Fashion brands are leading the way in transitioning from pureplay etail to omnichannel retail. According to a new report, fashion businesses account for almost 30% of all online retailers taking physical space in the UK to date.
Property group Savills’ latest Retail Revolutions: From Digital to Physical report shows that 29.6% of space taken by online retailers came from fashion brands, followed by furniture and homeware at 25.9% and DIY, electrical and building supplies at 14.8%.
Five brands made the move from online to physical retail in the past year, including Missguided which recently opened its first standalone store in Westfield Stratford and has another in the pipeline for Bluewater, Kent. Finery and Little Mistress made the move to physical retail via department store concessions.
Online retail sales growth is expected to slow in the the coming years from 11.4% pre annum between 2012 and 2016 to around 4.8% by 2022. However Savills says for brands it is not a case of pitting one against the other but rather about how the platforms can work together to create a “total” experience.
“When it comes to fashion and homeware, the biggest driver of total retailing continues to be consumer preferences. In particular, the desire to touch and feel a product before purchase remains strong, meaning physical stores play an important role in driving both online and offline sales. Stores can also deliver convenience to customers, a key attraction of shopping online, in the form of click and collect services,” said Savills commercial research director Marie Hickey.
The report also states that digitisation of the retail experience will be key. To date in-store technology has centred largely on hardware, such as providing iPads to allow shoppers to search for products online, however the evolving focus is on creating integrated software solutions, which can provide the same personalised shopper experience in-store that consumers have become accustomed to online, and enhance the speed and ease of payment.
Luxury fashion platform Farfetch recently showcased just such a vision at its first FarfetchOS summit in London in the form of its Store of the Future. The concept, which offers a truly personalised shopping experience and mobile payment among other features, will be rolled out to its Browns boutique in London in the autumn, as well as the Thom Browne flagship store in New York. Yoox Net-A-Porter Group (YNAP), meanwhile, has paired up with luxury brand Valentino to create its new omnichannel model, called NEXT ERA, which will launch next year.
While the shift to omnichannel appears to be good news for the property sector Savills notes that at the same time retailers are becoming more strategic about the size and location of their stores with the focus being on major retail locations.
“Despite increasing recognition of a physical store’s role in raising brand awareness and revenues, this is unlikely to lead to a flurry of national requirements from pureplay etailers making the transition to bricks and mortar. The most significant impact on retail property will instead come from digitisation of the in-store experience, as mobile payment, customer recognition technology, live inventory tracking and monitoring shopper engagement with products become the norm,” said Savills head of UK retail Sean Gillies.