Five predictions for London’s high streets in the 2020s

1. Shops get a lot smaller

Building an audience for your business is harder than it has ever been, as Alex Danco said recently “Whatever your business model is, acquiring users is the new building factories” ¹. Competition for eyeballs is fierce. What happens if the plunging cost of high-street rent leads to a ‘flippining’, whereby it becomes cheaper to build a brand using physical space rather than online? If you have a shop in Oxford street, Shoreditch, Soho, you’ll be getting thousands of people coming past every day. At the extreme your shop doesn’t need to sell very much at all, it is simply there to give people a taste for and a ‘first meeting’ with your brand, all the real selling happens online. In this model, you don’t need a very big store at all — only just big enough to convey what your brand and your products are about.

The future has already made an appearance in — where else? — Shoreditch, at Box Park:

Most retail space has been designed around the premise that it is where the shopping happens, but the default switch to shopping online means physical space becomes a driver for discovery and brand-building. Shop sizes should plummet in this world. What are currently large stores might turn into free-wheeling emporiums where multiple brands take up residence. Interior designers suddenly rocket in demand, as retailers try to condense their brand — their raison d’être — into an immersive, engaging physical experience. Expect companies like Appear Here, which rents retail space to retailers on a short-term (even days) basis, to do fabulously well as retail floor space gets deconstructed.

2. An in-person-only shop goes viral

Sooner or later someone will spot the opportunity to garner a lot of attention by creating a shop that exists only in physical form, with no online presence whatsoever. No Instagram account, no website, no twitter, not even on google maps. The only way you would know about this is if you saw it, or heard about it. The only way you could buy from there would be by going there. This is deliciously retro, a tonic to our year spent on zoom calls.

It has to be just the right sort of cool of course — a card shop is not going to cut it — but if the product is desirable, unique and exciting enough then the scarcity of having it only accessible in person will only fuel the fire. It becomes a status thing — have you heard about it? The cool people will have

3. Taste-makers build and run their own shops

Shopping online is becoming social, as competition heats up between Snap, Tik Tok and Facebook. The idea of influencer marketing is not new but the rise of the creator economy is taking this to new levels. This recent² live-streamed shopping discovery experience run by Walmart and Tik Tok, and hosted by Gabby Morrison (3.5m followers on tik tok), gives a sense for where things are going:

So if this happens online then why not offline? Obviously the economics are quite different, but it doesn’t feel far-fetched to conceive of influencers/creators and taste-makers, widely known in a particular domain, setting up their own physical stores to curate not just the products but the entire experience. This is a pure and complete expression of their creative vision — owning physical space, and giving fans the ultimate connection to their ‘world view’.

4. Clothes shopping becomes a concierge service with a smart mirror

Smart mirrors are on the way and this could transform the logistics model for in-person clothes shopping. Instead of going from clothes shop to clothes shop trying things on, you go to one boutique store where you get a private area with a smart mirror. Maybe its run by ASOS, or Stitch Fix, or Boohoo, maybe there’s even a stylist to give you tips and recommend things. Pick a few dozen things you like then come back a couple of hours later — the clothes have been whisked in from an out-of-town warehouse for you to try. Keep what you like, pay and leave the rest.

Clothing is unlikely to be the only category disrupted by virtual reality technology — imagine going to a high-end furniture store that had incredibly high-powered, high-resolution VR to ‘explore’ any item of furniture, as if you were there in the room with it. Suddenly furniture stores can shrink by 10x, which means — many more of them.

5. Grocery shops become co-working spaces

In the past few weeks two very well-funded start-ups (Dija and Getir) have launched a new model for urban groceries in London: 10 minute delivery, using ‘dark stores’ (much like dark kitchens). This has the potential to completely upend urban grocery shopping. The property portfolios of supermarket chains, in cities, have been built out on the assumption they should be in walking distance of where people live. But with delivery this all changes — if you can get your food delivered in 10 minutes, why leave the house? And if the upstarts don’t need a visitable shop, why would they pay for expensive real estate in prominent areas? They can take dirt-cheap, unloved warehouse-type space and use it to serve a much wider customer base — think 3 mile radius. Strip out the wasted space on aisles, tills and have the whole thing automated, and the cost plummets. Sure the riders cost money but it won’t be long before starship arrives to handle that (really: they began trials in Milton Keynes town centre exactly a year ago²).

If the model works it doesn’t really matter whether the upstarts or the incumbents end up winning, the effect on physical geography will be the same: a glut of sites in locations in walking distance from people’s homes, with a footprint around 3,000–4,000 square feet. What happens to them? Wework Local — the smaller, satellite version of the grand, central Wework offices; lacking the rooftop terrace perhaps but making up for it by being exquisitely located just 5 minutes walk from your house. That’s the perfect distance to walk to work, isn’t it? Enough to get out the house, without wasting your life on a commuter train. The template for this perhaps is VC legend Fred Wilson’s new side hustle, Framework, a co-working space explicitly designed around being local to home.

Framework co-working space, Brooklyn

6. Bonus entry: London’s first 21st century temperance pub

Not strictly retail but where what’s the British high street without a good boozer down a side street? Except people aren’t drinking much anymore, young people especially.

In 2019 London took a tentative step in this direction with a pop-up pub called “The Clean Vic”. This one was temporary, but it’s only a matter of time before the trend becomes real and the start to be a permanent feature of the high street.

¹ https://alexdanco.com/2020/02/07/debt-is-coming/
² https://techcrunch.com/2021/03/09/walmart-to-host-a-new-live-stream-shopping-event-on-tiktok-following-successful-pilot/

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Data scientist, product junkie, one-time founder. London-based. @tgh44

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Tomhalloran

Data scientist, product junkie, one-time founder. London-based. @tgh44