Current trends in retailing and the future of retail property Andrew - - PowerPoint PPT Presentation

Current trends in retailing and the future of retail property

Andrew Bolitho - Property, Energy, Planning and Transport Policy Advisor

Lobbying Industry data and information Media management On Pack Recycling Label Global Standards Events www.brc.org.uk

BRC Membership

The BRC is the authoritative voice for retail recognised for its powerful campaigning and influence with governments and as a provider of excellent retail information.

The BRC represents

Over 80% of the retail sector 30,000 small and medium sized retailers Over 75 major retail members Over 190 fascias wide range of large to small, out-of-town to high street, Located in London, Brussels and Edinburgh

Economic overview

• 3.0%
• 2.5%
• 2.0%
• 1.5%
• 1.0%
• 0.5%

0.0% 0.5% 1.0% 1.5% 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 Source: ONS

Source: ONS

200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Claimant count 000's

• 2.0%
• 1.5%
• 1.0%
• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0%

• 45
• 40
• 35
• 30
• 25
• 20
• 15
• 10
• 5

Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13

Consumer spending % change Consumer Confidence

Consumer spending Consumer confidence

Source: ONS & GFK

Source: Bank of England

Rolling 3-month average

Source: BRC

• 4%
• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 6% 2009 2010 2011 2012 2013 % change year-on-year Total sales LFL sales

Source: BRC 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Online % change year-on-year

Source: BRC % change year-on-year (3 month average)

• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13

Online non-food sales Total non-food sales Non-food (excl. online)

Source: BRC 0% 3% 6% 9% 12% 15% 18% 21% Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Greater London South East East Midlands Scotland South West East West Midlands North & Yorkshire Wales Northern Ireland Weighted UK Average Vacancy rates

£bn as per cent of total

2013

Source: BRC

Source: Bank of England

 Rise of online retailing  Expansion of the supermarkets into non-food

products and lines

 Leases and renewals  Recognition that there is too much retail space  Increase in level of exports

Sir Phillip Green: [on closing 260 stores] “All the landlords may turn up with completely different deals, based on the market being a very different place.”

Statement: November 2011

“Do you need to build hypermarkets in the UK when the internet is taking so much growth in electricals, in clothing, in general merchandise?”

Philip Clarke, CEO, Tesco, January 2012

Ten years ago, larger retailers would have needed stores in about 250 places in the UK to reach customers in most of the country. “Now, with the surge in online shopping, and with the larger centres getting stronger, many retailers can cover the country with stores in 100 centres,” says Mr Dalgleish.

Retail Week: April 2012

Sean Gillies, head of retail at Savills, the property consultancy, says the contraction is being caused by “structural and cyclical

• change. The cyclical part is the economic

side, and the structural change is the growth of the internet and multi-channel retailing. There is also an ageing population profile.”

Financial Times: April 2012

100 200 300 400 500 600 700 800 900 2 4 6 8 10 12 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 £ million % of total retail sales Internet retail sales, £ millions (RHS) Internet sales as a % of total retail sales (LHS)

Source: ONS

Source: Eurostat

115,000 120,000 125,000 130,000 135,000 140,000 145,000 150,000 155,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e Source: Verdict

Floor space and shop numbers

559 559 246.6 527 527 221.2 Floorspace (million sq ft) Shop numbers (000s) 2010 2020

In Town and Out of Town

30,000 7,000 20,700 6,860 In-town Out-of-town 2010 2020

Source: Bank of England

• Technology - Commerce
• e-commerce
• m-commerce
• Social media (f-commerce)
• Technology - Marketing and Advertising
• QR codes
• Near Field Communication (NFC)
• Interaction digital advertising
• Wi-Fi
• Technology - Supply Chains
• Efficient sourcing
• Inventory management

Seamless integration across the multi-channel platform E-commerce

• Sales growth of 20% per annum
• Accounts for 10% of all retail sales (c. £30 billion)
• Online retail searches growing by 40%

M-commerce

• Sales growth of 150% per annum
• Accounts for 5% of online spend (c. £1.5 billion)
• Online mobile retail searches growing by 214%
• NFC – mobile wallets “Quick Tap”

Social media (F-commerce)

• ASOS first retailer in Europe to open Facebook shop

Desktop

77% 77%

Mobi bile

109% 109%

23% 23%

Smart rtphone

102% 102%

57% 57%

Tablet

288% 288%

43% 43%

Total

10% 10% 100 100%

Growth YOY

Proportion

• 3%

Retail searches breakdown by device

Source: BRC

Future Developments

3D Printing

Retailers

• Tesco is assessing the possibility of printing 3D products in-store, with its technology team

currently testing 3D printers to explore future in-store applications.

• Amazon has launched a section of their website that sells 3D printer and supplies.
• Staples has plans to set up a new service called "Staples Easy 3D“ that will allow

customers to upload their designs to Staples' website, then pick up the printed objects at their local store.

• Sainsbury’s is preparing its 3D printing strategy to be revealed later this year.
• We have even seen this technology used to create 3D chocolate faces at FabCafe in Japan

and by ChocEdge in the UK. Fujifilm

• In 2012, Fujifilm discussed introducing 3D printers using the established kiosk model

that's been successful for digital photo printing. Kiosks would be placed in retail store and a catalogue of objects would be available for purchase, with the products on offer

• ccasionally rotated to provide variety.

Food

• NASA and a Texas-based Systems & Materials Research Corporation are exploring the

possibility of using a "3D printer" on deep space missions to make food in space. 3D printing of food may be revolutionary for the food industry - tissue engineering reduces CO2 emissions with no animals, land use, chemicals or transport and is also heralded as a solution to food shortages.

Future Developments

Rise of the robots

Hointer, a US mens fashion retailer, is leading the way to robots running some of our retail stores.

