Is the era of the buccaneering retail entrepreneur well and truly over – at least in the bricks and mortar space?
Well, a walk down just about any high street would suggest – here in Britain at least – that the old fashioned model of opening a store and selling products to enthusiastic and grateful consumers is under a considerable amount of strain. Over the last couple of years, we’ve seen a spate of major retailers fall into administration, their businesses undermined by online rivals and high operating costs. Overall, 16 stores closed every day in the U.K. in the first half of 2019 while only nine opened, according to an analysis by accountancy form Pwc and the Local Data Company. And there is a sense of gloom in the industry. This time last year, owner of the Sports Direct and House of Fraser chains, Mike Ashley, told MPs that the mainstream “high street” was dead.
Not everyone is so pessimistic. These days, conventional wisdom has it that while “boring retail” is dead, stores that offer an experience are set to thrive in the new commercial landscape.
So on the face of it, that’s good news for entrepreneurs and independents. As major chains cut back on branches or close their doors altogether, new and independent players, fizzing with ideas, can open up shop in the vacant spaces and find new ways of engaging with consumers.
That’s the theory. In practice, one of the challenges facing newcomers to the retail marketplace is to find spaces in areas where there are sufficient numbers of potential customers on terms that are flexible enough to allow experimentation. For instance, a long-term lease may not be suitable for a young retail company.
This, of course, is not a problem that is unique to retail entrepreneurs. The co-working sector opened up to meet demand from startups for affordable office facilities that don’t tie them down in a bog of onerous terms and conditions. So can the same broad principle be applied to retail?
Ross Bailey’s experience suggests it can. He is the founder of Appear Here a platform that effectively brokers the rental of retail space, enabling brands and individuals to create either shops or experiences over a timespan of their choosing. Or to put it another way, you might use the platform to create a “pop-up” store for a month or book space for longer periods to establish a more enduring presence.
Having originally launched in London in 2012, the company says it has facilitated the opening of 10,000 stores in the U.K., U.S. and France. Last year, the businesses reported growth of 296, 300 and 219 percent respectively in those markets, To date, it has raised $25 million in investor cash.
But does the approach of Appear Here represent some kind of a paradigm shift in the retail property market? Is the company simply offering another way for established and prospective retail brands to acquire space. Or does its business model help drive innovation by enabling new players to experiment and create the fresh types of experience that will – according to pundits – save high streets and shopping centers from terminal decline?
Well, as Bailey sees it, his company’s model opens the door to a whole new range of experiences. “It’s not just about retail,” he asserts. “We’ve rented space to Jazz Cafes, artists and designers,” he says. “It’s about people with incredible ideas.”
The concept is a simple one. Anyone wanting to rent a space, can go to the company’s website and key in a desired city, starting date and duration (anything from a month or less to twelve or more months). Once that’s done, the system pulls up a list of available spaces, each with a specified daily rate, which can be anything from £50 to £1,000. Once a particular space has been selected, the prospective tenant is asked to send a profile. If this is approved by the landlord, the space can be booked.
So how difficult was it to convince landlords? In the U.K. at least, a long boom in retail has enabled property owners to charge high rents(that are difficult to negotiate down) and insist on long leases. What has convinced them to support a model that enables short term stays at fairly affordable rates?
A Different Narrative
“What we’ve got is a different narrative to what has gone before,” Bailey says. Which is probably a diplomatic way of saying that if landlords have more empty units on their hands, it makes sense for them to optimize their assets by working with a platform that helps them to monetize spaces that would otherwise be vacant.
Major brands use the service, but Bailey says it is also attractive to small businesses and newcomers to the retail market with good ideas. “At the moment, the ratio of bigger brands to small businesses is about 50/50,” he says.
From The Street
And as he sees it, the ease with which prime space can be booked provides a conduit between the hitherto rather exclusive world of major city retail districts and the ideas that are bubbling up on the margins. “Everything cutting edge has come from the streets,” Bailey asserts.
That could, of course, be a marketing pitch but one senses that Bailey – who cut his entrepreneurial teeth selling t-shirts featuring the Queen with a Bowie face stripe from a pop-up store – is genuinely keen to encourage innovation. To that end, the company is this month launching a competition dubbed Space for Ideas. Essentially, entrepreneurs are being invited to pitch to a panel of judges. The best will attend a bootcamp where they will receive mentoring and advice. Four winners will be given two weeks in a flagship store in London, New York, Los Angeles or Paris, with the prize including a full fit-out. There is also a parallel Space for Change prize – focused on ideas that have the potential to deliver societal benefits.
The retail space is changing. As shops close, town centers are seeing empty spaces being taken up by pop up shops, drop-in centers and even (in my home town) table tennis facilities. Meanwhile, many retailers are seeking to offer more in the way of an experience to attract customers. But the pressures are huge. Every time a so-called anchor store – one that is a seen as a destination in itself – closes its doors, another group of customers may drift away and never return regularly to that particular center.. After all, why return to a shopping precinct if your favorite shops are no longer there. A platform such as Appear Here can doubtless play a part in ensuring that retail districts remain vibrant while also encouraging exciting ideas. However, step back to look at the bigger picture – and particularly away from the major, affluent cities – and it remains to be seen whether the trend of a drift away from bricks and mortar and towards online retail can be reversed, at least in the short term.