FALSE: COVID-19 induced lockdowns pushed us all online, but whether this will be permanent is yet to be seen. H&M, the world’s second-largest clothes retailer with 5,000 stores worldwide, witnessed a fall in overall sales (-25% by November 2020) despite having built a good online presence. H&M are now considering whether bricks-and-mortar can play a role in driving online retailing further. Amazon, who reported its largest quarterly revenue ever ($125.56 billion end of 2020) is also considering 'bricks' to further 'clicks.' Amazon agreed a letting with British Land for 2,500 sqft for its Amazon fresh site and are actively looking for a few more sites to expand the range of goods for purchase outside of their normal grocery offering.
It is clear retailers with just an online presence weren't able to prevent the fallout from COVID-19 restrictions. All retailers, big or small, online and offline were faced with similar challenges.
Despite 2020 being a difficult year for retail 40 new stores opened across London. Although this figure is down by approximately 60%, this clearly demonstrates how certain brands still require a physical presence and continue to see benefits in operating from a physical location in some capacity.
According to the latest BNPPRE data, of the total investment into retail over half (53%) is designated towards a shop unit, followed by retail warehouses. Looking back at the past ten years, shop units have remained a popular choice followed by shopping centres amongst investors. Some funds believe an opportunity has opened up in the retail sector. Others believe bricks-and-mortar still hold value. For investors it always pays dividends to be ahead of the curve and in this case ahead of the evolution in retail.
'What' is changing in retail hasn't altered, the speed at which the change is occurring, has. What COVID-19 has done is reinforce the need for the right physical stores. The format of these stores will adapt to keep up with changing consumer preferences, but the need will remain.
FALSE: 2020 saw a number of high street empires collapse. High streets were left exposed with anchor tenants such as Arcadia and Debenhams exiting, leaving behind vast amounts of vacant space. The underlying trend of shoppers moving towards online retail has only been exacerbated by COVID-19. But the industry was already facing challenges prior to the pandemic.
It isn’t the end of all empires just yet. These empires are reshaping their offer, those that successfully do will remain household names. Those that succumbed to difficulties during what was a difficult year did not evolve fast enough to keep up with the changing consumer preferences. John Lewis is a good example, who have begun laying out a new strategy to shut down some of their stores to diversify in providing services such as home improvement and offering office space. John Lewis also have plans to build a residential property portfolio, identifying 20 potential sites for Build-to-Rent.
Evidently, we are likely to see more mergers and acquisitions as retailers consolidate, update store models, and build more presence online to offer the convenience and experience that cannot be offered online.