Saving the high street: how can indies innovate to keep up with changing times?

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  • Written by Richard Saunders, retail director at Hartnell Taylor Cook

Over the past year, we have witnessed the UK’s largest retailers diversifying their offerings drastically. John Lewis has revealed plans to build 10,000 rental homes, Tesco has piloted an in-store flexible office space and a number of supermarkets have for a long time now offered personal finance services.

Industry leaders are always under pressure to deliver growth, and as the cost-of-living crisis sets the scene for an increasingly difficult operating environment, they are forced to innovate, diversify and collaborate to appease shareholder demands.

With retail, office and residential tie-ups set to be a growing trend in regional commuter towns. The UK’s leading businesses now have the opportunity to create mini-communities and a one-stop location for workers. 

However, while headlines have pinned in-store innovation as the saving grace for the high street, a mixed-use model is not a realistic expectation for independent retailers. The expensive and time-consuming barriers that stand in the way of creating mixed-use buildings are simply not cost-effective.  Indies need to be more creative in their approach to innovation; they do not need to reinvent the wheel, rather innovation should rely on collaboration.

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Issues with in-store innovation

In-store innovation is ultimately underpinned by ownership. The UK’s top 10 retailers – including Tesco, Sainsbury’s, Asda and M&S – have long-standing portfolios and will typically own properties on a freehold basis, giving them more scope to effectively use the building. With a freehold and the widening of the use classes system, business owners can reinvent without having to jump through the convoluted hoops of planning permission and can more easily create a mixed-use experience.

This is in stark contrast to the majority of retailers in the UK who have short-leasehold portfolios. With a short-leasehold, retailers have limited motivation to pursue drastic changes as there is simply no guarantee that they will hold the store for long enough to benefit from the change.

Take for example, the comparative experiences of M&S and Debenhams in Broadmead, Bristol. Both stores were forced to close due to poor trading conditions, but M&S own its building so is able to retain and look to work with Bristol City Council to potentially develop a more innovative solution for the premises and have the potential to diversify its use in the future. Debenhams, which had a lease, had no option but to abandon the store and ultimately the entire business.

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Collaboration is key

This is not to say leaseholders are unable to innovate – smaller retailers just need to be more creative. Retail collaboration has always been the essence of the high street and retailers have always diversified their offering. This is not a new phenomenon.

Often, smaller retailers need to collaborate with larger, more established brands. For example, to diversify its offering, Finisterre (an own brand British sustainable fashion retailer) has partnered with Vans, Vivobarefoot, Palladium and even the RNLI to offer shared products to a broader reach of consumers. The smart modern retailer needs to leverage and collaborate with similarly-minded brands to innovate.

Hartnell Taylor Cook is an independent property consultancy based in London and Bristol.