Retail Renaissance: Store wars - a new hope

3 Key Takeaways

Retail is going back to basics

The next phase of retail occupiers’ renaissance is seeing a welcome refocus on business fundamentals and overdue re-embrace of basic retail disciplines.

Physical stores in the spotlight

Physical stores are at last receiving the attention and investment that has been lacking in recent years – M&S and John Lewis are key examples.

Positive impact of acquisitions and refurbishments

Selective new store acquisitions and refurbishments are proving a catalyst to other positive multiplier effects – vacancy rates are declining and rents are increasing as a result.

Back to basics – what does that mean?

It means refocusing on and reinvesting in the very fundamentals of the business, the central planks upon which all else depends, the epicentre of the brand.

Going right back to the start as a basis for moving forward and driving future growth. Front and centre of this back to basics shift, the stores themselves. A retailer focusing on and investing in its stores might not sound the most radical thing in the world, but it has been sorely missing for too long.

Put simply, store networks were left woefully neglected and starved of investment, creating a vicious circle of decay and deteriorating performance – if a retailer doesn’t care about its stores, why should its customers?

Back to the future

Most retailers are again acquiring and we're now at an inflection point whereby new openings are starting to outweigh closures.

One of the key manifestations of this shift is a declining vacancy rate. According to Green Street high street vacancy declined to 13.2% in Q1 2026, the lowest level since COVID (Q3 2020 13.3%). At the current trend level, this rate will be lower than pre-COVID levels (Q4 2019 12.1%) by next year. This rate is still far too high, but at least the direction of travel is positive.

Store refurbishments

New store openings are just one facet of this back to basics approach. The other, arguably more significant aspect, is major investment in the existing portfolio.

John Lewis and M&S are the two standout examples of this change of focus. John Lewis has earmarked £800m for store upgrades across its 36-strong estate. £800m may seem an eyewatering investment, but more significant is the strategic U-turn that it represents. The Partnership seriously lost its way under its previous Chairperson, opting for a “digital-first” strategy, whereby online would account for 60-70% of sales.

Stores were not the priority under the previous Chair and in-store standards demonstrably dropped – and the Partnership toiled. Thankfully, the new management team have reversed many of these strategic decisions and the stores themselves are now receiving the attention that had lapsed.

The business has committed £300m+ to an accelerated store rotation and renewal program. This is likely to see the number of full line stores (i.e. those that combine food and general merchandise) reduce to 180 from around 226 presently. The optics on this part of the programme may not look good but the residual 180 will be fully-invested in, probably bigger, definitely better.

Multiplier effects

Few retailers are as large as M&S and John Lewis, nor do they have the same level of capex to deploy.

But these two are:

1. Setting a tone.
2. Sparking multiplier effects.

In essence, investment is infectious. If a key retailer is showing a commitment to investment, a landlord is more likely to as well, both parties putting their money where their mouth is.

Similarly, this has a cascading effects on other retailers. A new or refurbished M&S or upgraded John Lewis store will set new standards in presentation that competing or complementary retailers in close proximity would do well to match. A tired, under-invested store will be shown up even more if it is trading next to a bright, buzzing new or revamped one.

Vicious to virtuous circle

Under-invested stores diminish shopper interest, lower footfall, decay assets, and reduce rents. A situation whereby no one wins, but one that has been all too familiar in recent years.

Contrast this with invested-in, cared-for stores, renewed shopper interest, higher footfall, positive multiplier effects and rental growth. Somewhat simplistic, but what can be achieved if the downwards spiral of decline is arrested.

One word missing from all of this is experiential. Experiential implies all-singing, all-dancing and probably onerous cost. For the same capex as an experiential vanity project in one store, a retailer could probably fully revamp a whole host of stores. Effective stores don't need to be experiential – they just need to be fresh, welcoming and easy places to shop. And, quite frankly, just nice.

Retailing is as basic as that.