From Land’s End to John O’Groats, Britain’s high streets are struggling, with many appearing to be trapped in a vicious spiral of decline.
Dwindling visitor numbers have led to store and restaurant closures, which in turn gives shoppers fewer reasons to visit and results in even more store closures.
The scale of the crisis was encapsulated by the latest BRC-Springboard figures, which found that a tenth of town centre shops currently stand empty – the highest level of vacancies in four years.
Meanwhile, shopper numbers suffered their sharpest July decline in seven years.
The BRC-Springboard figures showed that more than a tenth of the country’s shops are currently empty
There’s no doubt that the High Street as we know it is changing.
Online shopping, out-of-town retail parks, erratic consumer confidence, rising costs like rents, business rates and wages, the weak pound and a slew of other factors have coalesced around traditional chains to create some of the toughest trading conditions in living memory, and – for some of them – seal their fate.
But it’s not true to say all shopkeepers are retrenching from the UK’s testy town centres.
There are some retailers that, against the odds, are expanding still – setting up shop in the eye of the storm and growing sales and profits to boot.
The secret for many is ‘experiential’ retail – or retail-tainment as it is sometimes known.
While shoppers tend to be holding back on buying discretionary items, they are still willing to splurge on experiences and events, as evidenced in recent spending data from Barclaycard.
People still crave human interactions. Among those cashing in on this trend is Lush, Warhammer (Games Workshop) and Hotel Chocolat, which by creating shops that are in themselves ‘destinations’ are bucking retail blues.
What makes these stores stand out and should struggling retailers take note?
Warhammer (formerly known as Games Workshop)
Games Workshop – the maker and seller of the Warhammer miniatures – has become something of a high street stalwart.
While the model building, painting and wargaming hobby may not be everyone’s cup of tea, the chain curries huge favour among school kids and big kids alike, and is growing sales while many of its rivals are falling into decline.
For the geek-minded, the little Warhammer stores (some so small they are run by a single person) are an ‘experiential delight’, says Ian Shepherd, author of Reinventing Retail and former boss of Game and Odeon.
A life-size model of Ork from Warhammer at the New York Comic Convention in 2010
The store estate, which was recently almost entirely rebranded as ‘Warhammer’, does not focus on selling stuff.
Once inside, there might be a workshop running on how to paint models, or an actual battle being fought across a tabletop.
Each store – and there’s a healthy smattering of them across the country – has its own Facebook page, listing details of special events, Warhammer-themed parties and competitions. The locals are not just customers; they are members of an inclusive society.
And it seems to be paying off.
In the firm’s last financial update, it said full-year sales would surpass £254million, while profits exceed £80million.
Its share price reflects its success, reaching a staggering £46.13 earlier this year.
One of the company’s biggest challenges, Shepherd argues, is creating games that are complex and big enough to sustain the interest of passionate players for years, while ensuring they are accessible and attractive to new younger players.
But its the in-store experience at its standalone shops that can help resolve this issue.
‘Stores are a hugely important part of this Warhammer customer recruitment process,’ Shepherd explains.
‘It has passionate teams in store who are brilliant at engaging with new and existing customers alike. And yes, they are pretty good at making a sale too.’
In the zone: Games Workshop is known for its sales of Warhammer and Lord of the Rings tabletop games
While its stores most definitely hold ‘destination’ status, they are not glamorous or expensively fitted out units. Far from it.
‘Much of the physical merchandising still falls victim to the ‘closed boxes on shelves’ retail design which can be cold,’ Shepherd points out.
‘But the hands-on approach of the staff creates a terrific experience despite that.’
Looking forward, Shepherd thinks the company has an opportunity to retain its customers better by learning more about them through data and analytic.
‘Every customer recruited is potentially a long term spender and it’s essential they know all they can to maintain that 1:1 relationship with each one of them,’ he says.
Lush, unlike many of its rivals, ensures its products are always available to touch and sniff
A number of retailers are guilty of focusing too hard on so-called ‘shrinkage targets’ – trying to minimise wasted, stolen or broken stock.
As a result, they end up ‘hiding’ products from customers by leaving them in packaging, behind glass and away from sticky fingers.
But Lush, Shepherd points out, is a ‘temple to the value a business can generate by breaking that retail rule’.
It also helps that Lush has a strong background as a campaigning brand
Lush ensures products are always available to touch and sniff.
‘Enthusiastic colleagues will cheerfully throw a bath bomb into a basin of water so that you can see what happens.
‘When they do that, they “waste” a product but gain a customer – a trade they are happy to make,’ Shepherd says.
From its huge flagships, to smaller branches on local high streets, Lush’s 928 worldwide stores offer an experience overloads – the smell of a million bath bombs, the noise and the colours.
It’s not for everyone – my allergy prone skin and aversion to strong fragrances means I’ve rarely crossed the threshold.
But Lush’s fun, destination stores do seem to draw the crowds – helping the retailer stand out in a saturated market, grow sales and expand into bigger sites in prime locations.
As Shepherd puts it: ‘Lush appears to be drawing in their younger target market like moths’.
This year, the global business opened its biggest ever shop and spa in Liverpool
‘Once inside, staff are particularly patient, understanding that rushing a sale would backfire.
‘And the stores are increasingly interactive too – some with spas, beauty bars, seating areas and even facilities for private parties,’ he says.
Earlier this year, the business opened its biggest ever shop in Liverpool, spanning three floors and boasting a hair salon, florist, ‘perfume library’ and spa with six treatment rooms and party area.
The firm, which saw like-for-like full-year sales rise 8.2 per cent in the UK, said: ‘At a time when revitalisation is needed more than ever, this new destination shop’s aim is to bring more innovation and creative personal experiences than ever before to the high street.’
It also helps that Lush has a strong background as a campaigning brand.
It strives to tackle issues like cosmetics testing as well as wider social problems which resonate with its shoppers.
One of its current goals is to reduce plastic use in the cosmetics industry – hence its newer ‘Naked’ shops, where people can buy plastic packaging-free alternatives.
‘This can be a huge strength for a business with a highly socially aware customer base,’ Shepherd says, ‘but creates its own risks too, as the recent Police Spy campaign backfire demonstrated clearly.’
Co-founder and CEO Angus Thirlwell (above) told This is Money he wanted to ‘free chocolate’ from the glass cabinet and ‘white gloves treatment’.
Much of the same can be said for upmarket chocolate firm Hotel Chocolat, whose co-founder Angus Thirlwell told This is Money he wanted to ‘free chocolate’ from the glass cabinet and ‘white gloves treatment’.
The retailer’s in-store samples and innovative use of shop space (both during and after opening hours) has been a driver of loyal customers, meaning that, while many of its rivals retrench from the high street, Hotel Chocolat is still opening shops, in the UK and now overseas too.
‘You’d think it would be hard to make a shop selling chocolate dull,’ Shepherd says, ‘but the sad fading away of Thorntons shows it can be done.
‘Hotel Chocolat has avoided the race downmarket that undid Thorntons by maintaining a very high-quality product, innovating that product at a terrifying speed and operating shops filled with staff who clearly want to be there.’
Indeed, the firm floated in 2016 with a valuation of £167million and, just over three years later, has a market value of £415million.
Shepherd points to the experiential elements in Hotel Chocolat stores, such as cafes selling hot chocolate, ‘chocolate lock-ins’ and after-hours tasting sessions, which have helped it ‘retain loyal fans and build brand credibility’.