2021
9
UK The Changing Face of the High Street Market Report 2021
2021-11-10T03:12:38+00:00
OX1046033
2195
144382
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Report
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“In-store shopping was under pressure prior to COVID-19 and the pandemic has only served to intensify this. The loss of multiple high street staples will leave deep scars and heightened…

UK The Changing Face of the High Street Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the how the face of the high street is changing across the UK including the behaviours, preferences and habits of the consumer.

While only 15.8% of all non-food sales in the UK were estimated to have come from online-only and non-store retailers in 2010, in 2020 this number has jumped to 48.6%. While the COVID-19 pandemic was partially responsible for this acceleration, the rise on online-only retailers and greater engagement from store-based players in the online channel serves to highlight the current pressure on physical stores. Following the removal of all restrictions in July 2021, footfall has recovered a little, although at 58.7% stores are still claiming a smaller share of total non-food sales than they had previously.

Greater use of online ecommerce platforms remains a major threat to shopping locations, however an equally threatening trend is that store-based shopping has become more ‘planned’. 74% of consumers report that their trips to stores have become more planned out since the pandemic began, with 71% saying they only visit stores when they have to. This has the potential to reduce dwell times in shopping locations, integral in driving impulse browsing and purchasing.

60% of consumers say they have missed going shopping as part of a day out and 55% say going shopping is a great way to socialise. This indicates there is still much stock placed in physical shopping, and its absence during 2020 has the potential to now be used as a catalyst to reinvigorate physical shopping behaviours moving forwards. However, investment and innovation will be needed to both fill the gaps left by business failures during the pandemic and to create a mix of experiences at a store level which rewards that desire to support physical shopping locations.

Read on to discover more details or take a look at all of our UK Retail market research.

Quickly understand

  • The impact of COVID-19 on shopping behaviour both in-store and online.
  • Shifts in consumers’ spending on goods and services across the past two decades, and how this has altered the retail sector.
  • The growth of penetration of online in the retail sector and the impact of this on physical sales.
  • What the important factors are for a physical shopping destination to have.
  • How consumers feel about physical customer service and services on offer in physical stores.
  • Attitudes towards online shopping post-pandemic and what can encourage greater in-store shopping.
  • How consumers shop multichannel and what retailers can target to better connect the channels.
  • Key drivers of current consumer behaviour and how these trends will manifest themselves in innovation across the next decade.

Covered in this report

Brands: Tesco, Sainsbury’s, Morrisons, Asda, Safeway, M&S, Boots, GUS, Argos, Kingfisher, JLP, Co-op, Aldi, Amazon, eBay, Fortnum & Mason, Primark, Whole Foods Market, Hughes Electrical, Bells of Lazonby, Forbidden Planet, Long Tall Sally, Jeroboams Shops, Charbonnel et Walker, Levi’s, Gorillas, Jumbo, Wild Roots, John Lewis, HMV, Arcadia, Debenhams, Shop Direct, Next, JD Sports, B&M, Dixons Carphone, Greggs, Timpson Group, Card Factory, WH Smith, Poundland, Specsavers, Screwfix, Well, Toolstation, Home Bargains, TK Maxx, Nickelodeon, The Outernet, BoxPark, Eatly, IKEA, Selfridges.

Expert analysis from a specialist in the field

This report, written by Nick Carroll, a leading analyst in the Retail sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

In-store shopping was under pressure prior to COVID-19 and the pandemic has only served to intensify this. The loss of multiple high street staples will leave deep scars and heightened online use will, understandably, make more retailers reticent to take on additional space. On top of this changing working habits and more localised purchasing threaten to fundamentally alter where and how we shop in-store. Physical retail is not, nor ever will be, dead but now is the time for the quicker evolution of stores to match the changed needs of UK consumers.

Nick Carroll - Research AnalystNick Carroll
Associate Director of Grocery and E-commerce Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
  2. Executive Summary

