Five years ago, a typical non-food prime site retailer starting out and looking to reach its optimum market might have targeted as many as 200 sites to trade from.

Five years ago, a typical non-food prime site retailer starting out and looking to reach its optimum market might have targeted as many as 200 sites to trade from.

Three years ago, that figure would have reduced to between 100 and 150. Today, the figure is shrinking again. For such a retailer, it is increasingly difficult to justify each successive location beyond

75 stores, while anecdotal evidence suggests that for a growing number of retailers it is closer to 50.

This reflects just how far and how fast retailing is changing and how the development of additional routes to market has not only changed the competitive landscape but the economics of the marketplace.

As a result, the nature of the store of the future must necessarily be very different to that which we are used to today. Stores will become much more of a showcase for product and the experience of visiting a store will be more about shopping than simply buying.

A store geared to people buying will carry more product options whereas a store geared to shopping will be about inspiration and aspiration and much more about customer engagement. The store of the future will carry fewer products but its offer will need to have far more relevance to its target market. 

The customer experience is changing as consumers evolve and become more connected. Consumers are constantly connected to the internet through smart, portable and highly usable devices, they are in control of the technology they use and demand the latest technology from retailers. 

In this market, it will be vital that there is a seamless, joined up operating model that unites all the channels through which the retailer addresses its market. There is more to multichannel retailing than just having stores and a website. 

Changes will be required to support this model. Retailers will need to re-evaluate key areas of the business including range and inventory, marketing and customer services.

Retail will become much more about the brand and how the retailer can truly differentiate by adding value to the customer. In a market where there are increasingly too many mouths to feed, being distinctive and having the ability to communicate this in a compelling way will be prerequisites of success.

The store remains a vital channel for retailers. A recent survey by Deloitte found that 78% of customers bought their last item of clothing and accessories in-store, but rising retail stars are already operating to the new model and for many established players we expect significant downsizing of store portfolios in the medium to long term.

The solution will not be the same for every retailer, but those who fail to realise the fundamental transformation required may struggle to survive.

Economic conditions might be accelerating this process but they are not the driving force. This is a structural change in retail for which there is no reverse gear.

  • Richard Hyman, strategic retail adviser to Deloitte