increasingly important
+4.8% -4.0%
with the growth of Click and Collect services. -8.9%
Out-of-town High street Out-of-town High street
19 Space growth and forecasts Out-of-town vs. High street

4. Stores on the verge of a tipping point
High street configuration will adapt as spend in some sectors increasingly moves online
Music & Video Electricals
The future configuration of high 1,600 90
6,700 45
streets will inevitably be impacted
80
by the growth of online 1,400
40
6,600
commerce. While the internet’s 70
1,200 35
share of retail spend is rising
60 6,500
across all sectors, the rate at 1,000 30
which it is eating up share varies 50 6,400 25
considerably. 800
40
6,300 20
600
The stores that are most likely to 30
15
disappear from our high streets 400 6,200
20
are the ones that are losing most 10
share to online. With the 200 10 6,100
5
digitisation of multimedia
0 0
content, the ease of price 6,000 0
2010 2011 2012 2013 2014
comparison and the general 2010 2011 2012 2013 2014
convenience of online, there will Online share Store numbers
Online share Store numbers
be less need for stores whose
propositions are centred on
technology and entertainment Clothing Health & Beauty
products, which will lead to a big 41,000 14 14,560 6
drop off in the number of Music &
12 14,540
Video and Electricals stores in 5
40,500
high street locations over the 14,520
10
coming years. 4
14,500
40,000
8
Meanwhile clothing will continue
14,480 3
to be prominently shopped for in
6
physical stores as consumers like 39,500
14,460
to try on items before they buy. 2
4
Health and beauty stores will 14,440
39,000
always have a place on the high 2
1
14,420
street as many have diversified
their offer to include services such 38,500 0 14,400 0
as manicures, hairdressing and 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
other types of activities that can’t
be provided online. Online share Store numbers Online share Store numbers
20 Store numbers and online share of sector retail spend. Figures of the left axis (blue line) indicate number of stores.
Figures on right axis (red line) indicate % of online share of retail spend in sector.

5. The future of high streets
What was once primarily a retail destination will gradually shift to become a place more for
social and leisure activities and a hub for localness
In next few years high streets across the UK are likely to see significant changes. While there are likely to be
variances depending on different locations in terms of regions and whether they are secondary or tertiary,
there are a number of aspects that are likely to become common place across high streets nation wide.
The unique and innovative
high street – While the clone town Britain
label has been doing the rounds for years,
we could see a reversal in this area as high
streets become more tailored to local
interests supporting local sourcing and
local entrepreneurs to offer a more
diversified and compelling shopping
experience than out-of-town retail parks
and malls. Pop ups and innovative
The social and independent boutique style stores could
leisure high street – As a greater become more prominent.
proportion of retail spend moves online
and to out-of-town locations, the role of
the high street is set to change, moving
away from being predominantly a The wired high street – As
shopping destination to a more leisure- smart phone usage really picks up and the
based centre. Coffee shops and high street becomes more leisure
restaurants will continue to increase their oriented, wi-fi will become more in
share of space on high streets to cater for demand as consumers spend more time
the social spectrum. Retailers that remain socialising in the town centre. Coffee
on the high street are likely to become houses have offered free wi-fi for years
collection centres for online orders or act and now some retailers such as Tesco and
as marketing tools to encourage O2 are beginning to offer it in their stores.
customers to try products before they buy A shared free wi-fi service could be offered
online. on high streets. Retailers and other tenants
could work in collaboration with local
councils to provide the service and use
location-aware technologies to send
targeted offers and discounts to customers
for different stores as they stroll along the
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high street.