Title

The contribution of physical retail to value co-creation in the town centre ecosystem; evidence from Grimsey.

Journal

Journal of Place Management and Development

Corresponding Author; Kim Cassidy Professor of Services Marketing, Edge Hill University Kim.cassidy@edgehill.ac.uk

Co-author; Bill Grimsey, Ex Retail CEO and Author of the Grimsey Review. William.Grimsey@btinternet.com

Co-author; Nelson Blackley, Research Associate, Nottingham Trent University. Nelson.blackley@ntu.ac.uk

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Abstract

Purpose The purpose of this paper is to identify ways to reconfigure physical retailing to ensure it maintains a sustainable position within the town centre ecosystem in the 21st century. The discussion draws on the evolving Service-Dominant Logic (S-DL) and its service ecosystems perspective and evidence of best practice provided by actors involved in town centre regeneration between 2013 and 2018.

Design/methodology/approach. The research adopts a case methodology drawing on data submitted and analysed as part of the Grimsey Review 2 (GR2), an independent review of UK town centres. The dataset provides examples of good practice sourced from industry leaders, trade bodies, local authorities and extensive social media engagement.

Findings. The paper evaluates the response of physical retail through an S-D logic and service ecosystem lens. The review of best practice suggests that physical retailers have the best chance of survival if they proactively collaborate with other ‘actors’ within a wider ‘community hub’ solution, align their strategic position and operations to a holistic ‘centre place plan’ and take steps to actively engage operant resources of consumers in creating physical store ‘experiences’.

Practical implications. The paper provides an evaluation of best practice in town centre regeneration implemented between 2013 and 2018. The case offers a rich bank of examples, illustrating how physical retailers are responding to the 21st century challenges facing town centres. It makes recommendations for further improvement in the three critical areas identified above.

Originality/value. This paper provides further empirical support for the application of an S-D logic and service ecosystem perspective to place marketing. To achieve effective value co-creation, physical retailers need to align themselves more closely with other actors in the system and maximise the potential of operant (and operand) consumer resources.

Keywords

S-D logic, operant (and operand) resources, physical retailing, town centres

Paper type

Case study

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Introduction and background

Over the past decade, an increase in online shopping, competition from out-of-town retail parks and the rise of a convenience culture has forced many retailers to close tens of thousands of stores in centres across the world (Grewal, Levy, and Kumar, 2009; Wrigley and Lambiri, 2015). Many see these physical store closures as the inevitable consequence of retailers’ inability to develop an effective and efficient omni-channel offer, which meets the needs of an increasingly ‘digitally obsessed consumer’ (Internet Retailing, 2017).

At the same time, ‘clicks to bricks’ retailers, with a heritage in catalogue and/or online retail appear to be celebrating the physical attributes of retail and opening stores to showcase their brand and providing an in-store experience to wow their customers (Avery et al. 2012). Amazon has been particularly active in this space using physical space to create a differentiated offer under the master brand (e.g. Amazon Go and Amazon 4*)

Although the overall detailed pattern of physical store openings and closures may be a little difficult to predict moving forward, political and public interest in their future remains high. Physical retail stores are seen to play a particularly crucial role in the economic and social health of towns and cities worldwide. Indeed, physical retail has traditionally been seen as the magnet, which draws people into a central location to enjoy a social as opposed to an online consumption experience. In the UK, retailers contribute to a high street ‘that comprises some 95,000 companies with a total net worth of £135bn’, significantly more than the education budget of £53bn, the defence budget of £24bn, and health at £110bn’ (Grimsey Review 1 (GR1), 2013 p.3). Although temporarily side-lined by more pressing policy concerns about the impact of Brexit, maintaining the role and value of physical retail within places remains a government priority.

In 2013, Bill Grimsey, ex retail CEO and retail commentator published an independent review of the state of the UK High Street, the first Grimsey Review (GR1), ‘An Alternative Future for the High Street’. This document received extensive media coverage, offering convincing evidence to suggest that dramatic changes were needed to enable town centres to maintain and develop their vital social and economic role within communities. The review made 31 recommendations centring on the need to develop a community ‘hub’ solution, measures to create a fairer, more economically sustainable high street, better management and a stronger emphasis on community (Grimsey Review, 2013 p. 6-7). Frustrated by the lack of progress, and an increasingly gloomy retail outlook, Grimsey commissioned a second review in 2017, to see what has changed over the 5 year period, ‘what has worked, what hasn’t worked, where we are today and what we should do now to improve our high streets’ (Grimsey Review 2013, p. 4). Although the original authors stayed largely the same, the involvement of an academic, the lead author of this paper, stimulated a different methodological approach. Specifically, the implementation of a formal call for evidence of best practice channelled through social media over a six-month period to strengthen the evidence base for the conclusions. It is this evidence, which provides the data set for this paper providing insights about what physical retailers are doing to maintain a sustainable position within town centres.

