Retailers were eager to see the back of 2021 but this year has presented its own challenges. In particular, stores have not had an easy time of it. 

Non-essential retailers closed during the multiple national and regional lockdowns, and now they are operating in a market where retail finds itself staring into the jaws of one of the worst cost-of-living crises in a generation. 

But retail is a resilient industry and it is fighting back. 

Increased agility and high levels of investment in ecommerce have understandably characterised the past two years, but bricks have not simply been replaced by clicks – stores now have a new role within today’s retail ecosystem.

The need to attract customers back to stores has never been more important – but the experience must be worth the visit. Particularly when retailers are trying to woo a cautious, cash-strapped consumer.

What does the consumer want from a retail store experience? What should modern stores look like today and how do they need to evolve in the future? How can customer experience be done in new ways to drive shopper loyalty? Which technologies will support this and what role will in-store events and the communications that sit around them play?

These are the big questions retailers have to contend with. But what is clear, as this report shows, is that consumers still crave physical experiences and retailers are rising to the challenge. 

Future Formats: What lies in store for physical retail, produced in association with global ticketing and event marketing platform Eventbrite, reveals how retailers are creating compelling experiences that make their stores destinations for consumers, despite the challenging trading environment. 

Winning strategies in this report

Retail Week has determined the five winning strategies all retailers should focus on in 2022 and beyond to succeed in a market transformed by technology and shifting consumer attitudes.

Experiential retail has been one of the big stories of the past 10 years. Coffee shops, nail bars and hair salons, gaming zones, puppy training classes and a variety of in-store events – retailers have been aiming to create spaces that give consumers an extra reason to visit and that feel like a home away from home.

The pandemic put paid to that for two years, with the focus instead being on getting consumers in and out of stores as quickly and safely as possible. That is if they were even open.

But now that has changed.

The context

Consumers have been returning to high streets. While online sales remain high – representing 27.9% of total retail sales in July 2021, according to the Office for National Statistics, compared with 19.8% in February 2020 – they have fallen from a peak of 37% at the height of lockdown. 

Data from footfall specialist Springboard shows that, while shopper numbers remain down on pre-pandemic levels – they declined 15.9% in April 2022 versus the same month in 2019 – footfall has been steadily improving and is now at one of its highest levels since the pandemic began. However, April performed worse than March, which saw a 15.3% footfall decline compared with the same month in 2019, and could be an early warning sign that the cost-of-living crisis is going to bite.

Springboard data also shows retail parks are enjoying the highest footfall, with those locations only down 5.9% in April 2022 against the same month in 2019. High streets fared much worse at -18.5%, while shopping centres languished at -20.3%.  

Springboard marketing and insights director Diane Wehrle says the big test for retail will be in the coming months as the true depth of the crisis reveals itself.

“The issue for retail is whether the result for April is a precursor to a contraction in retail consumer activity over the coming months,” she says, adding that strong inflationary pressures will affect household budgets as we move through 2022.

Certainly, the May UK consumer confidence barometer from consumer goods data intelligence provider GfK makes for worrying reading. The monthly survey of 2,000 consumers, which asks whether the time is right to make major purchases or save money, registered an eye-watering score of -40. That is worse than any low seen even during the pandemic.

Booths chief operating officer Nigel Murray says the Northern grocery chain is taking a responsible tone in how it interacts with its customers right now. He says: “How can we help them to save money? How can we give them domestic hacks and tips and techniques to save some money here, there and everywhere? That’s what we’re trying to do now, and be more holistic.

“Rather than just being about price or value within the stores, which is obviously what we do offer, we’re trying to provide an additional service to help customers think about what they can do in other parts of their life to try to get through some of the challenges that they’re facing at the moment.” 

It is fair to say stores have a lot to contend with and retailers need to challenge themselves with the big questions: what does the post-pandemic consumer want to find when they visit shops? And how can retailers use their store space to really maximise revenue?

Do stores still matter?

The answer is yes. 

Look no further than Google, which opened its first permanent store in New York in 2021 after years of pop-ups. 

The store focuses on creating settings where customers experiment with products in dedicated rooms, which Google vice-president of direct channels and membership Jason Rosenthal says allows visitors “to experience how our products and services work together in a variety of immersive ways”.

Netflix lost 200,000 customers in the first quarter of this year and expects to lose 2 million more in the second quarter as consumers cancel subscriptions following the pandemic, but it too has been experimenting with stores. The streaming giant partnered with Asda in April 2022 to offer a range of products in 12 supermarkets and opened a flagship concession in Asda’s Milton Keynes branch. Netflix sees strengths in diversifying its offer and, like Google, believes stores have an important role to play. 

