British retailers are feeling the pain as online retailers compete on convenience. New River director Emma Mackenzie said the solution to evening the score might be in implementing an online/physical hybrid practice: click-and-collect, which impacts the design of new developments.
The pressure on retailers is immense. With tax hikes, rising costs and customers not quite as willing to part with a pound, retailers are struggling. Tenants are constantly looking for ways to make money and share costs. They are shedding stores that are not turning a profit, Mackenzie said, and constantly improving the online offer.
Thanks largely to Amazon, UK logistics supply is just barely keeping pace with demand; in 2016, take-up increased by 10%, according to a new report published by BNP Paribas. With most merchandise passing through physical stores during its life cycle, the demand on the supply chain is also showing strain in retail shopping centres.
“It is forcing retailers to maximise their space,” Mackenzie said.
Most shopping centres were not built for today’s supply chain and retailers have adapted by using tools like click-and-collect, an imperfect solution.
There is rarely a large central space for workers to gather the sold merchandise and ready it to be picked up. There are rarely seamless ways to check out for purchases paid for online, and it often feels like a bolted-on service.
When Debenham’s debuted click-and-collect, it consisted of a counter attended by one person in a dark corner on the fourth floor. It is now in a huge area on the first floor where shoppers can nip in and get out easily. But that convenience is costing retailers.
“Retailers do not make money on click-and-collect,” Mackenzie said.
There are about 400 click-and-collect purchases per day at New River facilities, and up to 700 at Christmastime. Often shoppers will buy several of the same thing, take them home to try them on and then return the items they do not want. Having a large range of items, which helps get people in the stores, costs money retailers hurt to spend, and all those returns have an impact on the bottom line.
To combat this, many retailers are placing click-and-collect counters right next to changing rooms which helps to get the stock into circulation quicker.
“Convenience is very big,” Mackenzie said. “Accessibility is the one thing everyone wants, no matter how much they spend.”
Join Emma Mackenzie and other industry experts at Bisnow's Future of Retail event on 27 April, where you will discover why London developers are not giving up on brick-and-mortar.