The theoretical frame for the analysis of the dataset is the evolving Service-Dominant Logic and its value co-creation and service eco-systems perspective (Vargo and Lusch 2004, 2008, 2011). It is a perspective, which moves away from seeing organisations as definers of value to a process whereby actors within a service ecosystem jointly develop meaning and outcomes (Alves, Fernando and Raposo 2016). The high street or town centre can be viewed as a ‘service ecosystem’, a relatively self-contained, self-adjusting system of resource integrating actors connected by shared institutional arrangements and mutual value creation through service exchange’ (Vargo and Lusch, 2016 pp.11-12). It is a perspective, which has already been shown to add value to our understanding of place marketing (Warnaby 2009, Warnaby and Medway 2015, Baccarani et al., 2018, Cassidy and Resnick, 2019). This paper adds empirical support for the value of this approach drawing attention to the relationships between physical retailers and other actors within the ecosystem and resource integrating processes.

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The purpose of this paper is to identify ways that physical retailers are reconfiguring themselves to ensure they maintain a sustainable position within the town centre ecosystem in the 21st century. The findings are drawn from evidence of best practice submitted to the GR2 and evaluated using an S-D logic lens. The emphasis is on reflecting on the implications for physical retailers. The findings suggest that physical retailers have the best chance of survival if they proactively work with other ‘actors’ within a wider ‘community hub’ solution, align their strategic position and operations to a holistic ‘centre place plan’ and take steps to actively engage operant resources of consumers in creating physical store ‘experiences’.

The paper begins with a brief discussion of the context, the current position of physical retail in town centres. Next, we outline the key features of the value co-creation, S-D logic and service ecosystems perspective, which have informed our study. The Grimsey ‘case’ and the data collection process is described followed by a discussion of findings. The paper concludes with recommendations about what more needs to be done to ensure a viable long-term future for physical retailers in the town centre ecosystem.

The position of physical stores in UK town centres

According to data produced by The Local Data Company (LDC) the physical store vacancy rate on high streets across Great Britain for the first half of 2018 was 11.1% with footfall for the first nine months of 2018 down by 8.1%. The number of general retail store closures increased by 16.9% in the first half of 2018 compared to the same period in 2017, while the number of store openings dropped by 2.1%, equating to a net loss of 4,402 units across Great Britain (House of Commons, 2019, p.10) A significant reason for this continued decline has been attributed to the financial burden of rising business rates, the property tax based on rental values, which increased in line with inflation. Other factors, which have contributed to store closures include the homogenisation of the towns with too many shops offering broadly similar ‘clone’ experiences, inflexible leases inhibiting innovation and of course, the increased competition from online shopping. Faced with these challenges many well-known retailer names, such as Debenhams and Marks and Spencer continue to significantly reduce or withdraw physical operations from UK town centres. ‘While the UK population has grown by c 0.7% per year, the number of people visiting high streets up and down the country has fallen’ (GR2, p.22)

Although this appears to paint a generally pessimist picture for physical retailers, some service-based operators appear to be flourishing. For example, a net increase of 624 Men’s Barbers and 495 Beauty Salons across the UK between 2017 and 2018 (LDC Retail and Leisure Report, 2018). Independent retailers also appear to be fighting back. Recent research undertaken by Visa shows that 34,511 independent high street shops opened for business in the UK last year, up 4.5% on 2017 (East Midlands Business, 2019). These positive developments for physical retail also appear to be bolstered by a resurgence of online retailers, keen to develop a physical estate either to showcase a brand or offer consumers an immersive or interactive product experience. Some of these are adopting a pop up or temporary location strategy, others, a more permanent position. A recent study of these ‘clicks to bricks’ operators (Cassidy et al, 2016) attributed their successful management of the physical estate to three things; first, customer insights giving them an in-depth, personal and focused understanding of the changing demands and behaviour of their consumers, second; a strong brand identify and positioning within the market and a clear view of the role stores play within their channel ‘mix’ and third, an entrepreneurial culture or leader which enables them to respond quickly and flexibly to change in the retail environment. Examples include Made.com, Loaf, Farfetch, Missguided and the international Rapha Clubhouse. Amazon is probably the most well-known clicks to bricks brand currently experimenting with a physical store offer. Innovations include Amazon Go, Amazon Books and more recently Amazon 4* and a fashion pop up store format. The global online titans JD.com and Zalando are both investing in physical stores. JD.com has ambitious plans to have one million locations under its banner by 2022, and Zalando can be seen to be opening discount and beauty stores throughout Europe ‘selectively to achieve certain ends rather than as wider marketing and customer

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engagement tool’ (Retail Week, 2018). It is clear that interest in developing physical retail is very much alive despite the general demise of stores in town centre locations.

