On day two of our annual gathering of retail property and placemaking experts, Revo Liverpool 2017, Retail Week broke the news that Microsoft were close to securing a UK store.
Located on a prominent corner site of Oxford Circus, the shop is set to rival Apple’s shop on Regent Street.
It is a great deal that demonstrates the retail market is alive and kicking – not down and out as sentiment can sometimes imply.
Clearly not all towns are going to attract the global tech behemoth, nor is one store opening in central London a bellwether of what’s to come, but in my view it is further recognition that a physical presence is key for sales, service and branding.
The deal raises more questions around what the store of the future is – what will it look like, how will retailers adapt and, specifically for our industry, how does this impact upon retail property and change how we do business?
It is clear that many in our sector recognise the need to think ever more laterally and creatively, and to evolve retail destinations into places that people feel compelled to visit regularly.
Indeed, in order to keep up with the changing pace of retail, those responsible for store estates will also have to become marketing gurus.
“I was asked if the retailers were nailing the brand experience yet. I think we’re on the cusp – those that are doing it well range from the global brands such as Apple and Nike, to smaller retailers such as Lululemon and Rapha”
The future isn’t so much about property in the traditional sense, it’s about finding a space that will showcase a brand and form part of the retailer’s marketing campaign.
The physical store almost becomes an interactive billboard that allows consumers to touch, smell and view the product – an entirely different experience to the one you get online.
And in business, differentiation is key. This shift isn’t just for trailblazers, or only one retail segment, the change needs to happen at all levels.
If a store is no longer just a retail unit but a brand experience, then we need to develop our understanding of what facilities, mix of uses, environment, activities and joint research and marketing strategies will enable retailers to continue to develop strong relationships with their customers through their physical presence, generating positive cash flows and therefore retaining that physical platform.
And if the store isn’t simply a bricks and mortar requirement for the property department, with the focus being as much about service, brand and experience as it is about rent and other lease provisions, there will undoubtedly be more collaboration across departments when opening new shops, and managing the store estate.
“Humans are social beings, and social interaction in physical environments is still a crucial factor in meeting consumers’ needs”
The role of a physical store in today’s multichannel retail environment is well documented. Some 89% of all UK retail sales touch a physical store, according to British Land/Verdict research, and the halo effect of a retailer’s store portfolio on its digital channels is also widely acknowledged.
This new breed of stores, or ‘brand emporiums’, act as a showcase, generating sales – online and in-store – and building brand loyalty often amongst a community of ‘followers’ rather than customers.
I found myself having this discussion at the Revo conference last week and it resonated with people across the retail and retail property industries.
I was asked if the retailers were nailing the brand experience yet. I think we’re on the cusp – those that are doing it well range from the global brands such as Apple and Nike, to smaller retailers such as Lululemon and Rapha.
It has been fascinating to hear from these lifestyle brands about how they see the physical store evolving.
It is an exciting time for retail as online channels reinforce the need to evolve physical space, which is where the emotional connection with the customer is established.
Humans are social beings, and social interaction in physical environments is still a crucial factor in meeting consumers’ needs.
But that interaction needs to be a positive and fulfilling experience, otherwise they now have many other choices.
Having spoken to many retailers and investors this past week, I remain convinced stores will be an important part of our collective future.
Ed Cooke is chief executive of Revo