The retail market is in flux. For some it is an apocalypse, for others an opportunity, but we are undeniably in the midst of an unprecedented adjustment of our sector.
Forecast amount spent within the physical retail space in the UK in 2026.
We are at a time of extreme polarisation, with meaningful differences between buyer and seller viewpoints and a trembling investor pool nervous to take risk, let alone quantify it.
Like all other asset classes, the main challenge for bricks and mortar retail across Europe is the change in people’s behaviours and expectations. On-demand is no longer reserved for the most affluent, and as our expectations for speed skyrocket so does the growth of services such as Netflix, Uber and Deliveroo. In retail, this translates to getting consumers exactly what they want, when they want it and where they want it.
The desire and feeling of entitlement to have it all and to have it now has never been greater, whether that applies to same day delivery of a weekend outfit, a video call with New York from my own sofa, or the click of a button answer to how many light years there are between Earth and the Andromeda Galaxy (2.5 million light years in case you were wondering. Source: NASA).
"The desire and feeling of entitlement to have it all and to have it now has never been greater"
And while these astronomical (no pun intended) changes in behaviour and people patterns do impact the physical retail space first and foremost, it would be naïve to not consider the impact of these seismic shifts on the rest of our physical landscape.
From Sidewalk Lab’s “thermal grid” which would heat and cool buildings without fossil fuels, to Alibaba’s “City Brain” which is developing an AI layer to collect data to control traffic lights, detect road accidents and alert emergency services – urban configuration is the next play thing for the tech and development giants.
There is tremendous opportunity with lots of demographic trends pointing not to obsolete, but instead relevant and resilient assets in the future. Estimates by CACI tell us that despite an increasing share of retail sales taking place online over the next few years, more than £290 billion will still be spent within the physical retail space in the UK in 2026. The question that then arises is; where?
There is a revival in city and town centre living, bringing with it a dense consumer catchment of often younger, highly dynamic and demanding new consumers. For these digital natives, the binary internet code of 1s and 0s sit comfortably alongside the As, Gs Cs and Us in their DNA code. The rapid increase in micro-business and self-employment, spurred on by the ease of running a business online, brings with it founders and freelancers who need micro or flexible offices, places to meet and coffee shops to work from.
And we should not be misled to think this generation cares only about hashtags and filters. This fast-growing consumer group is increasingly questioning their consumption, demanding it be sustainable and conscious – fuelled by respect for authenticity and wanting to get close to the brands they buy. And they are loud about it too, pushing for sustainability, animal welfare and fair trade, and refusing to compromise.
A recent survey by Ipsos Global Trends show that 62% of people want brands to help them make a difference in the world and are more likely to recommend those that do. In the age of innovation and easy, immediate access, we are also seeing a counter weight desire to consume locally – driven by a sense of pride, convenience and eco-preservation.
"62% of people want brands to help them make a difference in the world and are more likely to recommend those that do"
Increase in the proportion of spend on experience in the last 30 years
Share of millennials who would choose to spend money on an experience or event over buying a desirable, physical product
Experience driven retail is also fuelling consumption locally. The US has seen a 70% increase in the proportion of spend on experience in the last 30 years and this trend is playing out across Europe as we see an exponential increase in service offering. Collecting, and ideally being the first to share, unusual and surprising experiences is now more aspirational than owning designer pieces – over 78% of millennials would choose to spend money on an experience or event over buying a desirable, physical product. The experience is often most valued when delivered by local operators who can offer this experience in a personal and bespoke context – a huge opportunity for our high streets and community-based retail.
JLL coined the concept “Redefining Retail Places” almost five years ago but the idea of re-definition has never been as relevant as it is today. Retail is, and will increasingly be, about place making and placement. Retail has moved from transactional to contextual, where relevance ensures success. Successful retail in the future will offer flexibility and breadth of use, with a greater diversity of residential, service and office than the offer we see in many cities today.
Physical services, experiences and social interactions that the internet, even with advances in virtual reality, cannot provide must have an integral role in the offer. Detrimental to future placemaking will be the continuation of the “us and them” mentality – be this between landlords and retailers, retailers and consumers, or people and policy makers.
How we analyse retail in this new era needs to change. We need to encompass a wide array of aspects, from aging cooling systems to aging populations, to ensure sustainability in the broadest sense of the word. A location can ‘fall apart’ with lots of different stakeholders driven by different interests. We need to maximise value as a whole, and recognise that what were once tacit, unquantifiable factors now need to constitute a fundamental part in our underwriting. Opportunities will pass us by, if we fail to do so.
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