Against this backdrop, the aim of this article is to identify ways that physical retailers might reconfigure themselves to ensure they maintain a sustainable position within the town centre ecosystem in the 21st century. The evidence base uses examples of best practice submitted to the GR2 by actors involved in town centre regeneration between 2013 and 2018. The theoretical frame for the analysis of the dataset is the evolving Service-Dominant (S-D) Logic and its value co-creation and service eco-systems perspective. The next section of this article evaluates the key dimensions of this conceptual frame which have added value to our case analysis.

S-D logic and place: The town centre as a service ecosystem

An S-D logic and service ecosystem perspective (Vargo and Lusch, 2017) supports the view that the nature of exchange in town centres is service for service, with value co-created by multiple actors within the system. It implies that people or ‘actors’ in the ecosystem, are connected by common purpose and processes (Vargo and Lusch, 2017). It is a lens which places emphasis on institutions i.e. the norms, rules, values, meanings, symbols and practices, which the connected actors share, and acknowledges the many interactions amongst and between multiple actors - as well as resource integration and the impact of social forces - at and between three inter-related levels: macro, meso and micro (Akaka and Vargo 2015; Witell et al. 2015). An S-D perspective ‘urges marketing scholars and practitioners to abandon the producer and consumer divide and to see all parties as resource-integrating actors with the common goal of co-creating value for themselves and others’ (Wieland, Koskela-Huotari and Vargo 2016, p.212).

Place marketing academics have already embraced the potential insights offered by S-D logic (see for example Warnaby, 2009; Hankinson, 2010; Kavaratzis, 2012; Källström, 2016; Källström and Ekelund, 2016, Eletxigerra et al., 2018, Kallstrom and Hultman 2019). Warnaby (2009) claimed to offer ‘the first iteration of the process of applying the fundamental principles of service-dominant logic to the context of the marketing of places, and vice versa’ (p.418). By evaluating the characteristics that distinguish place marketing from its more stereotypical marketing counterparts, in the light of the S-D ‘mindset’, the author concludes that ‘some of the issues which have in the past been argued to create a degree of distinctiveness in place marketing theory and practice could actually be construed as having more resonance with, and relevance to, mainstream marketing’ (p.418). Of particular interest have been insights about the process of value co-creation within place marketing. S-D Logic views value creation as ‘a process achieved through economic and social actors interacting effectively and exchanging resources across and through networks’ (Vargo & Lusch, 2008). Value co creation activities are likely to create a superior customer experience and can result in firms securing competitive advantage (Crick, Chaudhry, & Crick, 2016). Källström and Hultman (2019) used service-based logic to study residents’ value creation in the place in which they live. They were able to ‘frame and conceptualize place satisfaction in a way that includes the co-creative element – something that tends to be neglected in traditional place satisfaction studies’ (p.277)

The S-D service ecosystem perspective acknowledges the multiple actors and resources which are commonly at play within a town centre setting and therefore represents an appropriate lens for this study.

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Figure 1: Some of the key players ‘actors’ working together within a typical town centre ecosystem. These have been generated from a review of stakeholders involved in the fifteen retail-related research projects that formed the basis of the ESRC-funded Retail Sector Initiative in 2014 and 2015.

In their recent study, Cassidy and Resnick (2019) applied an S-D lens to illustrate how selected members of a town centre eco-system worked to shape place strategy through value co-creation processes. Their case study supports the value of the S-D service eco-system perspective identifying seven norms shared by ‘actors’ operating within the town which are critical in shaping future decision making.

Resources and resource integration within the town centre ecosystem

As well as emphasising the collaborative nature of value co-creation, the S-D lens also offers a more detail understanding of the nature of resources exchanged in the town centre eco-system.

As noted above, within S-D Logic, stakeholders are viewed as ‘actors’ engaged in the exchange of operand and operant resources. Operand resources are generally physical and inanimate in nature, such as traditional tangible products and land and buildings; operant resources are human activities, involving the application of skills, knowledge and competencies such as organisational and relational abilities (Hunt, 2004). Arnould, Price and Malshe (2006,) sub divide the operant resources of actors as physical (energy, emotion and strength), cultural (specialized knowledge/skills, history and imagination) and social (family relationships, brand communities, consumer tribes and commercial relationships).

