Savills latest SPECS report, which tracks build costs and programme timescale sentiment, has this quarter pointed towards an overall more stable market, providing greater clarity when it comes to property development.

The survey, which is based on 48 separate indicators, scored 15 out of 25 in the second quarter of 2017, indicating that while build costs are still on the rise, timescales in all sectors and geographies remain static. The latter is good news for retailers embarking on ambitious fit-outs.

SPECS Q2 2017

Source: Savills Research

In the face of ongoing uncertainty, people are going to continue to visit the shops, but with inflation impacting disposable incomes, they are going to be more cautious about where they spend their money.The physical store is therefore going to have to work harder to tempt consumers to spend.

In addition, over the past five years at least, there has been a distinct shift towards online retail and this evolution has placed a number of new demands and challenges on the physical store as a result.

While a number of retailers have had to adjust their strategies in order to keep up with this changing trend, it is not a case of offline vs online. For example, some of the biggest online retailers, such as John Lewis, also operate a physical store network.

While online continues to dominate headlines, we are in fact seeing a number of ‘pure play’ e-tailers making the leap to bricks and mortar. Fashion brands have been the most active in making this transition, accounting for 30 per cent of pure play retailers who have moved towards a more omnichannel strategy. Missguided opening a flag ship store in Westfield Stratford is just one example.

For this reason physical retailing still plays an essential role in promoting the brand, driving both online and in-store sales. What’s clear is that the ‘store’ itself is not going anywhere. However, what will change in light of the growth in online is the size and number of stores required by retailers and the style of fit-out that will best enhance the consumer experience. The digitisation of the in-store experience and the way that retailers use their stores is therefore likely to have the most significant impact on retail property going forward.

Ultimately, this retail revolution presents a number of practical realities for the industry. These include how to deliver innovative retail space, as well as ensuring operational trading requirements are met when combining brands and services under one roof, all of which can lead to higher build costs and a longer delivery programme. This month’s SPECS’s report should provide such retailers with some reassurance.

Further information

Read more: Savills ProgrammE and Cost Sentiment Survey