Despite obvious concerns about a depressed consumer, eye wateringly high energy bills and increased labour costs there are more than a few verdant green shoots springing up on UK high streets and retail parks. A whole host of names, household and less well-known, have announced expansion plans as some businesses continue their post-Covid rebound.

From Starbucks (SBUX:NASDAQ), Greggs (GRG) and Marks & Spencer (MKS) to Aldi, Wagamama and the brilliantly named Boom Battle Bar, all have put new premises on the drawing board for 2023.

Some investment comes at the cost of other closures. Marks & Spencer is planning 20 new, full line stores in prime locations whilst shutting more than 60 lower productivity sites. Wagamama owner Restaurant Group (RTN) is trying to get investors back on side with plans to open five of the popular Asian eateries a year while closing down 35 underperforming casual dining restaurants from its other, more tired brands.

It seems the consumer is still prepared to spend some cash but it’s more particular than ever about where, when and what it spends that cash on.

Reimagining store estates is nothing new but in the past where the focus has been about cost-cutting, today’s moves have a lot to do with cost opportunities.

Landlords have been through the Covid wringer too, and even before that, the shift to online shopping had started a rush away from bricks and mortar leaving huge holes at the centre of some communities. Not all those holes will prove tempting, companies are using complex data programmes to ensure they’re picking the right spots to invest in.

It’s not just about footfall or even about the patchwork quilt of stores that surrounds them but about the quality of the consumer that’s regularly attracted to a particular area.

BOOMING TRENDS

The ongoing shift to homeworking has meant bars can’t assume robust trade will spring from the post-work-crowd fleeing offices at 5pm on Friday. Instead, they’ve got to think more creatively with some like Boom Battle Bar-owner XP Factory (XPF:AIM) creating destinations with an experience that can’t be found in many other places.

XP Factory’s revenue increased by a rather extraordinary 300% last year as it responded to demand for venues that delivered a unique night out, pairing augmented reality axe throwing and beer pong with cocktails and reasonably priced food. The business achieved early success with its escape room format, but the new model seems to have captured the mood of post-lockdown revellers.

In what could be seen as a remarkable 180-degree mindset shift, coffee chain Starbucks has announced huge expansion plans in the UK – only last summer press reports suggested it might sell its UK operations entirely.

A 37% increase in revenues last year might have had some sway in the company’s decision-making process. Posh coffee has become one of life’s staples and an affordable treat at a time many people are being forced to cut back on bigger purchases.

DRIVING GROWTH

Crucially, Starbucks is thinking about the user, how people want to buy their coffee and in 2022 it reported further investment in its drive-thru outlets as demand went from ‘strength to strength’.

That limited contact purchasing came to the fore during lockdowns when enterprising businesses flipped their operations on their heads and used the click and collect model to allow them to keep making money.

Social distancing might be a phrase resigned to the history books, but it was the mother of invention and with people back on the road savvy businesses are choosing to keep and even expand that method of delivery.

And it’s a trend that’s picked out in the latest update from real estate investor Custodian Property Income REIT (CREI) which constantly seeks to refurbish or redevelop its portfolio to achieve maximum return for its investors. With business sentiment pretty ropey over the past year it’s had to work hard to maintain the right mix of property in the right places.

Drive-thru options add value, not just for the traditional burger joints but also luring in smaller independents looking to grab as much of the market as possible.

Again, it’s back to those metrics and technology isn’t just useful for picking locations, it’s an integral part of the economic landscape and with huge leaps forward in AI technology businesses need to keep investing to stay ahead of the curve.

Inflation, interest rates and the squeeze on budgets might make headlines but investors are looking to the future.

Inbound travel is back, employment levels are holding up and there is the little matter of a May bank holiday bonanza which is likely to give a boost to travel, retail and hospitality sectors.

There will be losers but there will also be winners, sometimes in the most unlikely places. No one thought sausage rolls on t-shirts would be a best-seller, but Greggs’ merchandise tie-up with Primark made it work, and its cafes can now even be found in a number of the fashion retailer’s stores. It’s clear that innovation and investment are creating fresh excitement on the once-beleaguered high streets.

‹ Previous2023-03-16Next ›