GDR’s CEO Kate Ancketill appeared on BBC Breakfast this week to discuss how physical stores can survive this inflection point for retail
Last week department store chain House of Fraser became the latest traditional retailer to announce it would be shutting a significant number of its UK stores because of what it called the “unsustainable cost base” of its legacy retail estate. In response to this, GDR CEO Kate Ancketill was invited into the BBC Breakfast studio where she discussed why footfall to Britain’s high street is declining, and what retailers can do to survive. Click here to see the full video.
Kate highlighted the impact of online sales and the decline of the British middle class as two key reasons for the changes being seen on the high street. “As 15% of sales are now made online, a physical store does not sell as much as it used to but it still pays as much rent and rates,” she said. “But most people still are going to stores: 85% in this country and 90% in the US, so stores are not failing.
“The middle class in this country was about 61% in the 1980s and now is only about 48% of the population. Fewer people are in that middle income bracket meaning there are fewer people shopping in those stores like House of Fraser that basically were designed for that sort of middle class person. What we’re seeing is that anything that is not highly differentiated and is in a large space that is very expensive for rates and rent, like House of Fraser, unfortunately is in trouble.”
Kate praised retailers like Apple, Harrods and Burberry, who offer experiential and fun environments to shop in, and she suggested a physical retail alternative for the likes of House of Fraser.
“It’s got to be experiential and its fine for it to go into smaller spaces because we have the endless aisle. A store in America, Nordstrom, is a bit like House of Fraser and they have Nordstrom Local, which is a tiny store in LA, no inventory at all, nothing, they hold nothing there. It’s basically posh click-and-collect. You order online ahead of time, you go there the next day, try it all on, keep what you want, and then the key thing is they tailor it for you. So basically it’s about posh tailoring, making sure its perfect for you and helping you with styling and nails and hair and all that kind of thing.
“That is a potential future for a large department store that can no longer afford these horrendous rents and rates.”
The watch the full video, click here.