Although operant resources are central to value co-creation in S-D logic, operand resources (e.g. natural resources) are still seen as important. The S-D perspective emphasizes the integration of skills to develop new knowledge (Lusch, Vargo and Tanniru, 2010) to apply ‘operand resources in a more effective, including efficient and sustainable, manner’ (Koskela-Huotari and Vargo 2016, p.166There is a difference between S-D Logic and other resource-based views of the firm, namely the emphasis of the former that resource application must benefit other actors. ‘In other words, resources are applied and integrated to co-create value – that is, to improve the wellbeing of oneself by improving the wellbeing of others’ (Koskela-Huotari and Vargo 2016, p.166,)

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The S-D logic perspective emphasises the importance of deliberate and planned collaboration between actors within the city centre ecosystem and the need to exchange operand and operant resources to achieve effective value co-creation. In their study of resource integration in the context of high street regeneration, Cassidy and Resnick (2019) highlight how specific types of operant resources possessed by actors illustrated through their normative analysis can be ‘mobilised to develop and implement a more sustainable strategy’

Method

The aim of this research is to investigate how physical retail might be shaped and adapted for an ‘alternative future’ within the city centre eco-system. Adopting a case study method (Eisenhardt and Graebner, 2007; Yin 2014) the narrative has been developed using several data sources which formed the evidence base for GR2 supplied between January and July 2018. The process of data collection began with a dedicated LinkedIn page which called for examples of activities which had been successfully implemented based on the recommendations in GR1 published in 2013. Written submissions were supplemented with notes from participant observations and key informant interviews with leaders during two site visits. The first was a two-day study tour to Roeselare (April 2018) arranged specifically to see successful regeneration developments. The second, a one-day visit arranged by the leaders of Stockton on Tees in the North East (June 2018), again to showcase good practice in town centre development. Both towns presented themselves as exemplars of good practice. The primary data was supplemented with historical secondary material supplied by key informants. For example, the data from Roeselare was provided by the Head of Economic development in the Belgian case. Archival data, including press releases and internal publications, and material in e-mails, minutes of meetings, twitter feeds and follow-up interviews provided further data for the case study. In short, the case comprised insights from a range of empirical settings comparing voices of consumers, businesses and public and private service providers.

The Case study: the Grimsey Review 2 (GR2) ‘It’s time to Reshape our Town Centres’

As noted above, GR2 represents the second attempt by ex-retail CEO and author Bill Grimsey to highlight the dramatic changes needed to enable town centres to maintain and develop their vital social and economic role within communities. Frustrated by the lack of progress since the publication of GR1 in 2013, the aim of the second review was to see what had changed over the 5-year period. ‘Although the original authors stayed largely the same, the involvement of an academic stimulated a different methodological approach. Specifically, the implementation of a formal call for evidence of best practice channelled through social media over a six-month period to strengthen the evidence base for the conclusions.

It is this evidence, which provides the main data set for this paper and specifically what it tells us about actions of physical retailers striving to maintain a sustainable position within town centres. Drawing on the evidence submitted directly to the team and information from Town visits, the second review highlighted common themes which characterised successful town centre regeneration activity. An inductive approach was adopted to data analysis to arrive at these themes, with two members of the review team initially undertaking a close reflexive reading of the data set (Cassell et al., 2009). The transcribed data was then analysed in an iterative way to identify patterns and themes (Bryman, 2008). An ‘open’ approach to coding of the data was adopted in that a priori codes were not applied to the text but rather the reviewers kept an open mind to the data while remaining sensitive to the context of the research (Miles and Huberman, 1994). The initial readings stimulated debate and discussion between the reviewers about emergent issues. The goal was to use thematic analysis as a means to try to make sense of participant experiences and meaning (Braun and Clarke, 2006). The same two members of the team finally agreed on a set of subthemes to organize the responses. The themes made reference to community involvement, the development of a clear vision and strategy and the provision of a coherent mix of goods and services, careful use of taxes and incentives, strategies to engage passion, enthusiasm and emotions and an emphasis on digital innovation.

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The academic involved in the Grimsey team subsequently revisited the initial data using a Service-Dominant Logic (S-DL) and service ecosystems perspective, reflecting on the implications for physical retail moving forward. Within the general picture presented in the review physical retailers appeared to be surviving where they are proactively working with other actors within a wider community hub solution, aligning their strategic position and operations to the holistic centre place plan and proactively engaging resources of consumers in creating physical store experiences. Each of these strategies aligns with some of the key tenets underpinning S-D logic and the service ecosystem perspective of value co-creation. The next section of the case provides evidence to support this claim. First, with practical exemplars submitted to GR2 and a subsequent theoretical discussion.

