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Smart Floorspace Digitalising Retail Experience

11 September 2019

Media coverage over the last year for the retail sector has been saturated with reports about the decline of the nation’s high streets.

We are continually hearing of “big name” retailers or restaurant chains which are struggling in the current market conditions - with reductions in consumer spending, large bricks and mortar portfolios, and changing shopping habits often cited as reasons for retailer woes.

But what can retailers do and what trends are we seeing from those brands bucking the trend and performing well? For the lower-cost brands, the focus will no doubt remain on large retail units with high stock turnover, holding their place in the market simply through competitive pricing and high footfall. But for higher-end brands, we are seeing an increasing need to focus on consumer interaction, with technology being utilised in clever ways to create a more sophisticated shopping experience.

Technology is being used at an accelerating rate. There have already been reports of drones being used to deliver shopping straight to a consumer’s door and this use is set to increase exponentially if Amazon’s Prime Air drone delivery system, as well as projects like Uber Air and Google Wing, prove a success. In April 2019, Sainsbury’s also launched a trial of the UK’s first “till free grocery store” in Holborn Circus. There are also mobile phone apps which engage with consumers as soon as they walk through the shop door – automated push notifications send personalised greetings to shoppers’ smartphones, together with targeted offers and links to the products on the retailer’s website. Retailers are clearly working hard and investing significantly to transform the use of retail floorspace; making it smarter, generating excitement, improving convenience and, as a result, re-engaging with consumers.

Technology also offers the flexibility to expand the boundaries of traditional retail floorspace and, in turn, increase footfall and raise awareness of brand identity. Pop-up stalls, mobile kiosks and similar agile trading arrangements can be created at almost a moment’s notice thanks to modern point of sale software.

And it seems that there are plenty of ways in which landlords can maximise opportunities here. For example, simply making retail units as versatile as possible and adopting a “can do” approach towards fitting-out works will no doubt reap rewards, allowing tenants to make the most of the space available. Investing in eco-friendly plant and equipment may also be beneficial, as issues surrounding sustainability and the environment are becoming more pressing for tenants, especially given the higher energy demands of smart retail. Security is another area which landlords may also wish to review to ensure that they have sufficiently sophisticated systems in place to protect any technology housed in the premises (as well as the data such technology captures).

For tenants, it will be important to ensure the premises have suitable infrastructure for their needs and that the services / conduits serving the retail unit can cope with innovative tech operations and higher energy demands. It may be that additional wayleave agreements need to be put into place to feed more / improved telecoms services (such as 5G) into the premises and, if so, this can have timing and costs implications. Tenants will also need to carefully check the planning status of the unit, as well as the user and alterations clauses in their lease, to verify that these are broad enough to enable the tenant (as well as any tenant to which it may potentially wish to transfer the lease during the term) to use the premises as it chooses.

The birth of smart retail and the so-called “digitalisation of the shopping aisle” has not happened overnight. Instead, it is arguably something which has gradually built momentum as a reaction to the downturn of the traditional retail market. Retailers are undoubtedly facing their toughest time in recent history and it seems that they will need to innovate with technology and experiment with high street floor space if they are to succeed in these turbulent times.

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