    • Impact of COVID-19 on retail
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on the retail sector, 2020-25
    • The market
    • Some shift in spending towards services, but spending on goods is still key
      • Figure 2: Breakdown of total consumer spending (value), by major category, 2000-20
    • Within the retail sector the rise of online has been the differential
      • Figure 3: UK retail sales (inc. VAT, ex-fuel, non-seasonally adjusted) breakdown, by major category, 1995-2020
    • Early categories disrupted by online already show the scars of online growth
      • Figure 4: CAGR of major non-food specialist categories (inc VAT, non-seasonally adjusted), 2000-19
    • Despite pressure the high street has held up relatively well…
      • Figure 5: the number of VAT and/or PAYE retail local units within the UK, by food and non-food, 2014-21
    • …but a bounce-back to physical is critical for the future of physical retail
      • Figure 6: Estimated share of all non-food sales, by stores and non-store retail, 2009-20
    • Amazon is now the fifth largest retailer within the UK…
      • Figure 7: Top 10 UK retailers, as a % of all retail sales, 2000-19
    • …but for store-based players online has opened up a new world of opportunities
      • Figure 8: Fastest-growing UK retailers, by sales per outlet including online sales, 2000-19
    • Trends Drivers
    • Experience now critical
      • Figure 9: Levi’s Haus, London, 2021
    • Value
      • Figure 10: Gorillas Shoreditch, London, 2021
    • Wellbeing
      • Figure 11: Jumbo Kletskassa, 2021
    • Surroundings
      • Figure 12: Wild Roots, Kingsland Crescent, Poole, 2021
    • The consumer
    • Hesitancy around spending time in-store is easing
      • Figure 13: COVID-19 Tracker, Impact on online shopping behaviour and time spent in-store, 2020-21
    • Change in working habits could alter the importance of location
      • Figure 14: Impact of COVID-19 on shopping location behaviour, 2021
    • The UK has a dense retail network
      • Figure 15: Proximity to shopping locations, 2021
    • The basics must be right before the mix comes into play
      • Figure 16: Key factors for shopping locations, 2021
    • Services can provide the USP against online
      • Figure 17: Interest in in-store services, 2021
    • Customer service needs to be invested in
      • Figure 18: Attitudes towards physical shopping, 2021
    • Better integration with online is integral to physical retail
      • Figure 19: Physical shopping behaviours, 2021
  3. Issues and Insights

    • The physical recovery following COVID-19
    • Physical retail needs to lead on the conscious consumerism revolution
    • Service and services must be how physical retail defines itself
  4. Market Drivers

    • Confidence currently at record highs
      • Figure 20: The financial wellbeing index, 2015-21
      • Figure 21: Changes in financial situation in the past year, by household income, 2021
    • Purchasing levels returning to normal
      • Figure 22: The financial activity index, 2015-21
    • Wage growth easing inflationary pressure at present…
      • Figure 23: Real income growth: Wages versus inflation, 2016-21
    • …but inflation could constrain retail recovery
      • Figure 24: Inflation, core categories, 2017-21
      • Figure 25: COVID-19 Tracker, awareness of price changes, 2021
    • A growing but ageing population
      • Figure 26: UK population, by age, 2011-30
    • Population growth quickest within London
      • Figure 27: Population change, by country and region, 2010-19
      • Figure 28: Top 10 fastest and slowest-growing areas, by population change, 2010-19
  5. Shifts in Consumer Spending

    • Some shift in spending towards services, but spending on goods is still key
      • Figure 29: Breakdown of total consumer spending (value), by major category, 2000-20
      • Figure 30: Breakdown of total consumer spending (volume), by major category, 2000-20
      • Figure 31: Compound annual growth rate of major categories of total consumer spending (value and volume), 2000-19
    • Retail spending: by value spending on F&D has declined as a proportion of total spending in the 2010s
      • Figure 32: Retail goods, major categories as a % of total (value) spending, 2000-20
      • Figure 33: Retail goods, major categories as a % of total (volume) spending, 2000-20
      • Figure 34: Compound annual growth rate of major retail goods categories (value and volume), 2000-19
    • Complementary high street spending
      • Figure 35: Key high street spending areas outside of retail, by major category (value), 2000-20
      • Figure 36: Compound annual growth rate of major complementary physical retail categories (value and volume), 2000-19
      • Figure 37: Split of total spending on in-home food and drink and out-of-home food and drink (value), 2000-20
  6. Retail Sales Performance

    • Growing non-store (online) sales the biggest shift over the past decade
      • Figure 38: UK retail sales (inc. VAT, ex-fuel, non-seasonally adjusted) breakdown, by major category, 1995-2020
    • Despite pressure store-based clothing specialists remain key to the high street
      • Figure 39: Share of store-based non-food retail sales, by major category, 1995-2020
      • Figure 40: CAGR of major non-food specialist categories (inc VAT, non-seasonally adjusted), 2000-19
      • Figure 41: Key store-based retail category sales as a proportion of total spending in category, 2000-20
    • Grocery: major players consolidate hold on store-based sector
      • Figure 42: Food and drink retail share of sales, by major category, 1995-2020
      • Figure 43: UK grocery retail estimated channels of distribution, by format, 2011-20
  7. The Impact of Online on Physical Retail

    • The pandemic has accelerated natural growth in online penetration
      • Figure 44: Online sales as a proportion of all retail sales, 2008-25
      • Figure 45: Share of online sales, by store-based and online-only retailers, 2016-21
    • For the first time over half of non-food demand in Q4 2020 came outside of stores
      • Figure 46: Estimated share of all non-food sales, by stores and non-store retail, 2009-20
      • Figure 47: Estimated share of all non-food sales, by stores and non-store retail, 2019-21
    • Non-foods – record penetration poses headache for under-indexing categories online
      • Figure 48: Estimated detailed store-based retail online market sizes, by value and as a proportion of total category sales, 2019 and 2020
      • Figure 49: Key store-based retail categories, percentage of sales accounted for by online, 2009-20
      • Figure 50: Key store-based retail categories, percentage of sales accounted for by online, 2019-21
  8. Structural Elements of Physical Retailing

