Retail Predictions: 2018

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Julian King


Julian King


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As we continue our bumpy retail ride into 2018 we ask… What next?

It’s been a rough ride for those working in the retail built environment over the last few years with the second quarter of 2017 seeing the number of shop openings across Britain fall by 84 per cent compared to the same period in 2016.  However, where one store door closes another opens with the significant trend of openings in retail distribution as online disrupters and traditional retailers concentrate on their growth plans.

National Head of Retail at Rider Levett Bucknall UK (RLB), Julian King shares his predictions for the retail property market for 2018.

  1. Right Sizing

All major chains will accelerate rightsizing. Others will trial new formats and new locations to address their online demands. Small format stores (up to 22% smaller), agile, multi-functional spaces and last mile concentration are key to any expansion plans.

  1. Online to Physical

Online retailers, burdened by the cost of the average 30% returns rate and unable to break though the need for show-case space, will continue to test the water with an actual store presence.  We have already seen Misguided, Amazon, Boden & Simply Be taking a limited number of regionally located outlets to counter this demand. We have yet to see how Amazon will leverage their acquisition of Whole Foods but expect more.

  1. Experiential Retail

Physical retail isn’t dead; lacklustre retail is. Following record closures in 2017 we forget that there were many openings too. Unremarkable retail and highly deliverable products have already gone online yet by this time next year circa 5 out of 6 purchases will still be done in a physical store location. Commodity buying is a chore and is typically focused on seeking out the lowest price and maximum convenience. This is where online retailers have made the greatest inroads.  Shopping is different. It’s a social activity and the role of physical stores and customer service is essential.  Brands that invest in experience and driving footfall in new experimental ways will continue to prosper.

  1. Healthy Retail

Landlords and developers will see growing value in developing scheme designs to an environmental, health and wellness remit. Far from a trend, it is fast becoming a prerequisite in new developments and refits, driven by higher expectations from customers. The market has seen huge “lettability” advantages for landlords, with retail tenants seeing up to a threefold increase in sales in schemes with a focus on an environmental, health and wellness remit.

  1. Walkable Retail for Future Growth

Continuing the theme of healthy retail, studies have found that Millennials are moving to metropolitan areas at high rates. Demographic shifts attributed to the “Coming of Age” of Millennials – a large proportion of the population – are driving this trend. Developing walkable retail areas appeal not only to this generation, but to older generations looking to move to vibrant communities. Walkable retail environments will drive large economic returns.

  1. Market Consolidation

In many aspects of today’s retail world, scale is more important than ever and this will continue to drive well suited mergers and acquisitions, particularly where systems or technology create capacity for accelerated growth. In some sub sectors there is still capacity to come out of the market. The department store space is a prime example. Funds and well capitalised companies will make acquisitions where they feel a turnaround is possible.

  1. Technology

Customer journeys increasingly start in a digital channel (more likely now to be Mobile) and the challenge is still to make all the disparate parts of the shopping mission come together.  Retailers will continue the drive to be relevant and provide the right solutions where it matters and to understand the benefits that good technology can bring to magnify those elements of the shopping mission that make the most difference.  Here at RLB we have seen how investment in digitisation, mobile data collection and analysis tools using our RLB Field app & RLB Focus systems can make radical improvements in the speed, accuracy and productivity of our teams and we aim to continue this successful journey into 2018.

  1. Payment Productivity

Until recently the primary drivers of digital change in store have been significant staff productivity enhancements like kiosks and self-service checkouts. Forward thinking retailers are now trialling the  next generation of this change with mobile payment apps that are likely do away with checkouts in the not too distant future. We can all see it coming, the race is on for the first checkout-less supermarket. The challenge will be to maintain customer contact and thus loyalty via strong underlying customer service principles.

  1. Data Driven Decisions

Retailers are taking full advantage of the plethora of data now available to them and will continue to develop ways of using this data to help make the crucial retail property decisions when identifying new locations, analysing existing performance, and tracking what their competitors are up to. These are still core skills, but new tools and richer sources of data will provide grounding for better and well analysed decisions.

  1. The Last Mile

Retail distribution has been the unsung hero of the property world in 2017 and is set to continue into 2018 & beyond as the big operators tweak their operating models and close in on their last mile services. This way they can close the loop and create the holy grail of end to end online shopping and returns services. Amazon trialled this in the US with “Wardrobe”, but for this to be truly possible the last mile needs to be conquered.

So what does all this mean for those of us who work in the built environment?  – Just like the spaces we create clearly we need to remain agile and responsive by continuing to innovate within our own services using digital ways of working and helping us to concentrate on the core information that drives better decisions and better management – that way we can truly deliver “more with less” and continue to help retailers compelling and exciting retail propositions.