• The store has no salespeople, confusing signs, or stacks of clothes to riffle through to find the right size.

Instead, lines of clothes in hundreds of styles hang for you to browse through.

• When you find something you like, you scan the QR code on the tag, pick your size on the Hointer app with

your smartphone, and your selection is automatically delivered to the changing room via a chute from the German robot-operated stockroom.

• To pay, you put your items in a bag, checkout by swiping your credit card at a station, and walk out the door.
• The store even offers free automated alterations

It’s as close to the ease of shopping online in the physical world as you can get.

Burberry Regent Street in London brings their online marketing in-store, to create 'Burberry World Live', which claims to offer customers the physical expression of the brand's most innovative digital launches in recent times.

• The store’s features include a 22ft-high screen, 500 hidden

speakers and a hydraulic stage.

• It also showcases RFID microchips on clothing and

accessories, so when customers try on clothing the mirror transforms into a screen, which shows the garment on the

• catwalk. Related catwalk footage is also triggered when

products are taken near video screens throughout the store.

• There is also a digitally enabled clothing gallery.

Source: Bank of England

 Rise of online leading to changes in distribution

• Higher concentration of warehouse vs brick and mortar

stores

• Delivery to door and click and collect

 Enhancing the customer experience

• Innovation in retail technology
• Multiple consumer offers in store i.e. coffee shops,

childcare, health and education

 Managing the decline of retail on our high streets

• Providing solutions to oversubscription of retail space

 Delivery of flexibility within change of use order

• temporary development rights for retail to residential –

April 2014

 Drive towards enhancing energy efficiency in commercial

buildings

• Minimum Energy Performance Standards
• Energy Savings Opportunity Scheme

 Greater focus on better town centre planning

• Delivering diversity to enhance the high street
• Providing long term clarity for investors/developers
• Enabling out of hours delivery

 Delivery of consistent planning decisions at a local level  Changes in the ways in which we shop  Innovation in the customer experience and multiple in-

store offers

 Managing the decline of the high street  Ensuring the right level of appropriate retail space

remains both In Town and Out of Town

 Creating a vision for the future of retail

Source: Bank of England

Thank You

Andew.bolitho@brc.org.uk

Source: Bank of England

What is NFC? short-range wireless technology which enables data to be transferred between smartphones and other devices. The technology is still in early development stage, but there is a growing number of retailers trialling NFC in-store – particularly in France. What is the development? French hypermarket, E. Leclerc, has introduced NFC tags on its products in France. Why do we like it?

• Shoppers simply tap NFC tags with their mobile phone to add

products to a virtual shopping basket.

• NFC tags call up product information, such as allergen

information.

• Prior to shopping, smartphone owners can set a shopping

budget which is monitored by the app.

• Users also receive discounts or promotions that are embedded in

the tag.

• Products can be paid for in-store via the app, and also ordered

for home delivery

What is the development? John Lewis, Ocado and Argos introduced ‘pop-up’ QR code stores in the UK to encourage 2011 Christmas sales. Why do we like it? John Lewis:

• Rolled out to 129 UK stores; customers could ‘click and collect’

items before 2pm the next day, avoiding the Christmas queues.

• 54% increase in the use of ‘click and collect’
• The QR code stores were placed in Waitrose windows, meaning

shoppers could conveniently combine their grocery and Christmas gift shopping. Ocado:

• The UK’s first virtual store.
• Ocado’s QR code stores make use of empty high street shop

fronts. Argos:

• consumers point their smartphone at the QR code alongside a

product whilst travelling through London Paddington station, and collect it from an Argos store the same day.

What is the development? Meat Pack, a shoe retailer in Guatemala famous for its heavily discounted designer shoes, in collaboration with Google, launched a discount marketing app called ‘Hijack’ to entice consumers from competitor stores around the mall. Why do we like it?

• Using GPS tracking , Hijack recognizes consumers entering

competitors’ stores and triggers a discount that starts at 99% and decreases by 1% each second until they enter the Meat Pack store. Those who reached the stores faster, got better deals.

• Over 600 customers raced to the store, being ‘hijacked’

from competitors, with the highest discount received a massive 86%.

What is the development? PayPal and Zapp, a mobile phone app company, have both independently developed their

• wn mobile payments service without the need for a wallet.

Why do we like it?

• Zapp:
• Zapp and Worldpay, a payments firm, have callaborated to provide a service that enables

smartphone users to pay for products in-store with their phone. Consumers can simply enter a code or scan a barcode at the till using their mobile, with the payment taking only 12 seconds.

• WH Smith, Lidl, Superdrug, and McDonalds have signed up to the scheme which will be

available to the online banking customers of Barclays, NatWest, Lloyds and Nationwide by 2014.

• PayPal:
• Products can be paid for in-store by checking-in with the app which is then identified by

the stores tills and charged for by the cashier. The customer’s profile is also sent to the till, allowing staff to treat customers as regulars.

• Restaurants may give customers access to their PayPal bill, enabling them to add items to

their bill without troubling staff.

• A ‘Bill me Later’ Service is incorporated so credit is accessible in seconds.
• Users can pay for products and have them ready for collection before they even enter a

store.

• PayPal’s app includes all its existing services, allowing consumers to effortlessly switch

between their payment sources.

• The Bingham Hotel (London) allows users to use a ‘Pay with Your Face’ service by simply

showing their face to the receptionist, and if it matches their PayPal profile photo the room is charged to their PayPal account.

Lego uses augmented reality to boost sales

Lego has introduced augmented reality displays to its own-brand stores, which enable customers to hold a product box up to a screen to reveal what the model looks like when built. The displays are already demonstrating results, customers who engage with them are spending between 20-40% more than customers who don’t.