High street changes: from shops to service-led retailers

When we talk about retail and the high street it can be a bit gloomy at the moment with many well-known names closing stores – from Argos to Iceland – amid continued pressure from digital channels and ongoing economic headwinds. But there are many positives to focus on. Namely, service-led retailers and hospitality operators leading an overhaul of high streets across the UK.

Big retailers shutting up shop

Recent headlines have highlighted the decision by Boots to close 300 stores, Argos is to shutter 100 units and WH Smith’s announced that it will not be opening any more high street outlets as it instead focuses on adding units in travel hubs. Indicative of the direction of travel is data from Ordnance Survey (OS) that found there were 9,300 fewer retail outlets between March 2020 and March 2022 and the trend for closures has continued since then.

But there is a positive story to be told because high streets are evolving and no longer focused as rigidly on what we define as retail stores as they have been historically. Although independent convenience stores have been enjoying a buoyant period, with 1,600 new openings during the pandemic, there are other more interesting elements at play – notably an influx of new types of outlets. These include more service-led independents running the likes of nail bars, hairdressers, orthodontic clinics, and gyms that are making our high streets much more varied, vibrant places.

High street wishlist

OS found an additional 5,100 hair and beauty outlets have opened since the pandemic, 350 new tattoo parlours, and a plethora of food-related shops, have all sprung up around the UK. The latter are certainly proving a major attraction to shoppers, judging by a survey from Tyl by NatWest. This found the “perfect high street” has a top 10 wish list consisting of bakery, Post Office, restaurant, coffee shop/café, clothing shops, supermarket, cake shop, book shop, butchers and pub. 

That makes it six out of 10 operators that are very much focused on food and drink. Supporting the attractive nature of food outlets is OS data that found 700 more pubs, 2,000 more cafes/tea rooms, and 4,600 more fast food outlets have begun operating since the start of the pandemic. 

From selling to servicing

It would not be an exaggeration to say that leisure and hospitality is proving to be something of a saviour of the high street. It reflects the fact people want to socialise on their high streets and are less interested in spending all their time in traditional shops because much of this can now be done more conveniently online. It’s about creating a blend of retail and leisure.

These shifts in demand have been in play for some time and the structural overhaul of property usage is being seen throughout the country. Research from the Local Data Company found that the redevelopment of old shop units reached a new high, with over 10,700 units repurposed in 2022, compared with 9,100 in 2021 and 7,300 in 2019. 

There will no doubt be lots more change to come, according to Revo and Lambert Smith Hampton, whose survey found that as many as 40% of shops must be repurposed in the next five years as the demand for goods through physical shops continues to wane. As many as 61% of property related organisations surveyed believe that between 20% and 40% of retail space needs to be reinvented as leisure, hospitality, health or civic use. 

Leisure pleasure

This move to leisure is being fully reflected in the UK’s top 650 town centres where the number of such units increased by 2.1% in 2022 compared with a reduction of 1.3% for retail shops. Indicative of this trend are the plans at Bluewater shopping centre that involve converting 10 shops into leisure facilities, restaurants and bars. This could see the likes of Nintendo World and Ninja Warrior along with escape rooms, soft play and bowling alley replace existing traditional retail units at the Kent-based site.

Although such venues attract big-name operators there is very much a strong demand for independent players on high streets and in shopping malls. A survey from American Express found 61% of people said they chose to visit such venues to show support for small businesses during tough economic times, while 59% say they enjoy the personalised service they typically receive.

Dan Edelman, general manager of UK merchant services at American Express, says: “It’s really encouraging to see that, where they can, many people continue to support these small businesses and enjoy positive experiences.” 

Final thoughts

Overall there is a positive feeling towards the high street, with 78% of people saying they would feel sad if their local high street was no longer an option for shopping, according to Accenture. But there is an equally sizable 47% of people who believe the high street is no longer relevant and needs to change. 

Clearly much structural change is taking place and therefore it is hoped that the high street does not lose people while it undergoes its much needed rejuvenation with new operators proliferating. There is no doubt that such changes can be difficult for local communities but they ultimately have to be embraced if the high street is to continue to play an important role in the future.

Further reading:

• Theo Paphitis: “AI has the potential to revolutionise the way retailers operate”
• Best Business Ideas for 2024: Connecting With Customers
• Best Business Ideas for 2024: Wellbeing
• Recession Proof Business Ideas for 2024 and Beyond

Glynn Davis

Glynn Davis is a business journalist specialising in the retail and food and drink sectors. As well as writing for publications including Retail Week, Ecommerce Age, Propel, Caterer and Retail Bulletin, he’s also the founder and editor of Retail Insider and Beer Insider.