// Physical stores will account in some way for £8 of every £10 to be spent in retail by 2025
// Intu and the Javelin Group found that physical stores will still influence retail transactions
New research has suggested that physical stores will still heavily influence retail transactions despite the prominence of online sales during the coronavirus lockdown.
Intu and the Javelin Group found that while traditional shop sales have steadily decreased over the last few years, physical stores will still account in some way for £8 of every £10 to be spent in retail by 2025.
The study also found that while in-store sales will remain important, they are increasingly only one part of a retail store’s function, such as click-and-collect purchases, in-store orders, ship-from-store and customer service functions.
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It also does not take into account the “halo effect” – the catchment area around a store where digital sales tend to double.
Intu and Javelin said that in order to allow for retailers to adapt stores to be omnichannel spaces, new models are needed for landlords to assess the value of physical shops.
“Traditional models and KPIs for assessing the success and long-term sustainability of physical outlets are outdated and no longer fit-for-purpose,” the report said.
“They often fail to consider the significant role now played in driving online sales.”
The research suggested assessing the rental value of a store based on its known or forecast sales; its ‘omnichannel halo’ covering and a benchmark occupancy cost ratio.
“Physical retail has undoubtedly faced some challenges over recent years,” the report said.
“However, its role is far from over. The part stores play in driving online sales and overall retail performance continues to be crucial.”