The Royal Institution of Chartered Surveyors conducted a UK commercial market survey which predicts that rental value of retail venues will fall as the demand for retail space reduces and unoccupied space on the high street rises.
Unoccupied High Streets As Ecommerce Websites Continue To Grow
As online sales continue to grow year by year, many business owners are responding to changing consumer demand and looking more towards launching or improving their ecommerce website. This is a change from the previous ways in which start up businesses would operate by opening a store on the high street. Big brands are dominating the retail industry with their multichannel presence as well as niche online start ups and websites with quality products/services which gained first mover advantages.
Demand for retail space fell the most in London whereas Wales and the Midlands remained flat which makes them the best performing areas for retail space demand. With rent prices expected to fall it does appear as if there is a good opportunity for people to benefit from opening a new store at lower costs, however if consumers are still favouring the internet and retail stores are unable to implement an effective multichannel ecommerce solution; operating on the high street will not provide profit margins the way ecommerce websites do.
Online Shop Or Bricks & Mortar Business
Commenting on this change, retail analyst at Economist Intelligence Unit Jon Copestake said, “Given the recent raft of administrations on a high street already struggling with record vacancies it is little surprise that demand is falling. As supply grows from businesses failure, the appetite to fill the gap is subdued by the increasing prevalence of online channels. At the moment investing in bricks and mortar represents a greater risk than ecommerce as a route to market. Those looking for a silver lining may be disappointed. The format has proven itself to be structurally overweight, although, pop-up-shops from start-ups or pure play retailers like Amazon could stem the flow of vacancies, as could the increasing focus on convenience formats from supermarkets.”
While the landscape of the online and offline retail world continues to shift, businesses need to ensure they are primarily focused on meeting the demands of consumers. As the greatest amount of growth is in online shopping, developing a high conversion ecommerce website is essential for any form of initial success. Combining bricks and mortar business with online for the time being is better reserved for bigger, well established brands.
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