    • The number of retailers within the UK has continued to grow
      • Figure 51: Number of VAT and/or PAYE retail enterprises within the UK, 2014-21
      • Figure 52: Percentage change in the number of VAT and/or PAYE retail enterprises within the UK, by major retail category, 2014-21
      • Figure 53: Survival of newly born enterprises, 2014-19
    • Stores under pressure from online growth
      • Figure 54: the number of VAT and/or PAYE retail local units within the UK, by food and non-food, 2014-21
      • Figure 55: Percentage change in the number of VAT and/or PAYE retail local units within the UK, by major retail category, 2014-21
    • To fill gaps the high street has looked beyond retail
      • Figure 56: Historical vacancy rates, 2013-20
      • Figure 57: Percentage change in the number of VAT and/or PAYE retail and complementary high street business local units within the UK, by major retail category, 2014-21
    • London the quickest-growing area for non-food outlets
      • Figure 58: Percentage change in VAT and/or PAYE retail local units within the UK, by region and by food and non-food, 2014-21
  9. Retailer Market Shares

    • In 20 years Amazon has gone from the 123rd to the fifth-largest retailer in the UK
      • Figure 59: Top 10 UK retailers, as a % of all retail sales, 2000-19
    • Amazon is now the largest non-food retailer
      • Figure 60: Top 10 UK non-food retailers, as a % of all non-food and non-store retail sales, 2000-19
    • Online changes the natural progression of brand demise
    • Store growth
      • Figure 61: Leading store-based retailers, net change in store numbers, 2000-19
      • Figure 62: Fastest-growing UK retailers, by sales per outlet, 2000-19
  10. Mintel Trend Drivers

    • A way to explore what will be crucial for physical locations in the coming decade
      • Figure 63: Mintel Trend Drivers, globalised drivers, 2021
  11. Trend Driver – Experiences

    • Mintel Trend Driver: Experiences
      • Figure 64: Trend Driver and Pillars: Experiences, 2021
    • Consolidation of high-street retail leaves opportunity for mega-malls
      • Figure 65: Nickelodeon Universe at American Dream: Opening Day, 2019
      • Figure 66: The Outernet London, August 2021
    • Big is great, but so is small
      • Figure 67: Boxpark Shoreditch, 2021
      • Figure 68: Eatly London, April 2021
    • Creating the experience in-store
      • Figure 69: H Beauty Lakeside, 2021
    • Making the experiential educational
      • Figure 70: Levi’s Haus, London, 2021
      • Figure 71: Ikea Future Format Store, community hub, 2021
    • What it means
  12. Trend Driver – Value

    • Mintel Trend Driver: Value
      • Figure 72: Trend Driver and Pillars: Value, 2021
    • Savvy shopping has driven both the discount sector and the online channel
      • Figure 73: Chilled & Frozen at B&M Bargains, 2019
      • Figure 74: Clubcard Prices at Tesco Express, 2021
    • The squeeze in the middle
      • Figure 75: ANYDAY John Lewis, Westfield Stratford, 2021
      • Figure 76: On Running, New York City Flagship, 2020
    • Making convenience the heart of service offering
      • Figure 77: Sneakers Er Selfridges, Oxford Street, London, 2021
      • Figure 78: Collect+ Lounge at Westfield London, 2014
      • Figure 79: Hema Fresh, 2021
      • Figure 80: Gorillas Shoreditch, London, 2021
    • What it means
  13. Trend Driver – Wellbeing

    • Mintel Trend Driver: Wellbeing
      • Figure 81: Trend Driver and Pillars: Wellbeing, 2021
    • Wellbeing in all its forms has risen up the agenda
      • Figure 82: Lush Sleepy pop-up, 2021
      • Figure 83: Holland and Barrett, Wellness For All campaign, 2021
      • Figure 84: Ikea STARKVIND Air Purifier, 2021
      • Figure 85: Sleepacy, Stockholm, 2021
    • Simple changes and service can make a big difference
      • Figure 86: Jumbo Kletskassa, 2021
      • Figure 87: The Hyundai Seoul, 2021
    • Creating space for an active lifestyle
      • Figure 88: WIT House London, One New Change, 2021
    • Giving a helping hand
      • Figure 89: Asda specialist greengrocer, 2021
    • What it means
  14. Trend Driver – Surroundings

