1 April 2017

Are you thinking of opening your first UK store?

If you’re a retailer thinking about your international expansion strategy, the UK is likely to be high on your list of destinations. Whether you’re a start-up trying to open your first store or an established retailer thinking of entering the UK market, it is not a decision that should be rushed into.

Here are some things to consider before opening your first UK store.

Understand the market

2016 has left the UK retail market in a bit of a tailspin. The unexpected results of Brexit and the recent US presidential election have created an air of uncertainty. The effects of both on the UK retail market remain unclear. Also, Black Friday is almost upon us again and the last three years have been completely unpredictable.

It is an expensive market for retail rent. London high street rent is £2,200 per sq ft compared with £275 in Manchester. This is up 57.1% and the short-term outlook is for it to go up again.[1] Although this might sound bleak, it is actually a good time to invest in the UK market. The weakening of the pound post-Brexit has ensured that international brands continue to open their first UK stores. Similarly, there is likely to be a boost in retail sales in Central London, particularly in the West End as 60% of its shoppers are international visitors looking to take advantage of the favourable exchange rates.[2]

Know your customer

While you may know your domestic customer intimately, the UK customer is different. Don’t make assumptions. Take time to find out where and how your target customers shop, what they buy and their level of loyalty.

Convenience has a major influence on the average UK consumer.  Despite being early adopters of online shopping, the UK consumer continues to value the experience of shopping in physical stores as well. The consistent thing is that they expect good service in both the digital and the physical world. So make sure your physical stores are fully integrated into your digital strategy.

While it might sound obvious, being in the right location and providing your customers with excellent service and advice, both online and offline, is fundamental to success.

Let your consumer get to know you

The UK consumer may not know you when you first arrive but that’s okay, just be prepared for it. Increasing your brand awareness and generating a buzz of excitement before you arrive is good starting point – this is where you can use the digital revolution to your advantage by promoting your products with attractive deals and letting your customers know where they can find you.

When it’s time to open your first physical store, give your customers a reason to come visit you. Invest in the experience and conceptual design of your store. It’s a great way to explain your brand’s story.

When Hackett opened its flagship store in Regent’s Street, it played beautifully into the London market and the brand’s heritage. The children’s area was built around a feature tree which was designed by the set designers of the Harry Potter films. It changed with the seasons and became a focal point. Hackett also took care of their adult shoppers by installing an Aston Martin and a gin bar!

“Retailers are no longer looking to stick to a single design concept. They are looking for a new concept every time to make it as relevant as they can to the market they are investing into.”

- Andy Woollard

Recruit the best

The staff based in your stores will be experienced retail advisors. But what’s more, they will be experienced retail shoppers! With this experience, they should be able to successfully communicate with your customers.

Your store-based employees will be interacting with your customers on a daily basis. They need to live and breathe your brand, have personality, and exude customer service.

Beyond that, they need to be productive. In April 2016 the National Living Wage was introduced in the UK so now more than ever retailers can only afford the best. All employees over the age of 25 need to be paid a minimum of £7.20 per hour as a ‘Living Wage’ which will raise to at least £9.00 per hour in 2020.[3] With employment costs increasing, retailers can only afford to recruit the best and automate wherever possible.

Design to be agile from the outset

The future of the UK high street is unknown but it is guaranteed to change. We know that bricks and mortar stores are still very much alive in the digital world, but the shape, location and use of these stores in two, five and 10 years time is unpredictable.

Create a physical store that is agile to the changing market. Pay the extra to have a short lease with a break clause so you can quickly change location if necessary. Keep your stores looking fresh by mixing up your design and layout regularly based on consumer experience and use technology to your advantage.

Fail fast and succeed faster

It’s likely you won’t get it exactly right the first time, but you’re in good company. US retailer Best Buy had to withdraw from the UK market less than two years after they entered due to stiff competition and the need to focus on their domestic market. Even the more successful Forever21 had to make tweaks to its UK portfolio after its Birmingham Bullring store was too big, and its Oxford Street store in London was too small.[4] Our advice is just to be quick to identify these potential issues and rectify them. Sitting on them can be costly.

Alternatively, test the market first before investing in your own store.

One way of doing this is to create a pop-up store. It is really important that you do your own research before committing to a location and this is a much cheaper way of testing your proposed location, footfall and products than committing to a long lease. It will give you great insight into your customers and give them the opportunity to get to know you at the same time.

Enter the UK retail market with Realys

If it’s a pop-up you’re after, an agile design solution or advice on your UK entry strategy, Realys can help. We specialise in creating solutions that allow businesses to adapt to the changing world of physical space. With offices in Asia, South Africa, UK and across Continental Europe, Realys has a global network that can be with you every step of the way.

We see brands, not borders, so we look to translate your retail designs into a format that suits the specifications and cultures of the UK retail market so you can make the maximum impact with your space without losing your brand identity.

[1] Report – Cushman & Wakefield | The DNA of Real Estate: Q3 2016
[2] Savills – The impact on the UK retail market
[3] Centre for Retail Research – What Does the Government’s Living Wage Mean for UK Retail?
[4] Analysis: Why American retailers are entering the UK

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