Gareth Planck, Partner - Consumer and Real Estate, Eversheds Sutherland
A dramatic shift in UK consumer spending over the pandemic will leave high street apparel stores with a £14.5bn (€17bn) hole in sales by 2025 if changes are not made, according to research by Retail Economics commissioned by Eversheds Sutherland.
The research, for The Future of the European Apparel Industry report, has found that the pandemic has accelerated UK retail’s shift to an online sales ‘tipping point’ – where online sales overtake in-store sales – by three years. This will now happen in 2022 instead of a pre-pandemic prediction of 2025.
UK retailers will be the first across some of Europe’s biggest retail markets (UK, Germany, France and Netherlands) to make the majority of sales via online, with 52% of all transactions set to occur online in 2022.
The pressure is on apparel retailers to pivot their business models and adapt to this new reality. If retailers are to be successful in capturing consumer attentions and driving growth online, the purpose of stores will need to evolve.
As lockdowns came into force across Europe store visits plummeted. However, the research found that more than a third of consumers in the UK (35%) will not return to stores with the same frequency as they did before Covid-19.
In the UK, the report estimates that the shift to online will result in apparel store-based sales losing an average of £3bn (€3.5bn) a year compared to pre-pandemic projections.
Gareth Planck, Partner – Consumer and real estate, Eversheds Sutherland, Belfast says:
“The Northern Ireland Executive last week launched a call for evidence on how to improve, adapt and futureproof our high streets as part of the work being taken forward by its High Street Task Force. While retail is only one part of what makes a thriving urban centre or high street, it is a large and significant part. Changes to consumer habits and online shopping in particular present serious challenges to traditional ‘bricks and mortar’ stores. This report starkly outlines these challenges and what retailers must do to keep up.
“Over the pandemic we saw the switch to consumers buying online accelerate. As lockdowns lasted for longer, and companies invested in the digital and logistics infrastructure to service demand, buying online stopped becoming forced and started becoming many people’s preferred method. Now that consumers can return to the high street, we can see that buying online has become a habit.
“This change of habit means the way we think about high street retail has to evolve. The industry needs a transformation in planning, policy and skills to avoid billions of pounds of sales and thousands of jobs being lost across the UK and locally in Northern Ireland. Retailers will have to alter the way they use commercial real estate and the customer experiences they deliver. They have to bring people back to the high street, and not just from across the UK, but from across the globe.”
Richard Lim, Chief Executive Retail Economics, says:
“The pandemic-induced shift to online and subsequent impact on store-based sales has magnified the urgency for retailers to adapt. Physical stores must be reimagined and repurposed to meet the needs of an increasingly digital-centric customer journey, becoming a powerful driver of online sales rather than competing against them.”