How to invest in the retailers spearheading the transformation of the high street

According to Maryam Cockar, high street companies that can make leisure and shopping fun will prosper

In recent years, department stores that have been permanently closed and boarded-up shop fronts have become a common sight throughout Britain. City centers run the risk of becoming ghost towns as big chains fail, internet retailers increase their market share, and out-of-town retail parks expand. How can bakers, butchers, and even candlestick makers adapt to shifting traffic patterns?

Covid has made the years-long decline in high streets worse by undermining consumer confidence amid the cost-of-living crisis, high inflation, and high interest rates. As a result, more people are now forced to shop online and on used marketplaces like Vinted and eBay in search of better deals.

According to Tom Gray of brand experience firm Imagination, "Britain's high streets are in the middle of a painful reinvention." "While the last-minute rescues of well-known brands like Claires and Poundland may seem like a lifeline, they actually signal the end of a retail era based on convenience and uniformity. A "

According to Christopher Sanderson of the strategic consulting firm The Future Laboratory, there has been a noticeable shift towards a "post-stuff era" where "over-consumption, sameness and algorithmic e-commerce have dulled the excitement of discovery." "Consumers are now looking for emotional connection, cocreation, and community, and retailers have failed to move past the sell, sell, sell model." A "

According to Gray, online retailers now have these advantages. Brick and mortar stores "must offer something digital retail cannot: a sense of experience, emotion, and belonging." Successful retailers are rethinking their spaces as hubs for culture and community rather than merely transactional areas. A "

Redefining the high street as an artistic endeavor.

Sanderson continues, "Retailers must think like curators, not shopkeepers." This entails considering retail as a means of fostering interpersonal relationships. Successful high-street models could concentrate more on movie theaters, museums, and pop-up events, turning conventional stores into exhibition spaces, especially if they want to draw in the teens and twentysomethings who are spearheading the effort to revitalize shopping malls. Generation Z (those born between 1997 and 2012) are more than twice as likely as the average British consumer to shop in a physical clothing store every week (28 percent versus 13 percent), according to a 2024 report by analytics company RetailNext.

By putting on a theater after it closes, the Paris department store Le Bon March has adopted a unique strategy for retail. While LVMH's Louis Vuitton has transformed some of its stores worldwide into immersive art spaces through partnerships with artists like Yayoi Kusama, Victoria Beckham has organized an exhibition of her favorite artists at her own brand store in London. The Louis, a 30-meter-tall ship-shaped store with dining and exhibition spaces, was also constructed in Shanghai by the French luxury brand. It's even started to draw tourists.

Louis Vuitton's ship-shaped flagship store in a Shanghai, China, shopping area.

Miu Miu, which is owned by Prada, has held a number of "storyliving" pop-ups. Last year, the Italian fashion brand distributed free copies of classic novels written by women in Covent Garden.

"These are not gimmicks," says Gray, but "blueprints for the future." Over the next ten years, the high street will change from being a place to buy to one where people can participate. The future won't just be commercial; it will also be social, creative, and experiential. Those who view their stores as platforms for brand-building and IRL in real-life customer engagement where commerce, culture, and community overlap will win. The "

Will small businesses on the high street endure?

Shops will probably continue to close, at least for the time being. According to Jean-Baptiste Wautier, an investor and co-founder of the Wautier Family Office, obstacles still include high rents, which are frequently the biggest expense for small businesses; regulations that have "increased in length and complexity" and may discourage renovations; and the ongoing allure of online shopping.

Local businesses may suffer as a result of these macro trends, which are likely to cause high streets to continue shrinking in terms of point of sale and favoring large brands. According to Wautier, "only a major real-estate shock, like a major price drop and major deregulation, could invert this trend."

But it's not all bad news. Estate agent Knight Frank reports that, despite ongoing difficulties, retail rentals increased by 2.3 percent in the first half of 2025 across all subsectors and vacancy rates decreased. According to Sophie Levenson of Knight Frank, "prime yields on high street properties have strengthened, and the best spaces are seeing competitive bidding," which is another change in retail investment.

According to Danni Hewson, head of financial analysis at AJ Bell, the central London estates run by real estate investment trust Shaftesbury Capital offer a "glimpse of what all high streets would hope to achieve." "A varied menu of bars, restaurants, and cafes combined with a carefully chosen assortment of various stores, from brands to distinctive retailers that appeal to the local demographic." Office buildings and residential areas generate steady foot traffic, and these experiences encourage people to stay longer. Although it appears simple, every choice is carefully considered, and each tenant is encouraged to succeed," she continues.

