Oxford Street is empty of shoppers as national coronavirus lockdown continues.
Mike Kemp | In pictures | Getty Images
LONDON – High street is undergoing a major transformation as retailers close stores, customers go online and leisure activities take up more time in our daily lives, analysts told CNBC.
The coronavirus pandemic and the resulting social constraints have left retailers a tough challenge and many have been unable to keep their doors open.
In the UK, 20,000 stores were closed in 2020, a significantly higher number than in 2019 and 2018, the Royal Institution of Chartered Surveyors said in a report last month.
Two major UK retail names, Debenhams and Topshop, entered management last year and were recently bought by two online-only retailers. Both offers exclude physical stores and it is only their brands that are bought out.
“We have seen a big trend in urban spaces, from commercial space selling goods to commercial real estate selling experiences. So the cafe is replacing the toy store. It will likely stay that way.”
Professor at Harvard University
In October, Gap was considering closing all stores in Europe. In the meantime, one of the two stores on the famous Oxford Street shopping parade would be closing.
This reality is changing the main street, known in the UK as Main Street, and the way we shop.
Neil Shearing, group chief economist at Capital Economics, told CNBC that pandemics and other shocks don’t cause big behavioral changes out of the blue, but “accelerate changes that were previously under way. One of them, of course, is the shift to online shopping.”
Move away from retail
The share of UK internet sales in total retail sales rose from 19% to 33% between February and May last year, according to the UK National Statistics Office when the UK put its first lockdown. That number hit a record 36% in November.
In the twelve months to December, according to the ONS, the share of Internet sales rose by around 10 percentage points.
Shearing predicts “a likely post-pandemic shift in major road use away from retail and into more recreational activities.”
He expects Main Street to have more “community activities” such as restaurants, cafes, cinemas, and theaters.
Before the pandemic, Hauptstrasse was about to move towards more experience-oriented spaces. Even retailers were trying new ways to keep customers in store longer.
For example, Topshop had live music on London’s Oxford Street and customers could get a haircut on the store’s bottom flower. Others had chosen to include small coffee shops and personal stylists as well. This trend should continue to gain momentum.
The mix is already moving away from souvenir shops to more food, leisure and adventure-oriented offers.
“It is right to expect some commercial-to-residential conversion if we see a decline in commercial real estate,” Edward Glaeser, professor of economics at Harvard University, told CNBC.
“We’ve seen a big trend in urban spaces, from commercial space selling goods to commercial property selling experiences. So the cafe is replacing the toy store. It will likely stay that way,” he said.
This trend can be seen in plans to redesign Oxford Street in London. Due to a public and private investment of £ 2.9 billion (USD 3.97 billion), the road is undergoing renovation, which may take several years.
Speaking to CNBC on Monday, Jace Tyrrell, executive director of retail group New West End Company, said the transformation was still ongoing, but with a delay due to the pandemic. Rather than finalizing the plans over the next year, Tyrell expects them to be completed by 2024.
The overhaul brings more leisure and cultural spaces such as a cinema in the Selfridges department store, a new market for sustainable food and a new space for events.
The overall idea is to provide more social opportunities to keep visitors past their normal shopping hours and to attract others who just want to socialize. The area will also benefit from other transportation options that could attract more people from outside the UK capital.
According to Tyrrell, there are two major structural changes: “the move to online and the desire to consume more sustainably”. To respond to the latter, Oxford Street wants to become an emission-free traffic zone.
He added that 20% to 30% of the ground floors in the area will change to accommodate more game lounges, galleries, and sports-oriented products.
The New West End Company, which represents 600 companies in the area, said in a report released just before the pandemic, demand for new experiences and online relocation are driving new brands and tenant mixes on Oxford Street. “The mix is already moving away from souvenir shops to more food, leisure activities and experience-oriented offers,” it said.
In this context, retailers are also paying attention to social media. Selfridges’ has a new dining area labeled “Instagram-worthy” and there will be public wifi covering the area.