Last year saw a sharp rise in the number of bricks and mortar stores closing down on UK high streets. In fact, the total number of closures was nearly 50% higher than in 2021. In 2022, as the economy continued to reopen, retailers faced endless challenges including rising costs, with steeped increases in energy and wage bills in particular.
Although almost half of UK consumers say they’d rather shop in store than any other method, with footfall up 9.3% during peak periods in 2022, shoppers are becoming increasingly cautious. In the face of a looming recession, more than half of UK consumers are more conscious of what they spend their money on; they may be out and about, but that doesn’t mean they’re parting with their cash freely.
To overcome these challenges in 2023 and beyond, we’ll see more and more bricks and mortar retailers changing up how they use their physical space to maximise opportunities and revenue, with a number of key trends emerging across the industry.
Hybrid shopping experiences
This year will see an increase in retailers going from being ‘purists’, or retail-only stores, to embracing a hybrid environment. A smart use of the space they have will be key for their survival, with savvy retailers becoming hybrid locations that provide offerings beyond inventory. We’re seeing this happen with retail stores that offer event spaces or have opened up coffee shops within their locations.
In the same vein, we’re also seeing companies in other industries introducing retail components to their businesses – from beauty salons to bars, businesses are becoming imaginative when it comes to offering retail to boost revenue.
Just as we’ll see the demand for pop-up shops rise during 2023 as eCommerce retailers look to diversify their sales channels during the impending recession, we’re likely to see a number of permanent physical retail outlets shut up shop to go the flexible pop-up route. Pop-ups are definitely becoming increasingly popular due to their costing and location flexibility and are hugely attractive in the current economic climate as they mean no commitments for a long lease – one of the main overheads for a physical store.
The pop-up store revival will be partly fuelled by brands looking to take advantage of peak trading periods in the retail calendar, but at the same time, keep costs down. Flash retail or the flexible pop-up is ideal for hosting exciting product launches and for offering the engaging cross-channel customer experience that today’s shopper demands.
In fact, experiential retail will be key for keeping a competitive edge in 2023. More than half of UK consumers expect retailers to dedicate more space to experiences, with the majority of shoppers saying they’d be willing to spend more in retail stores that offer rich shopping experiences. This year and beyond, a strong experiential retail strategy will pay dividends. The right experience depends on a number of factors including the customer base and store format. Some retailers have had success by offering workshops or classes; others stores have benefitted from elevating the shopping experience through intelligent in-store design or automation.
If there’s one thing we can be sure of; 2023 will come with a number of challenges for the bricks and mortar store. The most successful retailers will be those who are agile enough to navigate curveballs and adapt to the ever-changing economic climate. Whether going hybrid or pop-up, or delivering a highly engaging in-store experience (or indeed embracing all three!) retailers who are most savvy with their space and have the tech to support their strategic and operational business decisions, will stand the best chance of getting ahead this year and beyond.