However, government assistance is essential for all high streets to prosper, and policy must change from retail preservation to cultural revitalization. "Mixed-use zoning, flexible leasing for independent brands and pop-ups, and incentives for creative, wellness, and community-led operators should be given top priority. It would better reflect how high streets now generate value if business rates were recalibrated to recognize their cultural contribution and sustainability impact, according to Sanderson.

According to Livia Bernadini, CEO of the retail technology company Future Platforms, "for investors, the upside lies in the infrastructure around retail, from tech-enabled platforms and urban logistics to regeneration-led property plays that blend commercial returns with social value." However, town planners must allow spaces to change to meet the changing demands.

However, since people are unable to spend as much as they once did, spending power is still a crucial element in revitalizing the high street. Fiscal drag persists, according to Ivn Marchena, an economist with broker Just2Trade. "Even though salaries went up (partially due to government pressure put on businesses to pay more), it's completely disproportional to the rising cost of living In addition, even though minimum wages have been rising."

High street brands are probably going to be successful.

A JD Wetherspoon Plc pub inside.

As a cheap beer, JD Wetherspoon has stayed devoted to both its brand and its clientele.

The future of high-street shopping lies in improving its offerings rather than competing with online retail. According to Sanderson, successful brands will view AI "as augmentation, used as a tool for empathy, intuition and cultural resonance" rather than as automation.

One example is Next (LSE: NXT), a retail industry bellwether in Britain. The retailer of apparel and home goods has successfully adjusted to technological advancements and shifting consumer preferences. It created a robust online platform that even hosts other brands by utilizing its physical chain and catalogue infrastructure, which included warehouses, delivery networks, and customer data.

According to Hewson, "true omni-channel brands like Next are likely to continue to thrive because they understand how to harness brand, ease of use, availability, and tech to their and their shoppers' advantage." "Brands will endure if they can keep appealing to their customers, change as they get older, or adapt to appeal to new customers. However, they must have a distinct USP (unique selling proposition) and never lose sight of tomorrow. A "

One of the most well-known pub chains in Britain, JD Wetherspoon (LSE: JDW), can claim to have stayed faithful to its brand and patrons as a cheap drinker with the same design and menu in every location.

The group reported a 4.5 percent year-over-year increase in sales to 2.12 billion for fiscal 2025 despite struggling with high labor and energy costs. This fiscal year, the company intends to open 15 managed pubs and roughly 15 franchised ones. Additionally, it intends to open a pub at Spain's Alicante airport as its first entry into mainland Europe.

Hollywood Bowl (LSE: BOWL), which is "taking wallet share from consumers compared with traditional hospitality segments," is one of the "low-ticket experiential leisure" companies that Brendan Gulston, co-manager of the WS Gresham House UK Multi Cap Income Fund, believes is experiencing structural growth. Another "strong" area is businesses that serve specialized interests and enthusiasts, like Angling Direct (Aim: ANG), the top retailer of fishing gear and tackle in Britain.

For example, angling "benefits from both an omnichannel proposition and a loyal customer base" and "ongoing e-commerce adoption/channel shift is a supportive dynamic for growth."

Conquering the hopelessness.

According to Gulston, "the industry as a whole continues to trade at depressed valuations, but these companies have delivered strong operating performance despite the broader challenges facing UK consumers." Crucially, neither the macroenvironment nor a quick recovery in consumer confidence are necessary for their success. However, if things do get better, we think earnings will have an extra boost, which could lead to a significant increase in share prices and a rerating from current lows. The "

The outlook for household spending "isnt as pessimistic as some might like to think," according to Darius McDermott, managing director of FundCalibre. Strong income growth combined with lower inflation could increase household income, which would raise UK consumer stocks. McDermott states, "As the outlook for consumers gradually improves, this creates a clear value opportunity."

The top holdings of "Artemis UK Select Fund, one of the standout UK equity funds with a strong long-term record, has more than 20 percent invested in consumer discretionary stocks," include Marks and Spencer (LSE: MKS). With nearly a quarter of its portfolio in discretionary names, VT Tyndall Unconstrained UK Income, which favors mid-cap stocks, demonstrates a similar conviction. A "

Spencer and Marks plc.

McDermott suggests the Premier Miton Tellworth UK Smaller Companies Fund, which has invested 18% in the industry, for investors looking further down the market-cap scale. "Small- and mid-cap funds, in particular, can provide an effective way to tap into the recovery story with UK retail names heavily domestically focused," he continues.

The high street's demise seems to have been overstated. High streets will continue to be important hubs for local culture, communities, and shopping as they become more omnichannel and experience-led. However, they will still need a healthy consumer economy in order to prosper.