03 Apr 07

What type of retailers will be forced to shut shop for good and which ones have healthy prospects of growth over the next 10 years? That is what the Oxford Institute of Retail Management at the University's Saïd Business School has been trying to find out for a new report commissioned by the British Council of Shopping Centres.

According to the report, 'The Future of Retail Business Models', new kinds of convenience stores, eclectic and high-speciality formats, home delivery, and shops seeking to add experience for the consumer are most likely to succeed in a UK retail marketplace characterised by increasing competition, more demanding consumers and a continuing growth in electronic commerce.

Existing stores that already appear to have a winning formula are cited and include Azendi, Fat Face, Hobbs, Hotel Chocolat, the John Lewis Partnership, Long Tall Sally, Paperchase, Primark, Scotts of Stow, Space.NK and Waitrose. The report selects a number of prospective international retail winners, some of which are already trading in the UK market as Apple, Costco, Ikea, Tchibo, Wholefoods Market/Fresh and Wild, and Zara Home.

Retailers in danger of losing ground, however, include formats that overstretch themselves or fail to add sufficient value for the customer, formats that 'fall between two stools' offering neither a one-stop service nor convenience, neither cheap prices nor quality. Those retailers which fail to provide for operational excellence, in terms of the efficiency of their business processes in a higher-cost business environment, also risk failure.

The report says success can be determined by a number of drivers: achieving 'authority' in a retailer's range - making it appear convincing and sufficient for a consumer with particular shopping interests; or intensifying its differentiation from other retailers through investment in employee expertise, good service or store ambience.

Dr Jonathan Reynolds, the co-author of the report, said: 'Innovation in retailing is the lifeblood of the industry, but it is often assumed that there is an inexhaustible supply of new retailers to take up space. Our research points to the continuing need for a healthy, innovative, specialist shops sector and support for retail entrepreneurship. The retail property industry needs to play a positive and proactive role in identifying and backing the likely winners.'

The Chief Executive of the British Council for Shopping Centres, Michael Green, said: 'More and more, physical formats will become less important with reduced stock being held in stores and extra space being allocated to e-commerce activities in the future. The retail format will need to be innovative in both products and services and speed to market will be essential due to successful formats being easily imitated, which the report expects to happen more in the future.'