8Retail 2020A Perfect Storm?Retail 2020
02 • Jones Lang LaSalle Retail 2020A Perfect Storm?A Perfect Storm?Demand: Worse to Come?The backdrop to this entire Report is the very sober economic situation.The recession has left its mark – both in consumers’ psychologies and on theretail landscape. We’ve lost many stores (one in eight units is empty on Britain’sHigh Streets at the time of writing) and several chains (e.g. Pier Import inFrance, Woolworths in Britain). We have even seen Shopping Centres go bust.The view ahead is challenging. Economics expertsfrom Experian and HSBC explain that the worstis not over. Taxpayers and/or public sector workersacross Europe are going to be suffering over the nextseveral years, added to the pain already being felt bysavers, construction/industrial workers and thosereliant on housing and stock assets for their retirements.Added to this are structural issues that were pushedoff the agenda during the Credit Crunch. The pensionscrisis has not gone away, it has just been talked aboutless recently. The inverted age pyramid means fewerworkers’ contributions to support those in retirementand this situation will worsen substantially over thenext decade as the Boomers become pensioners.Meanwhile, greying populations mean over-burdenednational welfare states. Set up at a time when manypeople died within a few years of retirement, andwhen life-saving technologies were still a distantdream, very few European States will be able tocontinue to fund their health and social securitysystems. Indeed, looking at the deficits, few canpay for their commitments today, let alone theincreasing liabilities over the coming decade.To these structural problems could be added thecosts associated with climate change, energy supplyand security, water and food provision – the list islong. All require solutions to be embarked upon overthe coming decade and all will come with hardchoices. For consumers this will obviously translateto increasing demands for public taxes and for privateprovision. For example, the French governmentannounced in April 2010 that it is planning a new taxto pay for future French pension liabilities.
05 • Jones Lang LaSalle Retail 2020A Perfect Storm?For retailers, the hard work will likely have to comesooner rather than later and over the next five yearswe will start to see the contours of the winners andlosers. Clearly, the winners will be those exemplaryoperators able to take advantage of new lands ofopportunity by rejuvenating and retargeting theiroffers, communicating better with fans and launchingradical, entrepreneurial online formats. For ShoppingCentres, who have perhaps not had to work as hardtoday as they will in the future, the major impact maycome more in the middle of the decade and beyond.In conclusion, the consumer is changing, the worldis changing and retail will change. To that extent,nothing changes.What does change is the pace of progress. Six monthsis now a long time in retail, time for an innovative websiteto scoop up part of a retailer’s business. Forty eighthours is an eternity for a consumer to wait for adelivery. Five minutes is simply too long in a queue.The last decade was one where physical expansion washigh and innovation relatively low; the next decade isprofiling itself as one where space expansion will belower but innovation will be higher.The barriers against change are weakening,everywhere. Take the internet. Speeds areincreasing, kit is ever more universal, networkcosts are coming down and governments andGoogle are training the reticent. Little stands inthe way of ecommerce increasing.Paradoxically, success in the future may go to thoseretailers and shopping locations that know how tohelp consumers savour time – to experience the art ofliving, to be enchanted by a great in-store demonstration,to escape from stress in a relaxed eatery, to find friendsand laugh together in a coffee bar.And some things never change. As always, thewinners will be the most deserving; those that knowhow to read the future and are prepared to take thetough decisions to align themselves with theopportunities. The losers will, as always, be thosecompanies trading on former glories, with their eyesfirmly in the rear view mirror. Retail 2020 is here tooffer you some guiding lights as to the right decisionsto make along the way.If you have any questions aboutthis report, please contact us at:Robert Bonwell, CEO EMEA Retailretail2020@eu.jll.comwww.retail2020.com