Reflections

The need for physical retail to operate as part of a ‘community hub solution’

Recommendation three from GR2, calls for town centres to be ‘repopulated and re-fashioned as community hubs, including housing health and leisure, entertainment, education, arts, business/office space and some shops’ (Grimsey Review, 2018, p.8). No longer can physical retail be seen as the anchor activity or central attraction within a town centre. Retail needs to take its place within an ‘activity-based community’ where it is a smaller part of a wider range of uses and activities and where green space, leisure, arts and culture and health and social care services combine with housing to create a space based on social and community interactions’ (House of Commons, 2019, p.3)

Two qualities appear to characterise physical retailers who are responding effectively to this repositioning challenge.

Flexibility

First, those with the flexibility and agility to re-present their goods and services in places which are located in the heart of a community. This often involves shaping a new retail offer to fit around a community attraction or historical feature rather than as a stand-alone store format in a designated high street location. Exhibit 1 provides a good example of this. The Lokaal in the town of Roeselare in Flanders provides retail opportunities to showcase fresh local products every Friday in a local church. The church, under council control, hosts the covered market but also provides a bar and children's workshop. It brings together producers who sell fresh and locally crafted products. The farmers pay a small fee to cover staffing, IT and marketing costs to sell meat, fish, vegetables and fruit straight from the farm. The onsite children’s workshop educates the community about healthy food, nutrition and sustainable consumption. The Lokaal market also organises events such as BBQs and music. It offers picnic baskets for use outside the church on a car free square.

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Exhibit 1: the Lokaal weekly market in the local church in Roeselare West Flanders

Street markets appear to provide another opportunity for store format retailers to connect more closely to the community and showcase their merchandise in alternative formats. These have been very successful in many areas around the UK. Exhibit 2 illustrates how Joe Barrett, a pioneer of the teenage market has helped to develop Foodie Friday to create a monthly ‘buzz’ in Stockport’s town centre and help local retailers and producers to showcase their goods and services in the heart of the community. The exhibit also illustrates the range of other ‘events’ which have provided opportunities for traditional retailers.

Collaboration

Second, a willingness and commitment to collaborate effectively with other organisations within the community hub. The review highlighted some very good examples of horizontal collaboration amongst physical retailers and services providers. Exhibit 3 for example, highlights the success of a group of independent retailers and service businesses who developed a formal traders association to help traditional retailers come together around a community spirit.

Exhibit 3: Successful collaboration between retailers; Bishopthorpe Road Traders’ Association

Bishopthorpe road is a high street in York, which appears to have reversed the national trend of store closures and declining footfall. In 2008, a fifth of the shops lay empty. Today however, it represents a thriving community of cafes, restaurants, and traditional retailers, and attracts thousands of visitors on a regular basis. According to Johnny Hayes, local councillor and co-owner of the local kitchenware shop, success has largely been achieved by pulling together the resources, passion and commitment of the traders themselves in a formal group, the Bishopthorpe Road Traders Association. It has had a website presence since 2010, and a membership structure to co-ordinate and mobilise the resources of the businesses. Although Johnny acknowledges that ‘you don’t need to have a formal constitution to work together’, the association ensures clarity about how things should be done and guarantees traders a say on an ongoing basis. ‘At our first meeting we had 30 members and we now have over 100, so

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Exhibit 2: Foodie Friday and other community events allow retailers to showcase their goods and services within the community

On Foodie Friday every month, hundreds of people come together for street food, craft ales and live entertainment from local talent in the beautiful surroundings of the Old Town.

The event has created a vibrant atmosphere in the Market Place, positively impacting the trading conditions of surrounding businesses, bars and venues. In 2016 it won the Best Pop-Up, Event or Project award at the Manchester Food and Drink Festival. Foodie Friday now has an estimated annual impact of £250,000 for the local economy in Stockport, making it incredibly important for the business community, which has also attracted additional investment into the Old Town as a result. Foodie Friday has been so successful, that Knowsley Council have asked for help in replicating the event in Huyton over the summer

The days of Norse invaders and knights in armour were re-lived when Stockport Old Town stepped back 1,000 years for the Medieval Viking Fair. There were battle re-enactments, a Viking longboat and an array of medieval stalls. Each of the three days had live music in the local church and the Market Place and more than 7,000 people visited.

A fringe festival event celebrated Christmas, including the first switch-on of a Christmas tree in the Market Place, with free mince pies, mulled wine and festive tunes on offer.

Exhibit 1: the Lokaal weekly market in the local church in Roeselare West Flanders

we must be doing something right, Bishopthorpe Road Traders Association was formed to protect a unique street in York from the worst of the recession. Our actions are not just about making money. It’s about giving something back’. They also took advantage of a unique opportunity in July 2014, when the Tour de France (which started that year in Yorkshire) came down Bishopthorpe Road and acted as a catalyst to connect the businesses and the community. Another membership group has developed more recently as an offshoot of the ‘Bishy Road’ association. ‘Indie York’ (York Independent Business Association), a wider organisation of over 270 independent businesses across the city has helped to promote the city to visitors following the floods in 2015 and represents the voice of independents within the community of York.

