Page Header Coffee1

Retailers rip up the old rulebook to trial new concepts and locations

19 September, 2021
Retail has always been a dynamic industry. But now more than ever, as we emerge from the shock of the Covid pandemic that rocked business norms, retailers are tearing up the old rulebooks to explore new directions and fresh opportunities.

As retailers faced up to the reality of life under lockdown, many were forced to urgently reassess core strategies and stress-test operating formats to plan for a markedly different post-pandemic trading environment. But out of adversity, often comes innovation.

Who would have thought five years ago that we would see Ikea taking space on London’s Oxford Street or Dobbies opening stores in city centres? In today’s new, and still ever-evolving, retail environment these new formats make sense and are part of a wider move that is redrawing the traditional retail landscape.

The seeds for this change were already being sewn pre-pandemic, with bricks-and-mortar retailers evolving to embrace the steady rise of online shopping. But a year of on/off lockdowns pushed shoppers online in unprecedented numbers, cementing these new shopping habits, while consumers’ thirst for convenience continues unabated. As a result, in-store retail spend across suburban and regional hubs is proving resilient, as many people continue to work at least part of the week from home and want to be able to shop locally.

Add to this a downward correction in rents, particularly in more urban areas, making it more affordable for retailers to enter previously expensive markets to test new formats, and you can see how the stage has been set over the last 18 months for a new wave of smaller, in-town retail formats.

This new strategic focus has been particularly prevalent for some of the more traditional big-box, out-of-town retailers. Many are now turning their attention to convenience and getting closer to their target shoppers using smaller urban and suburban stores, rather than asking shoppers to travel out to them. This will also be amplified in future years as secondary retail parks are increasingly earmarked for residential conversion.

Ikea’s new urban strategy is a prime example. In stark departure from its iconic 300,000+ sq ft big blue boxes located on retail parks, its proposed store in the 100,000 sq ft former Topshop unit on Oxford Street, will see it open at the epicentre of the UK’s busiest retail parade. But this will not be its first urban venture. The Swedish retailer’s property partner, Ingka Centres, acquired the King’s Mall in Hammersmith in 2019 with plans to create a smaller-format Ikea store, which is expected to open later this year. These two stores will enable Ikea to tap directly into the lucrative central London market, offering a level of convenience never previously possible with its larger out-of-town formats.

The new Little Dobbies urban stores in London’s Westbourne Grove, Bristol and Edinburgh, are also a direct response to increased consumer demand for convenience, but also the rising popularity of urban gardening sparked by the Covid lockdowns. The same is true for B&Q with the opening of a number of express format in the likes of Wandsworth, Tooting, Wood Green, and Homebase with its new Decorate by Homebase stores in Cheadle and Sutton, enabling suburban customers easier access to home-improvement essentials. Young DIY-ers and gardeners borne out of the pandemic are driving part of this growth.

Adding to this town centre charge, Pets at Home kicked off 2021 by opening smaller-format high street stores in Putney and Camden and is now said to be targeting 20-25 stores within the M25 over the next few years. Each will be just 3,500-4,000 sq ft – a quarter to a half its normal store size.

But it is not solely the big-box retailers that are utilising new formats to access more lucrative markets.

Pret, which was hit hard by the closure of London offices during Covid lockdowns, revealed a £100m investment from owner JAB and founder Sinclair Beecham in September, which will enable it to open more than 200 new stores across the UK. Target locations are in regional and suburban markets where workers are spending a larger proportion of their working week. Don’t be surprised to see them opening in a smaller town close to you soon.

Convenience retailers and supermarkets are also ramping up their drive to access hyper-local markets, with Co-Op launching 24-hour, self-serve micro-supermarkets in office blocks and train stations, with the first to open at British manufacturer Numatic’s Somerset base.

Earlier this year Iceland also unveiled its new Swift concept in Newcastle’s Longbenton, focused on high-traffic, urban locations and seeking to rival the likes of Sainsbury’s Local and Tesco Express. Meanwhile, Poundland also launched its Local format in Kendray, Barnsley, and Hornsea in East Yorkshire in a bid to get closer to where its shoppers live.

With these new concepts representing a march back into town and city centre retail spaces, the question is – could this now represent the much-needed boost needed by these retail parades to create a sustainable future? Are occupiers generally moving from a period of store consolidation to one of expansion – albeit smaller formats but taking the store to the consumer as opposed to pulling the consumer to the store ?

Time will tell on that front, but what we do know for sure is that this new wave of urban and suburban concepts is only growing stronger and there will undoubtedly be many more interesting and innovative new formats to emerge from the chaos of Covid over the next few months.

Bob Dylan’s 1964 hit ‘These times, they are a-changin’’ still rings very true today for retail.

Sign up for property alerts

Enter your name and email address below to subscribe to our property email alerts.