It has been quite a decade for UK retail, one that was bookended by the financial crisis and the Brexit debate. It was one of exceptional shifts in the structure of the sector and the behaviour of shoppers. It has also been one where the headline ‘death of the high street’, in one form or another, has graced front-pages on an increasingly frequent basis. And yet, if we look at the compound average growth in retail sales from 2010 to 2019 (3.2%) it bears a striking resemblance to the growth of 2000-09 (3.2%). 

So retail is not dead, and nor will it ever be, but it has, and is, evolving. If we were to use one term to describe the past decade it would be one of ‘rebalancing.’ Online has grown from accounting to 6.2% of all sales in 2009 to now around 19.6%. The online channel does not create demand, it shifts it, and in very simple terms that means that some retailers become surplus to demands and for others a smaller physical presence is needed. However this does not mean stores are not relevant, indeed in 2019 for every £10 spent in the sector £8 was spent in stores, but it means, varying by category, their function has shifted and the most successful players over the decade have understood that online and stores are symbiotic, complementary and not to be treated as separate entities.

Indeed if we look at those businesses we have seen exit the sector in the past decade, Blockbuster, Comet, Toys’R’Us, the commonalties between them is a lack of reaction to changing shopping habits. Online is of course not only to blame, a lack of investment in stores and product, with BHS a prime example, has impacted more businesses than online in the period – but overcapacity in the market will always lead to a reaction, and in most instances this is the exiting of once major players.

The death of one retailer can open the door for another, and there have been plenty of success stories over the past decade. Ocado has proved all doubters wrong, and the merger-come-acquisition of its retail operation by M&S provides nice symbolism for the need of both old and new ideas to come together for success. In 2009 JD Sports had 437 stores, and it will end the decade with over 3,000 split across multiple continents. Primark, despite flirtations in the early part of the decade, has shown you do not need online to succeed, with its taking over of the old Pavilions shopping centre in Birmingham for its latest flagship this year testament to its success and a fine example of how to do physical retail in 2019.

B&M and Home Bargains have emerged from the non-food discounter rush as well established names in the shopping habits of many. Aldi and Lidl have done what many thought impossible by cracking a grocery order that looked enshrined in stone, initially perfectly capitalising on the downturn but then consolidating this platform by evolving their offering, sourced more locally and broadening their consumer base. They will end the decade as the fifth and sixth largest grocers in the UK and, in Aldi’s case, a retailer which now attracts more consumers than Morrisons.

Indeed focusing on the grocery sector it has been some ten years. Tesco was market leader and performing well in 2009/10 and it will exit the decade in the same manner – but in the intervening years it ballooned to be a producer of tablets and an operator of garden centres and restaurants, before a record UK loss and an accounting scandal provided the platform for Dave Lewis to trim the fat and complete the most impressive rescue job of the decade. Co-op too, teetered with disaster before rediscovering its core and placing its heritage back at the front of its message to end the period as one of the better performers. Of course the biggest shift was the story that never was, the failed merger between Sainsbury’s and Asda, a move which would have created a duopoly within the grocery sector and a move that even in its inception shows how much disruption to the sector there has been.

However if there is one business that has led the winds of change in the past decade then it is Amazon. On a global level Amazon had sales of £15.7 billion in 2009, but in its last full year results (2018) this had ballooned to £174.3 billion. In terms of the UK it has grown from the UK’s sixteenth to fifth largest retailer in the past decade, and is now, in GMV terms, the UK’s largest non-food retailer. We would need a whole report to document Amazon’s impact over the last decade (and luckily we have that in the upcoming Amazon: Creating an Ecosystem – January, 2020 Report) but no business has better represented the shift in buying habits and expected standards coming from consumers than Amazon.

However to be the largest retailer in the world it needs both a grocery operation and stores, and its shockwave inducing, of which only the smallest tremors were felt here in the UK, acquisition of Whole Foods was both an admission of the difficulties in fulfilling grocery demand from a pureplay position and a tacit endorsement of the physical store format. Its further experiments with Amazon Go and Amazon 4-Star, a mixed-goods format it has done so much to run out of business in the US, only serve to further highlight the potential of the physical store.

For all our optimism about the future of high street retail, and there are many reasons to be optimistic, it is clear physical retail needs to be supported. From the 2011 Portas Review, to the Sir John Timpson High Street Report in 2018 there has been numerous reports and campaigns designed to highlight this issue to policy makers – but the much needed changes have not come. Support for physical sellers, big and small, is needed and the hope is this comes sooner, rather than later as otherwise rebalancing act of the 2010s will extended far longer and further than it needs to into the 2020s.

Away from this we have seen technology become integral to shopping habits at both online and store level like never before. For all the talk of VR, voice and various other ‘new ways to engage’ it has been the smartphone which has driven the winds of change. In January 2010 our data showed 15% of consumers had a smartphone, by January 2019 this was 83%. As many 16-34s now shop via smartphone as they do by laptop/desktop and this has meant a vast majority of shoppers have the tool in their pocket to information gather, price check and purchase from rivals directly from others stores.

However there is no such thing as an ‘online’ and ‘store’ shopper – the two are now intrinsically linked. A perfect demonstration of this came from our Purchasing Journey for Fashion – UK, June 2019 Report which found that whilst 48% often shop online after seeing something in-store, 50% say they often shop in-store after seeing something online. With a vast majority of shoppers now comfortable in purchasing through both channels, habits are fluid and retailers must be as well and the better integration of the physical with the digital at store level is crucial for retailers moving forward.

Practices and products in the retail sector have also come under increasing scrutiny over the past decade. Looking back the horsemeat scandal of 2013 was a watershed event, not simply because of the initial public backlash but because it began the intense scrutiny placed on grocery retailers, with the current focus on plastics, food waste and carbon footprint being clear echoes. But all categories are now subject to this scrutiny – the terrible tragedy at Rana Plaza placed the spotlight on fast fashion which has only intensified in the intervening years whilst the Extinction Rebellion protests in 2019 have shown that, particularly for the youth of today, the climate and our effect on it has become a dominant theme. If there is a safe prediction for the 2020s is that buying decisions in the coming decade will be scrutinised like never before and brands and retailers will be forced to react.

Much more of course has happened, more than we could cope to cover in an already word-limit pushing Christmas message. 2019 was also a significant year for the retail team here at Mintel as we said goodbye to our Director of Retail Research Richard Perks. In final thoughts on not just one but five decades on analysing the sector before retiring he wrote this:

“So much is made of the growth in online as if that is the easy way to retail success and that online on its own will destroy the high street. It won’t and it is all too easy to overlook the basics in retailing. Success depends on having the right merchandise, in the right place, at the right time and at the right price.”

Looking ahead to the next decade whilst the how, when and where may continue to shift the underlining factors of that mantra will continue to be the key to success.

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