Physical retailers also appear to be thriving where they are embracing the internet and learning from internet-based operators rather than trying to compete directly with them. Many online retailers are also opening physical operations drawing on superior customer insights to develop a strategic proposition which compliments their online offer.

Exhibit 4 offers an example of an independent retailer who has blended online and physical delivery to provide a distinctive offer for consumers

Exhibit 4: Linking online and offline to create a seamless experience

Tony Boothroyd, owner of a store called Vinyl Tap in Huddersfield appears to part of a wider trend in the retail landscape, expanding from a clicks to bricks business. In Tony’s case he was selling records and CDs on the internet two years before Google was even invented and described himself as a ‘genuine pioneer of online selling’ but now he's back on the high street. He believes his Vinyl Tap store provides an authentic shop atmosphere and acts as a shop window to his online portal, and a series of special promotions helps generate recognition through social media. The evidence suggests that clicks to bricks retailers have the advantage of having a strong consumer database and a clear view of the role the physical store plays in the channel mix. He stages live bands, cinema evenings, hosts record launches and works with local breweries and restaurants to offer joint promotional events. Tony believes his specialist business helps attract visitors to the area and contribute to Huddersfield’s distinctive position and heritage.

The need for physical retailers to align their strategic position and operations to a holistic ‘centre place plan’

Recommendation 1 from GR2 called for the establishment of a Town Centre Commission under strong, established leadership through the local authority with a defined remit to build a 20-year vision/strategy for their unique place. This vision has to be underpinned by a comprehensive business/place plan. The importance of developing this strategic place plan was reinforced recently in the guidance for submissions for funding under the Future High Streets funding scheme.1

Successful physical retailers are those making a co-ordinated effort to place their offer in the context of the place plan and contribute to reinforcing a distinctive place position.

A clear example of this is highlighted in Exhibit 5, the case of Malton, the small market town in Yorkshire. Here retailers are aligning their businesses with a place plan enthusiastically led by a local entrepreneur and landowner.

1 https://www.gov.uk/government/publications/future-high-streets-fund-call-for-proposals.

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Exhibit 5: Aligning with the strategic vision; the Case of Malton

Malton, a small market town in Yorkshire, is located on the north of the River Derwent on the historic boundary between the North and East Ridings of Yorkshire. It has drawn on the passion and enthusiasm of a local entrepreneur and landowner Tom Naylor-Leyland, as well as the expertise of artisan producers within the community and successfully positioned itself as Yorkshires ‘food capital’. Tom's family owns the Fitzwilliam Estate, which in turn owns much of Malton. He has been working for eleven years on the town's reinvention as the "food capital of Yorkshire", and through investment, charm and marketing the place has been duly reinvigorated. The town hosts a Tuesday food market with 35 stalls, twice a year a Food festival, attracting more than 30,000 people, a cookery school and a Malton food tour to tourists, often led by Naylor-Leyland. Talbot yard, the epicentre of the old Malton estate is now home to six entrepreneurial

The Roeselare place plan has offered similar opportunities for physical retailers. The vision for this small but growing city of 60,000 inhabitants, is to retain and develop a position as a leading smart food shopping city in Flanders. The vision is captured in a plan with seven core ambitions and fifty specific activities which are updated and negotiated with traders on a regular basis. To reinforce the fresh food positioning, streets have been renamed and differentiated by fruit and vegetables together with lighting and signage. Each retailer operating within this street has to align its offer with this theme. Exhibit 6 illustrates one street (Lemon Street)

As well as creating a strong place plan, many towns are also establishing initiatives which specifically require the collaboration of all businesses and organisations within the community. Physical retailers who enthusiastically engage with these initiatives are clearly reaping the rewards. Exhibit 7 highlights an initiative to mobilise digital capability and social media engagement within the place.

Exhibit 7: #WDYT A campaign to increase digital influence in the high street 

The #WDYT (What do you Think?) campaign is a proven way for retailers, towns, and cities to collaboratively increase their Digital Influence to increase local footfall and sales. The campaign is being delivered by Maybe*, in association with GFirst LEP. It is an output from the Future High Street Forum but is delivered and funded by a private company with towns paying to participate. One of the outputs of this activity is the UK Digital Influence Index which measures the social media output of over 150,000 retailers in over 1300 towns in the UK on a daily basis.

The ability to measure digital output by place has enabled the impact of the campaign to be quantified and linked to key physical data points; footfall and sales. This has enabled towns and retailers to match positive increases in footfall and sales to their increased digital activity. Those Towns and Retailers that engage in the #WDYT campaign have had a rapid and significant increase in digital influence and output. This has proven to be a catalyst that encourages retailers to accelerate their digital strategy.

