Note: this article refers to Least; now Kato.
Article first featured in React News on 24th Jan 2023.

The global ecommerce market was expected to total $5.57 trillion in 2022 (Shopify) having seen huge growth over the last decade. As well as significant changes to customer behaviour, this growth has also had a profound effect on our high streets and shopping centres.

You only have to look at the void left at Oxford Circus by high street behemoth Topshop - once the central anchor to this busy shopping street, now part of the Asos ecommerce platform. There are other brands too that have contracted their store portfolio and moved online leaving dark shopfronts behind in their wake and with the recent sentiment in the media, we might all be thinking that bricks and mortar is over and the future of retail is e-comm alone…

But at the same time a counter trend is emerging - that of digitally native vertical brands (DNVBs) taking physical sites at a rapidly increasing rate. These are brands that originated online with a clear target audience and product offering that now are opening a highly selective store portfolio with multiple unique aims. These include Glossier, Warpaint & Allbirds - all brands with a strong following, community and brand proposition.

So why are these innovative brands looking to move from clicks to bricks? The reality is that the e-comm space is crowded and customer acquisition is expensive. The store can act not only as a shop/showroom but also as a community space, events venue and marketing channel, helping to foster brand loyalty and get real life feedback , trialling different locations, merchandising techniques and feedback methods.

DNVBs are therefore expecting more from their store portfolio - they have a very different property strategy that comes with different requirements. They can make data led decisions with strong customer insights and proof of product concept already. Their captive audience means that they can generate footfall and therefore are desirable to landlords seeking to create dynamic, high footfall locations. These brands are therefore in a strong negotiating position when it comes to commercial terms.

However, despite all of this, navigating the leasing process can be a real challenge. Compared to building an ecommerce platform, expansion into property is an inflexible, inefficient and time consuming process - with multiple stakeholders; complex agreements and slow decision making. Despite best efforts on the part of the landlord, the lead times and inefficiencies associated with real estate means it just cannot compare to the immediacy of other sales channels. It currently takes in excess of 14 weeks to close the average property transaction, whereas a website can be built in a matter of days and pivoted immediately if something isn’t performing as expected.

Forward thinking retailers moving from online to omni-channel have recognised the need for flexibility within the store format itself - as Ben Francis, CEO of Gym Shark recently told Forbes - “If you come back to this store in 12, 18 months and it’s the same then either we’ve knocked it out the park or, more likely, we’ve adapted as we find out what our customers and visitors want from us. If we haven’t changed, then we haven’t listened.”

So how can the lease agreement reflect this agility? - what if an occupier wants flexibility in order to trial new locations to test and learn from different customer bases? Current 10 year lease agreements do not allow for this and therefore forward thinking landlords are now offering flexibility when requested, but lease length is only one part of the puzzle. Complex agreements, slow timeframes and complex fit out approval processes can all hamper an occupier's need for agility and flexibility - and with retailers having increasing choice over location, or whether to open physical space at all, it is clear owners need to listen to their customers' needs.

So how can landlords help? By streamlining the onboarding process and putting the customer (brand) at the centre, landlords can help reduce the barriers to entry and timeframes associated with leasing a store. Informative consumer data, simple lease agreements and flexible terms are all things we know help, but by digitising the process landlords are making engagement transparent and democratic.

With Least, our readiness feature means that landlords have the information needed to deal at their fingertips and they can onboard their customers in an intuitive and user-friendly way. It allows total transparency throughout the process as well as effective and instant communication between parties. Faster, more transparent leasing means happier occupiers with a real sense of partnership in the agreement with their landlord - not something they would ever get with a partnership with Squarespace or Shopify - and therefore a compelling reason to move from clicks to bricks.

Find out how Least can help you be a better partner to your occupiers, offering them faster, better Leasing. Click here to learn more.

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