News Retail Real Estate : Commentary Let's Shift Our Focus from Store Numbers
Retail, in its essence, refers to "the sale of goods or services from individuals or businesses to the end-user." This definition is quite broad and suggests that those constantly proclaiming the decline of retail on our high streets may have it wrong.
From my perspective, this definition includes leisure and hospitality, along with various other services like nail bars, hairdressers, orthodontic clinics, gyms, and more. When discussing the future of the high street, it becomes increasingly clear that retail no longer exclusively refers to traditional shops; it encompasses a wide range of businesses.
Consider a survey by Tyl by NatWest, which identified the perfect high street as having a top 10 wish list consisting of a bakery, Post Office, restaurant, coffee shop/café, clothing shops, supermarket, cake shop, book shop, butchers, and pub. By my interpretation, only two of these can be categorized as traditional shops, while the rest belong to various other categories. They do not fit the rigid definition of retail held by many.
Therefore, it should not be a cause for concern that up to 40% of shops may need to be repurposed in the next five years, as suggested by a survey by Revo and Lambert Smith Hampton. This is because the demand for physical shops to sell goods is diminishing. In fact, 61% of property-related organizations surveyed believe that between 20% and 40% of retail space should be reinvented for leisure, hospitality, health, or civic purposes.
In reality, this transformation has been underway for some time, as evidenced by stats from the Local Data Company. They reveal that the redevelopment of old shop units reached a new high, with over 10,700 units repurposed in 2022, compared to 9,100 in 2021 and 7,300 in 2019. The trend is clear—these units are being converted into leisure-focused offerings because that's what consumers increasingly demand.
Leisure and hospitality appear to be the saviors of the high street. Traditional shops have realized that they need to offer more than just products on shelves, which is why many have incorporated cafes and similar elements.
Across the top 650 town centers in the UK, the number of leisure units increased by 2.1% in 2022, while retail shops saw a reduction of 1.3%. Drive-thru fast food outlets are especially popular, with high demand for prime locations, often resulting in fierce competition for the best sites.
In my local high street in North London, this shift towards leisure retail is evident. Branded food operators like Wendy's and Wingstop are the latest to announce openings in the area. Moreover, developments are underway to add a hotel and residential units to the high street. Nearby shopping centers have introduced an NHS Diagnostics center, and an aesthetics clinic is set to open soon.
While these changes may pose challenges to communities, they must be embraced because they align with evolving consumer behaviors and consumption patterns. This transition could be smoother if certain segments of the retail industry were less fixated on rigid definitions and the counting of what they consider to be "shops."