Even editorial brands are getting in on the action. In February 2022, Buzzfeed announced a long-term partnership in the US with Stellar Partners, opening dedicated outlets selling travel supplies, snacks and magazines in airports. Two sites have opened in LaGuardia Airport, New York. 

So… what now?

The demand for stores may not have diminished, but consumers are expecting different things from them. How should retailers respond?  

Context is everything, according to Will Trump, head of the behavioural insights group iptiQ by insurance firm Swiss RE, who describes a “dichotomy of self” within the consumer psyche.

“Human behaviour is highly context-specific. Those same people who in one breath are saying ‘I do everything online now’, in the next breath are meeting up with their friends on the high street to have a coffee. Human behaviour is not a zero-sum game,” he says.  

One thing missing from consumers’ lives during the past two years has been a good deal of human interaction.

Now, they want the chance to step into those brand worlds – not just to shop, but to enjoy experiences in keeping with the lifestyle those brands promote. Creating this kind of experience will help retailers make the most of their existing store estate. 

Creating community spaces

Spar’s strategy is based around three pillars. One, value on your doorstep. Two, nurture neighbourhoods by employing people and supporting local charities. Three, being passionate about local produce. Ian Taylor, retail director at Spar UK, says: “You've got to know your customers and the missions that bring them into stores, and then make your offer relevant to your local community.”

Primark has sought to create engaging ‘moments’ within its stores. For example, its Manchester store features a Central Perk cafe, complete with a replica of the Friends sofa. “People have got that Instagrammable moment with the iconic sofa. We've now got a menu inspired by the Friends show and every fourth song is the theme song. It’s a very immersive experience,” says Primark director of new business development Tim Kelly. 

Asda integrates its stores with local communities in a practical way, offering up community rooms in stores, which are available for use to local groups and good causes. “This creates a ‘hub’ that supports the communities we serve,” says Harrison. 

Making retail an event

Events are playing a crucial role in attracting customers into stores, communicating retailers’ brand stories and placing shops at the heart of local communities. 

At Uniqlo, this has meant reacting to demand from customers to learn how to extend the life of their clothes. “We organise workshops with customers to help them understand what they can do to care for their clothes,” says a spokesperson.

Northern grocer Booths has also put a big focus on events. Chief operating officer Nigel Murray explains: “We've had gin tastings. Wine and cheese evenings. I think the best example is the Burns’ Night suppers that we host in some of our cafes. These things are packed out; they are absolutely sold out.”

For Waterstones, this means visits from authors. “We do these big grandstanding events in our larger shops with hundreds of people and then down to local authors in smaller stores and children’s events,” says Daunt. 

Loaf's Charlie Marshall agrees that in-store events are an important way to engage with customers in its ‘shacks’. He says: “We’ve held various events across our shacks over the years. When we plan an event, we’re very aware that people are giving up their precious time to visit us. We really think about what kind of things our shacks can credibly host that people will get value from, while also ensuring they relate to what we’re about.”

He adds: “We’re currently holding Moodboard Masterclasses. The primary goal here isn’t to sell; we want these workshops to be interactive, inspiring and engaging events that help solve design dilemmas and colour conundrums for customers. They’re not Loaf product-focused, but if attendees do have any questions then our shack representatives are on hand to help.” 

Dobbies also has a big focus on events due to its customer base being avid gardeners and its staff being horticulturally trained. “We run events throughout the year and supplement them with digital events,” explains chief executive Graeme Jenkins. 

Membership is now a big part of Nike’s business, says Cathy Sparks, vice-president of Nike Direct EMEA. “Now that we can bring more people together again in a safe way, we are super-excited to invite our members to new events in our key stores: opportunities to meet their favourite athletes, sessions to personalise their Nike shoes and apparel, community activations, sustainability workshops and running clubs,” she says. 

Events are a great way for retailers to bring customers together, create community hubs, show off the expertise of their store staff and drive loyalty. 

“The physical store is still such an important part of telling your brand message via product, marketing or service. Retail spaces need to evolve to meet the customer in multiple aspects of their life beyond just product by also being home to service and hospitality experiences,” says Todd Snyder. 

“A Todd Snyder store will bring consumers into the world of Todd Snyder. Showcasing our product but also in-house tailors or made-to-measure services, adding in hospitality aspects like a cafe or bar, or partnering with brands like Aesop and Moscot to open shop-in-shops inside our stores. We are strategic about using our shops as a hub for services that will naturally bring people through the door and then convert them into a Todd Snyder customer.”

Future formats: What lies in store for physical retail, produced in association with Eventbrite

Content lead: James Knowles, head of content innovation

Sales lead: Sophie Nevin, business development manager

Production: Stephen Eddie, production editor

Designer: Sam Millard