The campaign stems from the belief that every place is the sum of its digital parts. Places that do not have the skills or ability to engage their customers through digital channels will have less

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Exhibit 6: Lemon street

Exhibit 5: Aligning with the strategic vision; the Case of Malton

Malton, a small market town in Yorkshire, is located on the north of the River Derwent on the historic boundary between the North and East Ridings of Yorkshire. It has drawn on the passion and enthusiasm of a local entrepreneur and landowner Tom Naylor-Leyland, as well as the expertise of artisan producers within the community and successfully positioned itself as Yorkshires ‘food capital’. Tom's family owns the Fitzwilliam Estate, which in turn owns much of Malton. He has been working for eleven years on the town's reinvention as the "food capital of Yorkshire", and through investment, charm and marketing the place has been duly reinvigorated. The town hosts a Tuesday food market with 35 stalls, twice a year a Food festival, attracting more than 30,000 people, a cookery school and a Malton food tour to tourists, often led by Naylor-Leyland. Talbot yard, the epicentre of the old Malton estate is now home to six entrepreneurial

footfall and sales. Enabling and encouraging places and retailers to think about serving their customers in new ways is key to the evolution of our High Streets.

The Maybe* platform has accelerated the digital evolution of 30 towns and over 2000 businesses and has demonstrated how using this conversational approach can increase digital conversion rates by over 3% and physical footfall by over 20%. Stafford, Cheltenham and Gloucester are cited as successful case studies and the learnings here have enabled the development of a replicable and scalable process that can be repeated in every town across the country.

The need to engage consumer operant resources to create and enhance physical store experiences

There is widespread evidence that consumers are increasingly willing and able to contribute directly to shaping their retail/service experience. The growth of online communities, loyalty cards and property sharing services such as Airbnb, illustrate consumer enthusiasm for sharing their expertise, personal information and physical resources with suppliers and fellow customers. At a macro level this trend can be seen as part of the ‘collaborative economy’ which involves ‘using internet technologies to connect distributed groups of people to make better use of goods, skills and other useful things’ (NESTA, 2014, p.10).

Many physical retailers have capitalised on this new consumer enthusiasm and developed a ‘service’ arm to a traditional product-based offer. This ‘service’ forces consumers into town, giving them the opportunity to use their personal skills and resources to co-create service provision. Exhibit 8 illustrates this with the work of the Oxford Towns team.

Exhibit 8: #morethanretail using skills and interest from the community

With this initiative, independent, often but not always retail, businesses offer classes or workshops to share and pass on their skills and expertise. As well as creating an additional income stream for the business, it has also seen those who take part in a class or workshop become future customers of the business (to buy supplies for the new craft that they have learned). Independents who are taking this approach include artists, flower sellers, up cyclers, handbag designers, chocolatiers and wool/fabric shops. Where there is a number of businesses doing this, the town can create a leaflet/campaign to promote them collectively. The picture below illustrates an art class run at The Artery art supplies shop in Banbury.

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Discussion and recommendations

GR2 made 25 recommendations to improve the nature and shape of town centre provision. This case draws attention to the findings which relate to physical retail. Specifically, it explores ways that physical retailers are reconfiguring themselves to ensure they maintain a sustainable position within the town centre ecosystem in the 21st century. The evidence suggests that physical retailers, particularly independents, are responding most effectively by linking the delivery of traditional goods and services to community attractions, communicating horizontally and vertically within the distribution chain and proactively involving consumers in service experiences.

These strategies align closely with the key tenets underpinning S-D logic and the service ecosystem perspective of value co-creation in two main ways. First, reinforcing the importance of collaboration between multiple ‘actors’ as the basis for successful value co-creation. Physical retailers are having to redefine their role within the ‘community hub’ which may include housing health and leisure, entertainment, education, arts, business/office space as well as shops. Drawing on Kotler’s traditional classification of competitors (Kotler and Armstrong, 2010) the collaboration at present remains largely ‘product and enterprise form’ based, with evidence of physical retailers joining forces with one another as well as with leisure operators. As the community ‘hub’ solution develops, other forms of collaboration are likely to emerge focused on generic consumer needs, e.g. sports goods retailers linking up with fitness clubs and public health services such as doctors surgeries to provide a full range of health and wellbeing facilities and services. Other opportunities for obvious retail collaboration are linked to the growth in investment in heritage assets in the town centre. In Stockton on Tees for example, the National Lottery Heritage Fund and the Council are supporting the refurbishment of the old Globe Theatre, once host to the Beatles, into a 3000-capacity music and entertainment venue. Savvy retailers will be those who are already thinking about how they might align their product/service provision to ‘fit’ this cultural development.