    • Mintel Trend Driver: Surroundings
      • Figure 90: Trend Driver and Pillars: Surroundings, 2021
    • Physical retailing must be at the heart of the sustainable revolution
      • Figure 91: Ecover Refill Stations at Booths, 2019
      • Figure 92: The Loop Refuse Station at Tesco, 2021
      • Figure 93: Tesco soft plastic recycling point, 2021
      • Figure 94: H&M Recycling system Looop, 2020
    • Making local the attraction
      • Figure 95: Tebay Services, 2021
      • Figure 96: Macknade, Faversham
    • Creating space for local
      • Figure 97: Hill & Szrok dining experience, 2021
      • Figure 98: Billa Regional Box, Baldramsdorf, Austria, 2021
      • Figure 99: Cargo bikes by Cargo, Broadway Market London, 2021
    • Working with stakeholders to create the right mix
      • Figure 100: Wild Roots, Kingsland Crescent, Poole, 2021
      • Figure 101: Curated Makers in M&S, Liverpool 2021
    • What it means
  15. Impact of COVID-19 on Shopping Behaviours

    • Concern hits footfall and drives sales into the online channel
      • Figure 102: COVID-19 Tracker, Impact on online shopping behaviour and time spent in-store, 2020-21
    • Continued shifts to working behaviour present the greatest shift in purchasing behaviour
      • Figure 103: Impact of COVID-19 on shopping location behaviour, 2021
    • Greater online use also brings opportunity to drive footfall
      • Figure 104: Changes and expected changes in click-and-collect usage, by area lived in, 2021
    • The rise in digital services presents a threat to physical
      • Figure 105: Impacted and expected legacy of COVID-19 on digital forms of service, 2021
    • The high street needs more than retail to survive
      • Figure 106: Impact of complementary business closures on retail footfall, by age, 2021
  16. Proximity to Shopping Locations

    • Vast majority of UK shoppers have multiple physical retail choices
      • Figure 107: Proximity to shopping locations, 2021
    • Those in urban areas have the greatest immediate choice of shopping location…
      • Figure 108: Proximity to shopping locations, within walking distance/short transport distance, by type of location lived in, 2021
    • …but they are also the most frequent online shoppers
      • Figure 109: Frequency of online shop, by type of location lived in, 2021
  17. Key Attributes of Shopping Destinations

    • Parking and transport are integral to choice of shopping location
      • Figure 110: Key factors for shopping locations, 2021
    • Younger consumers want more than just retail
      • Figure 111: Key factors for shopping locations, by total importance and age, 2021
      • Figure 112: Key factors for shopping locations, by factors selected as ‘extremely important’ and age, 2021
    • Physical stores can’t compete with online for breadth of choice and ease of access to retailers
      • Figure 113: Key factors for shopping locations, by factors selected as ‘extremely important’ and frequency of online shopping, 2021
    • For families convenience and a ‘day out’ are critical
      • Figure 114: Key factors for shopping locations, by factors selected as ‘extremely important’ and parental status, 2021
  18. Service and Services on the High Street

    • Investment in service is critical as a differential
      • Figure 115: Attitudes towards in-store service, by age, 2021
    • Conscious consumerism represents a golden opportunity for physical stores to redefine themselves
      • Figure 116: Interest in in-store services, 2021
      • Figure 117: Interest in in-store services, by age, 2021
    • Most frequent online shoppers most interested in experiential services
      • Figure 118: Interest in in-store services, by frequency of online shopping, 2021
  19. Attitudes towards Physical Shopping and Retail Mix

    • Shopping trips have become more ‘planned’ due to the pandemic
      • Figure 119: Attitudes towards shopping during the COVID-19 pandemic, by age, 2021
    • Incentives in the short term could break some pandemic behaviours
      • Figure 120: Interest in rewards for footfall, by frequency of online shopping behaviour, 2021
    • Longer term the joy of physical shopping needs to be reclaimed and promoted
      • Figure 121: Attitudes towards social shopping and markets and pop-ups, by age, 2021
    • This can be encouraged by involving the local community
      • Figure 122: Attitudes towards community involvement and investment into shopping areas, by household income, 2021
  20. The Multichannel Impact on Physical Shopping

    • Greater online use is shifting how consumers interact with stores
      • Figure 123: Interaction of online and physical stores, by age, 2021
    • As the online channel grows, issues and opportunities will only be exaggerated
      • Figure 124: Interaction of online and physical stores, by frequency of online shopping, 2021
    • To capitalise on this retailers need to make the multichannel experience smoother
      • Figure 125: Issues experienced when collecting products in the past year, 2021
    • Going truly multichannel can create new forms of store
  21. Appendix – Data Sources, Abbreviations and Supporting Information

    • Data sources
    • VAT
    • Abbreviations
    • Consumer spending analysis
      • Figure 126: COICOP Classifications, 2021
    • Mintel Trend Driver methodology
    • Consumer research methodology

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