The future of retail has never seemed so uncertain – so who is staging a successful fightback and what have they learnt along the way?
It’s no secret that choppy waters are ahead for retail. Shopping precincts in London, New York and Paris have seen dramatically reduced footfall and countless department stores, malls and monobrand outposts are closing. Yet new life will emerge from difficult times. The retail landscape was already in desperate need of a shake-up; the pandemic has merely accelerated that transformation. The question is: which retailers are poised to capitalise?
One of the effects of lockdown has been a division of retailers into essential and non-essential players. Over the past few months, essential retailers have kept us fed and sane: for some, the butcher, grocer or deli worker constituted one of the few (and welcome) daily interactions. “Grocers and supermarkets have become much more relevant and their reputation has been enhanced by the way they’ve behaved through the crisis,” says Dr Clive Black, a consumer analyst and head of research at London stockbroker Shore Capital. People’s embrace of home cooking means that supermarkets will continue to succeed. And as those who live nearby form their core clientele, they will not be hurt by the absence of tourists (unlike luxury retailers).
Looking at the next 12 months, Amanda Bourlier, head of retailing at market-research agency Euromonitor International, expects shops that sell a “range of categories” to succeed and says that standalone shops will fare better than shopping-centre branches. Certain specialist retailers also have a rosy future: DIY and furniture shops, bike sellers and garden centres will continue to benefit from the way our lives have changed; a sofa or pot plant may feel more necessary than, say, a dress.
From food to fashion, retailers that have invested in thoughtful experiences, including offering a variety of online marketplaces and improving home-delivery services, will be well placed, says Bourlier. Selling direct-to-consumer is increasingly attractive; the pandemic has revealed the fragility of the wholesale model.
As for where we’ll be doing our bricks-and-mortar shopping? High streets will survive but, rather than central thoroughfares, shoppers will embrace neighbourhood strips. Dr Tim Denison, director of retail intelligence at research firm Ipsos Retail Performance, notes that this is particularly applicable to London and major US cities, where inner-city retail relies on tourists; cities in Italy and Germany have a more robust local customer base. In lockdown we’ve grown fond of our neighbourhood spots so “retailers who are based in suburbs where people live are going to be winners”, says Black.
The feel of these strips will change for the better. We’ll see a thinning out of mid-sized players with hundreds of generic outposts that made all high streets look similar. That means there’ll be empty retail units available at a steal and Denison suggests that we’ll see a new rental model emerge in which retailers pay landlords a proportion of monthly revenue. All of this will enable small independents to thrive. “It could well breed a new flush of retail entrepreneurs,” says Denison.
It’s heartening to think that our high streets will become more individualised: change, as Denison points out, isn’t always a bad thing.
A plucky sustainable food market that’s revitalising neighbourhoods.
Mercato Metropolitano runs food markets that put community and sustainability at the heart of everything. Oh and lots of good food, great beer and tasty cocktails. Established by Andrea Rasca, the first outpost was a pop-up in Milan. In 2016 he found a permanent site, an old industrial building, in London’s Elephant and Castle neighbourhood. Today it’s home to 42 stalls and has become a pivotal part of the area; there’s now also an outpost in central London and two new spots are set to open in the city. And with all that the world is throwing at us, it’s a success: trade is just shy of 2019 levels. In the first year of trade, this single market had turnover of £9m (€10m) and by last year that had risen to £22m (€24.5m).
Rasca walks monocle around, encouraging us to try the gelato and come back for grilled fish. Rasca, who in the past worked with Eataly and Esselunga, has made Mercato a success by ensuring that his team and all the operators abide by ambitious guidelines and beliefs. So there are no single-use plastics anywhere; all the suppliers have to be vetted for sustainability; there are no big brands offering fizzy drinks; every stand has to make a delicious £5 (€5.50) lunch every day, one stall is always reserved for a refugee who wants to start a food business and another for female entrepreneurs; and hundreds of free meals are donated to families who could do with help feeding their children. This business recipe, paired with good food, drew in 3.5 million visitors in 2019. It is, says Rasca, proof that “you don’t need a big sponsor or government to do good and make money”.
Rasca has worked hard to be part of the community in a mixed-fortunes part of London and it’s this that has delivered success. “Food is a reason to be together and socialise,” he says. And it’s the power of this place-making role that now sees governments and developers knocking on his door: there are currently 15 projects from Berlin to the US on the cards.
