Specialist brands find the sweet spot in UK retail

 —  Article by JLL Staff Reporter
Woman having make-up done in-store
Image credit: Shutterstock

Keeping up with the latest lifestyle trends and remaining relevant in a crowded marketplace is a tough challenge for today’s retailers.

While many department stores are struggling – with challenging trading conditions adding to their woes – specialist brands in tune with the needs and preferences of today’s shoppers are faring better.

Specialist food and drink outlets such as tea chain Whittard and athletic leisurewear stores such as JD Sports are among those riding the healthy living zeitgeist which has seen consumers of all ages place greater emphasis on high-quality food and drink and become more active in their daily lives.

Food-to-go is another niche area where time-poor consumers seeking convenience are happy to spend, especially on healthier options, with the UK market set to be worth £23.5 billion by 2022 – up from £17.4 billion in 2017, according to market research group IGD.

Linked to this are food halls and markets with a variety of unique offerings. Borough Market in London successfully promotes itself as a foodie destination to buy and experience authentic global produce in a cool, convivial setting while the former BHS department store on London’s Oxford Street is due to open as a Try Market Halls venture.

“It’s often the younger operators that have found a niche in the market that are growing,” Colin Burnet, JLL director – UK research, says. “The successful retailers now are those who understand their customers’ spending and what they want, whether its online or in-store shopping, convenience, or an experience. Getting the mix right is crucial.”

Getting personal

Like all other retailers, specialist brands face intense competition from online players, where lower overheads often mean lower prices. Yet specialist brands have one big advantage; they can create an in-store experience, whether it’s sampling a bottle of wine before buying, trying on nail polish or getting a make-up masterclass.

Beauty specialists know this well. They’re now using the latest technology to create an immersive, personal in-store experience that keeps their audience coming back for more. Dior, for example, uses digital screens to beam backstage footage from its catwalk shows and fashion-savvy customers  can then try the latest shades and products.

Burberry, meanwhile, has introduced an in-store digital nail bar, where users can select a shade and use technology to virtually match it to their skin tone to see how it looks.

Fashion retailers are also taking note. Next is introducing prosecco bars in some shops, including Manchester, to immerse its customers in a shopping experience they can’t find online.

Rethinking retail real estate

Changes in shopping habits and the rise of new brands with more specialist offerings, which often have numerous smaller stores in select retail locations, has big implications for the wider retail real estate sector – especially as the stalwarts of UK retail face the headwinds of lower consumer spending and high business rates.

“We are seeing a lot of the big legacy retailers with store networks that are too big for their needs,” Burnet says. “One of the things they are doing is sub-letting these larger stores and bringing in a lot of specialist leisure, experience and entertainment outlets to provide more variety and differentiate their customer experience while also ensuring they remain relevant to today’s shoppers.”

While large flagship stores will continue to have a place in UK retail – specialist brands still want high-profile venues to show off their wares – more smaller units in the right location and more flexible lease terms could help all retailers better respond to changing lifestyle trends and downturns in consumer spending.

“There’s a lot of retailers, like Matalan, that are actually performing well, if you look behind the headlines,” according to Burnet.

Nevertheless, as the current difficulties in UK retail lead to a reshuffle of tenants, it’s creating opportunities for specialist brands.

“People are still heading to retail locations – it’s just what they’re buying and how much they’re spending that’s changing,” Burnet says. “Plus, outside of the prime areas, retail units are becoming cheaper.

“There’s money to be made for those retailers who come along with the right niche product, sell it through the right channels and get their digital offer right.”

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