While physical store profit margins more than halve in eight years in the UK, ‘Store of The Future’ flagship opens at Selfridges, London

Newly published data report that UK retailers are suffering from diminishing profit margins drawing concern for the UK overall economy, at a time that retailers are gearing for Christmas sales, even without complications of a general election.  However, those retailers, especially fashion brands, that are focused on the value, convenience and luxury segments remain generally resilient, compared to the struggles of mid-market operators.

Strategic partnership and in-store pop-ups give shoppers new physical retail experiences at a time when retailers

are faced with increased challenges presented by online shopping, growing operating costs and inflexible leases.

Photo by Lucia Carpio taken at London's Harvey Nichols during a recent pop-up shop launch.

The new study has found that store margins for the top UK retailers “have dropped from 8.8% in 2009/10 to 4.1% in 2017/18.” According to new data published by global professional services firm Alvarez & Marsal (A&M), in partnership with Retail Economics, store-based profit margins have plunged, faced with growing operating costs, inflexible leases and the rise of online shopping, thus leading to the steepest decline in shoppers’ footfall,  and resulting in a wave of store closures, while demand for UK retail space is at its lowest since 2007.

Richard Fleming, Managing Director and Head of Restructuring Europe, A&M, said a new era of retail is emerging, which means "new opportunities exist for forward-thinking incumbents, entrepreneurs and investors."

Despite the challenges in the sector, UK retailers are being urged to continue to invest in their in-store shopping experience, as bricks-and-mortar shops are expected to account for 65% of retail sales over the next five years.  And while the rise of online shopping has threatened the future of in-store shopping, the study found that 25% of Millennials and Gen Z continue to visit a flagship shopping destination at least once a week - more than their older counterparts, with 45-54-year-olds saying they visit on average just once every six months.

In London, luxury department store Selfridges has long been admired by its ability to strike a balance between offering desirable lifestyle goods and leisure through strategic partnership that gives unique experiences to its shoppers.  One of its newest additions is to have Smartech, an experience-led tech concept store, open a new flagship in the lower ground floor of Selfridges on London’s Oxford Street, within its tech-products section.
Smartech is a new “tech playground” where more than 80 carefully curated cutting-edge innovation pieces are on show to give visitors unique lifestyle experiences.  

Photos above and right by Lucia Carpio.

Fronted by exclusive robotics, IoT, smart art, FemTech, snaps-taking spectacles and the very latest in Deep Tech, it’s said to be the largest and most experiential shop-in-shop at the iconic London department store. 

Smartech is a concept store, designed with 

discovery in mind, created for people to have fun,

diving into a future filled with surprises 

Above, visitors engaging with Waterlight Graffiti, a surface made up 

of thousands of LEDs that are illuminated 

by contact with water, allowing the user to treat it as an electrical canvas.
Photo from Smartech. 

Dubbed by the Financial Times as “The Store of The Future”, Smartech is billed as "a window onto what the world’s creating, bringing life to a new era of ground-breaking makers, creators and start-ups."

Covering 200sqm, Smartech introduces a state-of-the-art store designed by renowned British designer, Robert Storey – previously of Prada, Hermes and Off-White. 

Smartech aims to open your mind to what culture, tech, art and sustainability will look like in the not-so-distant future. Incorporating contemporary and sustainable influences, Smartech’s innovation space “showcases a new design identity, embodying a never-before-seen mixed reality of tech and futurism combined with modernity,” according to founder Jacov Nachtailer.
He said, " Everybody is talking about innovation, but you don’t have a physical space to try, discover and buy. People come to Selfridges to discover, which is why they’re the perfect partner for Smartech, to amaze and amuse their customers with the world’s latest innovations.”

 

From MAKR SHAKER - bar-tending robots serving visitors' favourite cocktails in Smartech, Selfridges.

Photo by Lucia carpio

“As the digital revolution continues to transform everything from politics to pop music, we want give people who create things a platform to tell their story and shine light on new ideas. Pushing the boundaries of where tech, art and creation collide has been a driving force behind our success,” said Nathalie Bernce, CEO of Smartech.
Smartech has been turning the retail game on its head, with huge success, experiencing an aggressive global growth over the past three years and over 143% above target year on year,  In addition to Selfridges, Smartech concept stores are also found in high-end department stores around the world including Paris, Milan, Berlin, Amsterdam, Rome, Zurich and Copenhagen, with another 10 stores opening within the next 12 months.