Rasca takes us for a beer at German Kraft, which brews a Bavarian-style tipple on site. The beer is never bottled or canned, just served fresh. We are joined by Florian Bollen, whose son and friends founded the company (with some advice from Bollen Snr). How is business? “It’s incredible,” says Bollen. “In our first year we sold 10 times more than was in the business plan.” And with that it only seems polite to order another round.
My first job was as a sales assistant in a small dress shop where the clothes were wrapped in crisp white tissue. I realise, looking back, that I gave advice on blazers and boleros as much as lives, relationships, hopes and fears. I was there to seek out the perfect trouser but also to commiserate. Not everyone wants to see a shrink – they might just want to drink tea and buy a pair of party shoes in the company of a sympathetic assistant.
The complex emotional role that shopkeepers play in our lives is often overlooked. A quick chat with the greengrocer can lift your morning. It might be a quip about plums but there is an intimacy that has value. A breezy joke with a fishmonger or even a knowing glance at the supermarket checkout are the building blocks of our existence.
Automation isn’t just fiddly – it might have worrying mental health consequences. “When people don’t have contact they atrophy in a way, they become more prone to their own anxieties,” says Oxford-based Clive Sherlock, a doctor whose practice deals with depression and anxiety disorders. “If we’re only with robots and AI, it’s like going into a sensory deprivation chamber.”
Retailers who have swapped human beings for automated checkouts often want to save money. Yet they underestimate the value of that nuanced ability to read a customer, to lift their mood and sell them what they want. Selling is a studied skill and the need for a human face behind the till is fundamental. “[With a shopkeeper] you feel connected,” says Sherlock. “We thrive off interaction. I don’t want to talk to a brick wall, I don’t want to talk to a machine. It has to be human.”
A storied supermarket gets a welcome redesign for the 21st century.
What’s the role of a modern supermarket? When Esselunga, Italy’s oldest supermarket chain, called Mark Landini to transform its Brescia outpost, he began by asking some fundamental questions. The founder of the Sydney design studio Landini Associates realised that supermarkets had become selling machines that worked in the interest of the operator, not the customer, and had lost the promise which is in the name: “super market”. “Separate those two words,” says Landini. “Think about the joy of buying things at the market. If you can make the place a celebration of human interaction and food, as well as convenient, then you have a solution.”
Landini’s redesign has three key features. First, the checkouts, which previously occupied the front of the shop have been moved to the side. That prime space has instead been ceded to a bakery, a kitchen and a bar-café: the sections of the supermarket that make people enjoy their time here. “Esselunga’s passion is food,” says Landini. “To have hidden that’s a shame; it makes no sense at all. You’re giving up the most valuable space in the shop to a processing function.”
Second, the customer is given space and choice. Rather than being endlessly funnelled through aisle after aisle, fresh produce, dairy and the essentials have been brought to the front. “From the fruit and vegetable area, where low-sitting signs recall the typical town market, the client can choose the path that best suits their needs: a fast and simple shop, a traditional one or just fresh produce,” says Roberto Selva, Esselunga’s chief marketing and customer officer.
In the same vein, the grocery aisles are laid out triangularly, rather than one after the other. “You can see the first two bays of each aisle,” says Landini, meaning that you can find whatever you need quickly and minimise needless wandering. “If you just want to pick up some vegetables and milk, you can just go in and out. That’s a convenient way of shopping.”
The most important aspect of Landini’s approach is his human touch. He is an ardent supporter of the high street and believes that big businesses should model themselves on independent retailers. To that end, his studio opted for simple but warm materials – concrete and wood – and widened aisles to allow people to move freely. For Landini, shopping isn’t just about buying a product – and retailers need to understand, or rather remember, this. It’s something he learnt while visiting Rome. “My aunt went to the market three times a day. One day I asked her why she didn’t go just once. ‘You’re a very stupid boy,’ she said, ‘I don’t go to the market to buy food. I go to the market to gossip.’”
Upmarket Fooby shows that shopping in store can still be an enticing prospect.
Switzerland’s retail giant Coop (not related to its international namesakes) first launched its Fooby brand in 2017 as a digital platform featuring food news and cooking tips. The website helped Coop build a community, especially when it started producing a recipe magazine that quickly became a hit with Swiss households. Last year Coop decided to go one step further and bring Fooby to life in a physical space: a former theatre in Lausanne’s city centre made for the perfect location to experiment with a more premium offering that went beyond the usual traditional layout.
