Technology has encroached on the high street but retailers are fighting back with imaginative offers.
The retail sector is in a state of flux. Retailers are rationalising their property portfolios and rightsizing store space. More shoppers are purchasing goods online, which they then either have delivered to their homes or collect from stores. Pure-play online brands are experimenting with bricks-and-mortar space and traditional high-street retail occupiers are moving from transactional retail space to more experiential space.
Amid all this change it is not easy for retailers to work out what is going on and how they need to respond. So Property Week commissioned location specialist CACI to look at how shopper trends have changed over the past five years.
To do this, CACI did a deep dive into its Shopper Dimensions database of 600,000 recent consumer surveys. These in-centre exit surveys, which regularly take place at more than 200 retail centres across the UK, ask shoppers questions about frequency of visit; dwell time; shops visited; retail and catering spend and conversion rates; and shopper demographics.
According to CACI, when pulled together this data offers a “unique insight into consumer behaviour” in the UK. So what does this information reveal when tracked back over the past five years?
First, in-centre engagement across a number of different metrics - retail and catering spend and conversion and dwell time - has grown each year since 2013. For instance, retail conversion has grown from 71% in 2013 to 79% in 2017, meaning shoppers are increasingly likely to make a purchase during their trip.
“However, 2017 has seen each of these engagement metrics fall below 2016 levels in line with the current UK economy and shopper confidence,” says Frances Goodfellow, senior consultant at CACI. “Whether this is a temporary blip or a longer-term trend, only time will tell.”
Frequency of visit has also declined 13% between 2013 and 2017.
The motivation behind shopper missions is noticeably changing. Destination-led trips - those that have a big shop or leisure/pleasure at their core - grew between 2013 and 2015 as shoppers increasingly looked for “experience and engagement” from centres, says Goodfellow. But there was a slight decline in destination-led trips from 2016 to 2017.
And although collectively this type of trip is the most valuable of the three ‘mission types’, Goodfellow says it is important not to neglect ‘convenience’ and ‘purpose-driven’ visits as they account for around three-quarters of all shopper missions.
“In volume terms, more than half of UK shopper missions are convenience-led [57.8%], with destination-led [22.6%] and purpose-driven [19.6%] trips making up the remainder of visits,” says Goodfellow. She adds that the format of a centre is not what motivates shoppers.
“A flagship-quality environment with strong design, the right mix of brands and the right catering and leisure will engage shoppers, whether that is in town, on a park or in a regional mall,” says Goodfellow.
“A smaller, more functional centre will drive different trips - meeting those local or purpose-driven needs. For retailers, in particular, it is more important to understand what motivates the shopper than to assume a one-size-fits-all format that you roll on to all parks or all shopping centres.”
Shopping habits don’t vary significantly geographically, but catering spend in the south of England is consistently higher than in the north.
“Given the demographic make-up of London, with high proportions of young adults, who have a high propensity to eat out, this is to be expected,” says Goodfellow. “The difference in spend is also likely explained by London and the south being the hub for new innovative concepts.”
The biggest changes occurring nationally surround online retail, including click & collect, with spend and engagement consistently growing.
“The amount being spent online in the UK has continued to grow since 2013, with an average annual growth of 14% each year since 2013,” says Goodfellow.
However, click & collect remains a relatively small percentage of in-centre engagement. “The proportions captured engaging with click & collect on the day of visiting a centre have grown from 2.3% to 2.8% (+23%), between 2014 and 2017. This growth is, however, no doubt masked by the diversification of this channel between these two periods. Five years ago, click & collect was nearly exclusively in-store, and consequently exclusively in-centre. This has rapidly expanded into a vast network of local Collect+ points and supermarket chains, diluting the proportion of all collections conducted in a centre,” she explains.
At Christmas time each of these online metrics is higher than during the rest of the year.
“During the non-Christmas period in 2017, 48% of shoppers stated that they had shopped online in the past month. During the lead-up to Christmas 2016, this reached 63%,” says Goodfellow.
“Similarly, the amount shoppers spent online in 2016 was 30% higher in the lead-up to Christmas, compared with the rest of the year, and a 7% rise on the lead-up to Christmas 2015. The value of click & collect purchases increased 29% between Christmas 2014 and 2016, with the proportion using click & collect consistently higher each Christmas compared with the rest of that year,” she adds.
With 2017 Christmas trading already under way - CACI counts peak trading period as November and December - retailers will be hoping that this pattern continues.
They will also be keeping their fingers crossed that the recent drop in the vital metrics of retail and catering spend and conversion, and dwell time, is just a temporary blip.
One of the more striking changes occurring in the retail sector surrounds what Goodfellow describes as flagship centres, which are increasingly adapting their offer to ensure they can provide an experience rather than just perform a function that can easily be substituted with an online purchase.
“At flagship destination centres, retailers are looking to showcase their brand and products, with stores not just acting as a base for transactions, but to grow brand awareness and support shoppers who want to experience a product and potentially purchase later online,” says Goodfellow.
Non-traditional shopping centre brands such as Tesla are increasingly present in regional malls, showcasing their product and increasing the brand profile (at Westfield London and Bluewater in Kent).
Ikea has launched a temporary space in Greek Street, London, to celebrate 30 years of trading in the UK. The retailer has set up a ‘house’ with multiple floors representing different eras, demonstrating Ikea’s impact on UK homes since the 1980s. Rooms reflect both the furniture and popular entertainment that dominated these decades. Evening events include cocktails and canapés with TV, music and games from each era.