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Bricks and mortar retailers challenged to embrace digital

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Bricks and mortar retailers are being challenged to embrace digital in the light of new figures that show a fall in shop openings ahead of the UK’s European Union Referendum this summer.

Technology company Fujitsu and delivery specialist Stuart both say it’s now vital that traders embrace rather than shun the digital and mobile market, since shoppers still believe the high street experience is critical.

Their comments come as figures from the Local Data Company (LDC) suggest that retailers held back from opening new stores in the half-year to the end of June 2016. Some 1,997 more shops were closed than were opened during that time. That contrasts with the second half of 2015 when there were 335 more shops opened than closed in Great Britain. In the first half of this year, openings fell by 15% to 20,804, while closures The dramatic turnaround came as openings fell by 15% to 20,804, while closures fell by 5% to 22,801.

Matthew Hopkinson, of the LDC, said growth had “slackened significantly” in the half-year leading up to the referendum, in contraast with a 2.3% improvement in vacancy rates since 2011.

“Of note,” he said, “is the structural change in the number of retail units by location type in the last five years with a net loss of over 5,000 units but with out-of-town retail parks growing by nearly 1,300 new units. Not only how we ‘shop’ but where we shop has changed dramatically.”

Rupal Karia, managing director of retail and hospitality, UK and Ireland at Fujitsu, said: “The fact that we have seen a dramatic fall in store openings in the first half of the year highlights the highly digital and mobile market that retailers are operating in today. However, the high street is still incredibly important, even for online businesses, and shouldn’t be ignored. By having a strong presence in the high street, retailers can ensure customers remain at the heart of their offering by giving them the choice of a shopping experience that works for them, whether that is hitting the shops in person, logging on to a website remotely or using their mobiles.

“The growth in the popularity of online shopping shouldn’t be viewed as a threat to the high street; it should be seen as an opportunity for bricks and mortar retailers to reinvent themselves and embrace digital. As consumers now have a multitude of options at their disposal, they are becoming increasingly intolerant of retailers who won’t provide them with the means to shop in the way they prefer. It is essential therefore to have seamlessly integrated channels that flow from the shop floor to the back end systems through to the online store. This will enable customers to move freely from one to the other during their shopping experience and shop the way they wish in this new digital age.”

David Saenz, UK MD at Stuart, said: “Bricks and mortar high street shops have long struggled to compete with their online counterparts. As a result we’ve seen a growing number of traditional retailers lose market share to those with an online offering that better meets consumer expectations, something highlighted in today’s findings. Some of those brands have sadly folded altogether. While it’s easy to suggest they lost out simply because they couldn’t compete on price, there is something else is driving consumers’ shopping decisions: a growing desire for convenience and speed.

“And so we have a growing disconnect between what the shopper of today expects and what their favourite high street retailers are able to deliver. One which is increasingly impacting the high street’s ability to expand. But this isn’t rocket science. Many high street brands have managed to master almost every element of the online customer journey. All except for one: delivery. That all-important ‘last mile’. Convenient delivery is nothing new, but for one reason or another the high street has yet to catch on. This needs to change. For those that do, there is a huge opportunity available. Consumers, given the right delivery options, are willing to spend £4.9bn a year more with their favourite high street retailer online.

“The message is clear to retailers, modernise or face extinction.”

The LDC figures found that England had the lowest national vacancy rate at 11.3%, followed by Scotland at 12.1% and Wales at 15.1%. Retail parks gained more units than other types of location, while shopping centres made the best improvement in vacancy rates, and town cetnres proved resilient to change.

Hopkinson said: “This new report sets the benchmarks for developments on the high street for the coming years which will see the UK exit the EU and strike out on its own. Increased costs for retailers coupled with fierce competition and over supply of shops is likely to see increased levels of distress and failure among retailers with survival of the fittest being the order of the day.”

He added: “Since the end of June we have seen the vacancy rate in leisure outlets inch upwards. Whether this will be just a twitch in the statistics or the beginning of a long term reversal will become clear over the coming months. For example, the 23% net growth in restaurants since 2010 is unlikely to continue. Business, government and the media are all sniffing the air and scanning the horizon for any piece of news that might tell us what happens next.”

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