Modelled on the idea of a market hall, the Fooby supermarket adds a feeling of grandeur to proceedings while staying true to what customers expect from a Coop franchise. A layout split across multiple levels and featuring plenty of nooks and crannies adds a sense of discovery to a shopping trip, while the selection of products on the shelves is particularly weighted towards local specialities. There’s also a focus on preparing fresh food to take away, from bratwurst to smoked salmon, all of which is made on-site to enable customers to take a peek at what goes into their lunch. As for its assortment of household goods, cosmetics and cleaning products, Fooby stocks natural options that are environmentally friendly.
Coop is using the Lausanne site to understand how it can better cater to its audience and the feedback has shown that there’s an appetite for a more sophisticated way to shop. The Fooby experiment proves that a beautiful shop can still entice customers away from online orders and deliveries – and that shoppers will come from near and far if it is worth it.
As retailers rethink their role on the high street, a fresh approach will help them navigate the future and direct any new ventures. We’ve gathered perspectives from around the world on how shops of all sizes can move forward – be it heading outdoors, to the countryside or to a new market. Here are a few rules for retail done well.
Twenty Stories, a bookshop in Providence, Rhode Island, began life on four wheels. Founded in Los Angeles in 2017 by Alexa Trembly and Emory Harkins, it operated out of a rambling 1987 Chevy van. The premises were nimble and so was its business model: every month, the pair curated an inventory of just 20 books. Now in its bricks-and-mortar iteration, Twenty Stories still keeps things small and manageable, a useful practice if you’re first-time business owners.
After years of working in some of Barcelona’s top hotels and restaurants, Pablo Pardo started noticing the decline of the city’s kiosks, many of which were selling souvenirs or closing down altogether. Driven by memories of buying newspapers with his grandfather in Buenos Aires, Pardo decided to rethink the newsagent model. The result is News & Coffee on Passeig de Sant Joan, selling coffee and magazines to go.
At a time when businesses are hunting for outdoor space to expand their operations, the solution may be right under their noses. For Pardo, adding a café to the set-up made sense. “I couldn’t understand why it hadn’t been done before,” he says. “Nobody had thought about how to give these places a new lease of life. We are very happy to be reclaiming them.”
The pop-up might be a tried and tested concept but when used to help up-and-coming companies to get a leg up in bricks-and-mortar, it remains hard to beat. Pauline Treis and Matthias Hachen (pictured) started their website Support Small Labels to do just that: to raise awareness of small Swiss labels, enable the exchange of know-how between brands and find strength in numbers when dealing with producers and suppliers.
Support Small Labels now features 66 companies. The pop-up space the platform bagged inside department store Modissa is what made the difference for the brand owners: every day, the stand is manned by one of the designers. Inviting the customers to feel the quality of the materials drives home the point about their value that no online marketplace could match.
“In the countryside everybody knows everybody else’s business,” says Tim Gardener, the owner of wine merchants Beckford Bottle Shop. With sites in Bath and the village of Tisbury, he knows a thing or two about operating away from a big city. “You live and die by your reputation.”
Running a business in a smaller context builds strong customer ties; this explains the rosy figures coming out of the vintners over the past few months. The Bottle Shop nimbly rose to the challenge of lockdown with a subscription model and free next-day delivery. Even now that bars and restaurants have reopened, the Bottle Shop has retained 50 per cent of the custom it gained. The lesson? “Take every opportunity to grow closer with your community,” says Gardener. “And never stop trying to impress.”
In a global context that has seen department stores challenged, Japan has lessons to impart. Its stalwart operators, including the fêted Isetan Mitsukoshi, have shown resilience thanks to their varied offering and prized customer service. Here, Hashizume discusses why a thoughtful approach to digitalisation will help in the future.
What are your latest offerings?
We are developing new services [paired] with digital technologies. Last year we introduced YourFit365, where we measure customers’ feet in 3D and the data finds the best-fitting shoes from our inventory. In July we launched Match Palette [for women] but here our staff make personal recommendations based on the data. We use technology but human service is still key.
International department stores flailing – what’s the answer?
It’s tough if your sales largely depend on apparel because the competition is intensifying online. Clothing retail has been hit the hardest by the rise in fast fashion, e-commerce and the current pandemic.
Is there something that the world can learn from the Japanese experience?
Japanese department stores have a diverse inventory, from food to fashion, and also provide gaisho (vip service including staff visiting clients at home to supply whatever is needed). Customer service is detail-oriented. However an e-commerce beef-up is a must. We also need to change.
Vietnam is known as the footwear factory of the world. “Big fashion brands have always glossed over this market and looked at it more for production,” says Boule Nguyen, one of the figures who’s trying to change the sector’s perceptions of the country.
The Vietnamese-Canadian moved to Ho Chi Minh City a few years ago to open a trainer shop. There vnd Then (vnd stands for Vietnamese dollar) debuted last year, taking up a plum downtown spot in District 1. What started as a small enterprise has ballooned into a giant three-storey multi-brand fashion boutique, spreading over 4,000 sq m that includes a barbershop, ice-cream stall and rooftop bar. Most – if not all – brands are on sale in the country for the first time. “This is a new concept in Vietnam so it is more than just a shop – we are trying to set a standard.”
Affordability is why Nguyen also started his own label. Now Apac’s $20 (€16) T-shirts are on sale alongside similar items from overseas that go for 10 times that. “This is one of the most important periods in Vietnam and I’m really fortunate to be a part of it,” he says.
When Livraria Mandarina first opened its doors last year in the neighbourhood of Pinheiros, people had their doubts about the viability of independent bookshops. But friends Roberta Paixão and Daniela Amendola took the punt and, while the pandemic proved fatal for many bookshops, their venture was unique enough to survive.
“In Brazil many of the big bookstore chains went bankrupt,” says Paixão. “I think that’s why we did well, we were like a flower in the desert.” The bookshop concentrates on the humanities, poetry and literature, with a focus on independent publishers across Brazil. In an homage to the bookshop’s name, the founders also sell coffee with citrus aromas and slices of tangerine cheesecake to go with it. It’s little touches like these that add zest to a shopping trip.
Shop designer Bob Neville co-founded his own agency in January, advising sportswear brands on their retail strategies. The Design Test Centre is split between Hong Kong and Shanghai, where it has a dedicated space for trialling shop interiors.
Will there be a high street after the pandemic?
People talk about a retail apocalypse but I think of it in terms of an evolution. There are always going to be those brands that fall by the wayside, while others can adapt.
Is ‘experience’ still the big retail trend?
It’s hard to have a brand experience when people cannot get together because of physical distancing. We need to make sure that we are building flexibility and adaptability into our spaces but that is the direction that retail design was already moving – towards the more emotional and experiential rather than simply transactional.
What projects are you working on?
We are working on a new fitness brand, as well as rolling out shops across China for a US sportswear brand.
Founded as an online label in 2017, Isto has been at the forefront of sustainable fashion in Portugal. One year on, Isto opened a shop in Lisbon’s mall Embaixada. Searching for a warehouse, co-founder Pedro Palha (pictured) stumbled on a shop with a large basement in a residential area. Having a second shop and entire stock in one place inspired fresh logistical ideas, including electric bike deliveries. “We wanted to offer this while also respecting sustainability,” says Palha.
Hong Kong’s high-end shopping centres are in a retail arms race to attract luxury shoppers. Their weapon? VIP lounges The Gentry Club opened last year at k11 Musea, a glitzy new shopping mall on the Kowloon waterfront. Bowtied staff set the tone on arrival, alongside displays of rare whiskey, Chinese crafts and the odd pipe. Membership is capped and every applicant is vetted by the owner. Home to four private suites, the plush space is part of K11 Musea’s efforts to tempt high spenders to Kowloon; competition for Hong Kong’s high-net-worth individuals has intensified lately because of dwindling Chinese tourists.
Qualifying for the Gentry Club requires an annual spend of about HKD1m (€108,000). Across the harbour, the Landmark uses a multi-tiered approach for its Bespoke salon, which opened soon after the Gentry Club. An annual spend of HKD200,000 (€21,700) gets a foot in the door but only those who spend HKD5m (€542,000) a year can reach the inner sanctum and make use of the private dining room. While this might appear extravagant, there’s a lesson: standing out still requires overdelivering on service.
Photographers: Mark Arrigo, Francesca Volpi, Guillaume Mégevand, Lit Ma, Marvin Zilm, Rodrigo Cardoso, Ben Roberts