Despite the growth in popularity of ecommerce and the effects of the coronavirus lockdown, new research has found that physical stores will still heavily influence retail transactions.
While traditional shop sales have steadily decreased over the last few years, physical stores will still account in some way for £8 of every £10 to be spent in retail by 2025, according to new research by Intu and Javelin Group, part of Accenture Strategy.
The study found that while in-store sales will remain important, they are increasingly only one part of a retail store’s function, such as click-and-collect purchases, in-store orders, ship-from-store and customer service functions.
It also does not take into account the “halo effect” – the catchment area around a store where digital sales tend to double.
Intu and Javelin advocate that in order to allow for retailers to adapt stores to be truly omnichannel spaces, new models are needed for landlords to assess the value of physical shops.
The report said: “Traditional models and KPIs for assessing the success and long-term sustainability of physical outlets are outdated and no longer fit-for-purpose. They often fail to consider the significant role now played in driving online sales.”
The research advocates assessing the rental value of a store based on its known or forecast sales; its ‘omnichannel halo’ covering and a benchmark occupancy cost ratio.
“Physical retail has undoubtedly faced some challenges over recent years,” the report concluded. “However, its role is far from over. The part stores play in driving online sales and overall retail performance continues to be crucial.”
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