The emphasis on collaboration is not new to the place management literature. Many have emphasised the importance of the promotion and encouragement of cooperation between place actors to enhance the attractiveness and performance of town centres. (Teller et al 2016, Warnaby, Bennison, Davies, & Hughes, 2004, Teller & Elms, 2012). The S-D logic perspective simply serves as a reminder of its importance in the context of the current demise of town centres.

As noted in the Housing, Communities and Local Government Committee report (2019), reflecting oral evidence to the Committee in 2018 from Professor Cathy Parker of the Institute of Place Management, “partnerships and collaboration [were] essential components of any town centre or high street rejuvenation’ (House of Commons, 2019, p.21) and explained that ‘insights from a wide range of people who understood the town were needed to ensure that the right decisions get taken’ (House of Commons, 2019, p.21)

S-D logic also draws attention to the importance of utilising both operand and operant resources to achieve effective value co-creation. As has been noted ‘places can be regarded as service systems, in that they constitute a combination of both operand and operant resources, and/or hard and soft conditions, which are integrated to develop a value proposition to potential users (Warnaby and Medway, 2015, p. 46). Many of the successful initiatives submitted to the review illustrated the wealth of operant resources that consumers appear willing to supply to save the town centre. Events in particular are proving to be particularly successful in unleashing the physical resources, energy and

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emotions of consumers. The transition from a product to service-based retailer also allows consumers to provide and develop their cultural resources in terms of specialist skills and knowledge.

Recommendations for physical retailers

The findings from GR2 highlight a number of recommendations for physical retailers looking to create a sustainable position in the 21st century town centre.

Define and reflect on your current retail brand proposition and vision. Use this to identify potential collaborators within a community ‘hub’ solution. Think laterally and concentrate on identifying synergies with operators working beyond existing products and markets.

Experiment with flexible delivery options and locations for your goods and services which bring you closer to the community. This may require new business models as well as government action to review current planning use system legislation to support great flexibility of place and delivery use.

Actively engage with the place plan. The Local councils are increasingly being seen as the ‘custodians of place’ charged with identifying a mix of goods and services that best suits their specific characteristics, local strengths, culture and heritage. Although traditional retailers will still have a place in this mix, the contribution is likely to be smaller. Towns will become activity-based community gathering places where green space, leisure, arts and culture and health and social care services must combine with housing to create a space that is the “intersection of human life and activity” based primarily on social interactions rather than financial transactions. Identify how your business might contribute to this community vision.

Attend forums and events with which to encourage the cross fertilisation of ideas. For example plans are underway for the development of a Health in the High Street forum to explore how to bring self-help into the high street through links with existing public and private sector providers.

Remodel your business to encourage and facilitate consumer participation. Define specific actions to mobilise the physical, cultural and social operant resources of consumers.

Actively engage with ‘place’ based initiatives such as #WDYT. Town Centre managers continue to identify retail lack of co-operation as a major barrier to progress in place planning. Many retailers insist on operating in isolation, tending to see themselves in a traditional role, offering merchandise rather than in store experiences.

Conclusions

This paper calls for physical retailers to continue to respond in a number of ways in order to maintain their vital role within town centres. First, and most significantly, physical retailers need to fully embrace their new role within a community hub solution which health, housing, education, arts, entertainment, business/office space, manufacturing and leisure. ‘Bricks and mortar retailing can no longer be the anchor for thriving high streets and town centres’ (GR2, p.8). Retailers need to be flexible and agile enough to present their goods and services to consumers in locations in the heart of the community. Those who deploy technology to make this happen are likely to hold a competitive advantage. Second, to achieve this, retailers need to ensure that their individual position and goals were aligned with a bigger ‘centre plan’ which works to a vision, methodology and timetable for the ‘place’. Third, physical retail like others within the high street have to find innovative ways to develop creative store ‘experiences’ to get consumers to physically come to the stores and to develop the flexibility to respond rapidly to change bought about by technology. Closing on a more optimistic note, Bill Grimsey is keen to stress that the town centre in the 21 st century will not be ‘without shops, because if you create enough density inside the high street and town centre, then by definition you will have trading going on and there will be some shops’. The key is to understand the role each actor can play in helping to create this density.

As part of her oral evidence to the HCLG Committee Inquiry about High streets and town centres in 2030, Professor Cathy Parker outlined her vision of the future high street ‘In terms of what I would

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like the high street to look like in 2030, I would say busy. We always know when it is a healthy high street, because it is full of people. I want to see lots of people of different ages using the high street for different reasons. They should be places that people are proud to say they are from, rather than feeling ashamed or embarrassed of’ Cathy Parker, Professor of Retail Management Institute of Place Management (House of Commons, 2018)

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