According to Deloitte’s 2021 Retail Trends, both ‘thoughtful experiential’ and ‘hyperlocal shopping’ will be key in the high street’s future. Deloitte has also pointed to convenience and omnichannel (merging elements of the digital shopping experience with physical, otherwise known as ‘phygital’) as ingredients for high street success. There is also value in the ‘combo’ store which is in equal parts retail, leisure, and food service.
From ‘CAC is the new rent’ to ‘rent is the new CAC’
According to an article by Shopify, there has been a shift in brands’ attitude towards physical retail due to rising customer acquisition costs (CAC). DTC retailers have built their businesses through investing in digital and social ads, but as the price of advertising on these channels rise and faced with increased competition and digital ad saturation, these now established brands are turning to physical spaces to acquire customers for less.
Why does it matter?
So, what does this mean for advertising and marketing? Alongside a general advertising and marketing push to accompany new stores reminding consumers of their existence and offering, new locations may be used for experiential activity to help engage shoppers in the local area. More generally, a rise in new high street stores, and therefore a boost in high street footfall, presents an opportunity for out of home advertising to drive traffic to those stores.
These brands will also be putting a focus on their click & collect services to drive customers to their stores. Although it is predicted that online shopping is here to stay, consumers are becoming more conscious of the environmental impact of their habits; and collecting items from stores provides one way to cut their carbon footprint. A rise in click and collect means there could also be an increase in digital advertising to draw people to brands’ websites to order and collect in the new stores. According to Brett Caine, CEO and President of Airship, app and mobile communications will also be important in reinventing the physical shopping experience for consumers, which means that brands increasing their high street presence are likely to invest in these channels.
Here are some brands listed in ALF who are investing in the high street:
Europe’s biggest shoe retailer is set to expand its UK presence where it believes it could double its estate of 109 stores as it aims to become the market leader in “family footwear”.
The shoe retailer has had a presence in the UK for 20 years but only has a small market share with its latest accounts showing revenues of just £104 million in 2019. Samuel Deichmann, the great grandson of the chain’s founder who is also running its UK operation, said: “We are very keen on the UK as one of Europe’s largest markets.” He added: “We see a lot of potential here and we want to be the market leader in family footwear like we are in many central and eastern European countries”.
The retailer has been redesigning its product offering for the UK market which has been upended by the growing trend towards more casual dressing. This also involves setting up a new distribution centre that will serve both stores and home delivery in a bid to tap into the booming ecommerce market as it plans to take lessons from the UK where ecommerce penetration is relatively high compared to other markets. This could be an opportunity for you to pitch your services to them as the company has appointed Josephine Soei as its new Senior Marketing Manager who will be looking to make an impact on the brand.
Lego announced in March that it was planning to open 120 stores in 2021 as it looks to create an ‘omnichannel network’ alongside its website. This will bring its total number of stores to 798 worldwide. Chief executive Niels B. Christiansen said: “People are looking for unique and memorable physical brand experiences, so we will continue to invest to expand our global retail footprint, as well as elevate our instore shopping experiences.” Across the pond, the brand unveiled a ‘retailtainment’ concept at its New York flagship store including ‘immersive digital and physical shopper experiences to inspire creativity and imagination’. The concept is due to be rolled out to stores worldwide as the business innovates its retail channels. Lego UK & Ireland hired a new head of marketing who takes up her role in October.
The cookware retailer has over 50 stores across the UK and has recently opened new sites in Edinburgh, Leeds, Teesside, Bristol and Bluewater. In January, ProCook was reportedly ‘seeking investment partners, further growth opportunities by pursuing EU markets, and expanding its retail portfolio.’ In March it launched a 30-second TV ad with media handled by Guerillascope, which targeted passionate ‘from scratch’ home cooks. At the time, founder Daniel O’Neill said: “In the past few years, we’ve focussed our marketing spend on digital advertising whilst choosing a more organic approach to building the brand but following our recent growth and the explosion in home cooking, we felt it was the right time to invest in TV engagement again”. The business brought in sales of £64.5m for the 2020/21 financial year, a 35% year-on-year increase. It has also opened a new hub in the Netherlands to service the European market.
Retail director Andy Kerr said of these new openings: “ProCook remains committed to offering bricks and mortar retail stores and these new stores will enable so many more customers to experience our exceptional service and feel the quality of our products for themselves.”
The discount retailer benefited from staying open during the pandemic and reported that pre-tax profit doubled to £525m in the year to 27 March on sales that rose almost 26% to £4.8bn. B&M announced plans to open around 45 new stores in 2021, targeting a retail estate of 950.
The company has seen sales soar and has broadened its appeal to wealthier middle-income customers, hence bumping up its average spend per transaction.
B&M had initially planned to move into ecommerce at the start of last year, in the same way its value rival Poundland did last summer. But plans were halted as it doubled down on stores. However in March, the retailer hired The Range’s chief digital & omnichannel officer Jens Sorensen as its new digital director. The appointment comes as B&M plans to push into ecommerce to sell higher margin items.
B&M are also taking a similar strategy as Iceland, where they are agreeing exclusive rights with manufacturers to stock their products over a given time to drive customers into its stores. Mars in collaboration with Burton’s Biscuits have launched a new Milky Way biscuit available only at B&M stores.
Allbirds, the B-corp shoe brand, recently opened its 30th store worldwide in Atlanta. In October 2020, it revealed it had raised £76m to fund its physical store estate expansion. The business has just branched out into activewear for running and is preparing to list on the New York Stock Exchange. It currently has two stores in the UK: London’s Covent Garden and Marylebone.
The company has continued to invest in high street stores after it found there was still a strong consumer demand for a physical retail experience, especially when it comes to purchasing shoes. Its stores aim to educate shoppers about shoes and socks, offering a tactile experience so that customers can touch, feel and engage with materials and learn where they came from. Allbirds hired a director of campaigns and storytelling in March.
The sandwich chain is planning to open 100 new stores over the next three years, creating 2,000 new jobs. The new shops will reportedly be drive-thru shops located outside of London, on high streets. The food-to-go retailer is also trialling a ‘shop-within-shop’ format in Tesco stores and shops at petrol forecourts in partnership with Motor Fuel Group. It has also introduced a new monthly subscription service to boost customer loyalty, offering a number of daily drinks plus added extras for a cheaper price that individual purchases. VCCP was hired as Pret’s global integrated creative agency in May.
For other brands investing in physical stores see: