Curious consumers check out ‘destination shopping’

Last updated: August 16, 2013 8:32 pm

Curious consumers check out ‘destination shopping’

By Duncan Robinson in Watford

At 4pm on a wet Thursday, Watford’s latest attraction is rammed. One pair of middle-aged women say they have come to see what the fuss is about, while more than a few are taking photographs. The venue? A renovated Tesco. Curious Watfordians nibble samples from the artisan bakery, while small children tuck into sundaes at Giraffe – the family-friendly restaurant that Tesco bought for £50m this year. Next door in Harris + Hoole, tattooed baristas serve coffee to buggy-wielding mothers as Tesco attempts to make its stores less of a chore and more of a day out.The supermarket is the latest retailer to try to entice shoppers by making its stores a destination in their own right, with restaurants, coffee shops and even exercise classes providing scope to entertain a family for a few hours.

Retail has evolved rapidly in the past decade, with customers now enjoying a much broader choice than even 10 years ago, thanks in large part to the growth of online shopping and the innovation spawned by its disruption.

The days when supermarkets had a stranglehold on the weekly shop are over, says Neil Saunders, managing director at Conlumino retail consultancy. “Retailers have to give people a reason to come to stores.”

While the high street has withered, “destination shopping” venues have prospered. The boarded-up shopfronts that blight about one in seven high street stores are broadly absent from large shopping centres. Westfield, which has shopping centres in London, Dudley and Derby, has over 99.5 per cent of its property portfolio leased.

On the high street, a further 5,000 stores are set to close by 2018, according to the Local Data Company and the Saïd Business School. The contrasting fortunes come as shoppers look for either convenience or a compelling experience when it comes to bricks-and-mortar stores.

“Retail is polarising,” adds Mr Saunders. “Destination is important at one end, and convenience is more important at the other. The middle retailers are the ones that suffer.”

The advent of “destination shopping” has left a metaphorical hole in some high streets – and a literal one in Bradford.

For the past five years, a 12-acre construction site has blighted Bradford’s city centre, after Westfield stopped construction on the site during the financial crisis. The Australian shopping centre group said construction would restart later this year – almost a decade after it started.

Other cities have also suffered. Sheffield’s city centre has faded as the retail heart moved to Meadowhall – an enormous shopping complex next to the M1 and a short tram ride from the steel city.

Next, the FTSE 100 retailer, complained when Sheffield city council suggested the retailer build its new store in the city centre, refusing its preferred location next to Meadowhall. The retailer, however, eventually got its way.

Saving the high street is a regular hobby horse of politicians, but is easier said than done, according to Mr Saunders. “The problem with the high street is that most are quite old and are not configured to the modern way of retailing,” he says. On top of this, customers are more exacting then they used to be, says Myf Ryan, general manager at Westfield. “You have shopping malls, online, the high street, your phone. All those elements have shifted what people expect.”

To entice customers, retailers have to go further, says Ms Ryan. The entrance toWestfield’s Stratford shopping centre next to the Olympic Park in London promises street dancing, cocktails and a “5D film”.

The mix of high street names, independent stores and plethora of places to eat and things to do has served Westfield well. Stores in its Stratford location are set to turn over £1bn this year, with about 700,000 shoppers pouring in from across the southeast every week.

Tesco’s push into destination retail is partly a response to a problem it created for itself in the 1990s and 2000s. Grocers, led by Tesco, spent much of those decades buying bigger sites, selling everything from paint to televisions, as well as groceries.

The rise of online retailers such as Amazon, which can stock even greater ranges at a lower cost, has left these enormous stores facing an identity crisis: range alone is no longer enough to attract shoppers.

The giant supermarkets turned off some customers, unwilling to enter a store the same size as an airport terminal. Tony Hoggett, who is in charge of Tesco’s larger stores and the man behind the Watford development, said: “We want to make it easy to shop. Whether it’s a loaf of bread and bottle of wine for tonight, or a £200 shop.”

Even after the renovation, however, some locals are intimidated by the 80,000 sq ft store. “It’s still too big,” says one resident.

Modern makeover: how the retail alphabet has changed

AMBIENCE Out: Quick ‘in and out’ shopping trips. In: Shopping at a leisurely stroll. Supermarkets want to encourage customers to linger and have introduced coffee shops and restaurants to make shopping less of a chore. BROWSING Out: Window shopping. In: Mobile browsing. A fifth of mobile internet users have bought goods or services from their phone, increasing five percentage points to 21% between April 2012 and April 2013. COFFEE Out: Staff in hairnets serving instant coffee. In: Tattooed baristas providing lattes. The Harris + Hoole chain made headlines earlier this year after customers thought they were in an independent coffee store, rather than one owned by Tesco. DINING Out: Bargain basement food courts. In: Family-friendly restaurants. Tesco bought Giraffe, a London-based restaurant chain, earlier this year in an attempt to make its eateries more family-friendly so that customers stay longer. ELECTRICALS Out: Bulky television sets. In: Encouraging customers to buy these goods online. Electrical goods shopping has shifted online faster than other categories, meaning the days of popping down to Tesco to buy a microwave are largely over. FLOORSPACE Out The race for more space. In: Community space for yoga classes. Supermarkets have more space than they need and so chains such as Tesco and Asda have looked at allowing some of it to be used by the local community.