Shopping Local 2025
1. The local High Street
We’re observing a powerful new trend across several markets. Consumers are starting to place more value on the support of their peers: as a bulwark against rising socio-economic uncertainty and falling trust in institutions. They’re caring more about community, interpersonal relationships, social leisure and communal decision making. They’re turning away from the ‘establishment’ support networks many take for granted, and surrounding themselves with a trusted ‘framily’: a collective of relatives, close friends, co-workers and members of shared interest groups. More and more consumers are embracing the ‘community spirit’.
One of the consequences of this attitudinal shift is the growing importance of the local community. Today 19 percent of Britons consider a brand ‘ethical’ if it links up with a charity: but 23 percent do if it is linked with the local community. And it’s a trend that’s been accelerated by the pandemic: with more home working and the restrictions of lockdown forcing them to spend more time closer to home.
As a result, consumer expectations of retail are starting to shift. We believe that tomorrow’s consumers will increasingly look to their local area to provide the means to satisfy more and more of their daily needs. They’ll seek retail outlets that provide things it’s preferable to purchase ‘in real life’ such as perishable, locally sourced and artisanal products. And they will value local retail much more.
In this report we look first at the neighbourhood community trend: what’s driving it and how it might develop. Then we take a deep dive into the importance of this for Retail: how the trend will impact the High Street, and how retailers can take advantage of it to gain competitive advantage.
2. Community drivers
2.1. What’s behind the trend
There are four factors driving the community trend: anxiety, trust, influence and technology.
2.1.1. Rising anxiety and loneliness
Rates of anxiety across the globe have been significantly higher in the last twenty years than the previous twenty. The anxious can find solace in the comfort, support and shared strength of communities real and virtual. Community is a useful anchor in an age of fractured media, frequent technological change and competing commercial interests. For an increasing number of people, friends and family are becoming the only trustworthy source of emotional and physical support.
2.1.2. Declining institutional trust
More and more people today trust their peers more than they do institutions. According to Edelman’s global Trust Barometer research, the average global citizen today distrusts all institutional groups: financial institutions, big business, governments and the media. Loyalty to businesses is falling too. The length of time customers stay with the same service provider has fallen 39 percent in the last four years. And where is that trust going? For an increasing number of people, it’s shifting to their peers: from friends and family to shared interest groups. 97 percent of consumers claim to use customer reviews whenever they purchase any new product.
2.1.3. Loss of citizen influence
And while institutional trust slips away, the global influence of many institutions is growing. Increasingly, the big issues, such as climate change, need to be addressed on a global scale. As a result, decision-making feels further and further out of citizens’ individual control, encouraging many of them to want to ‘take back control’ from institutions. This is where the fourth factor comes in:
2.1.4. Growth of comms technology
As ever, technology is the great enabler. Fewer people need the big banks when they can use FinTech apps to keep an eye on their finances. And fewer people need doctors when they can google their symptoms. Tech continues to be the great enabler of closer connections too and that’s key to this trend. Over half of the world’s total population now uses social media. Over two thirds of users say the reason they do it is to stay in touch with friends and family. 68 percent of 13-17s say social media makes them feel they have people that will support them. The pandemic has further cemented its importance. For many people forced to stay at home due to Covid, technology-driven innovation, from social media to teleconferencing was essential to connecting them with others.
2.2. Pandemic influence
It might seem counterintuitive to focus on community during a pandemic: when people’s normal interactions have been so curtailed by the requirements of social distancing. But rather than reducing the trend towards community, the pandemic appears to have boosted it. Social platforms and forums, for instance, have been busier than ever and online meet-ups have rocketed.
Moreover, in the physical world, citizens have if anything gained a closer relationship with their neighbours. And they’ve taken greater interest in local shops, having been forced to rely on a combination of e-commerce and local retailers for all their purchase needs.
Over half of Britons (56 percent) say that since lockdown they’ve got to know their neighbours a lot better or are now better friends than ever. The rise in neighbourliness during lockdown appears to have actually reduced feelings of loneliness in the US. Many individuals received practical and emotional help from those nearby during lockdown too: a sharp reminder of the importance of peer support.
“[After the pandemic] the idea of being dependent on the people in your neighbourhood will actually be a good thing.” Tom Dixon, designer and retailer
3. Neighbourhoods take centre stage
The trend toward neighbourliness has been boosted by the pandemic, but the trend to ‘think local’. started well before Covid.
Two years before the pandemic, 30 percent of Britons said they were getting on better with neighbours than they did five years ago. Over half (54 percent) said they were now on first name terms with the people next door, and 29 percent would trust their neighbours with a key.
70 percent of European consumers now express a clear preference for buying locally sourced products. 68 percent of Americans prefer to buy things locally whenever possible and 59 percent would consider paying more for locally made products. 76 percent of Americans trust local TV news and 73 percent local newspapers versus just 55 percent who trust national TV news, 59 percent national newspapers and 47 percent who trust online-only news outlets.
3.1. Working from home
One key driver for next-stage neighbourhood growth is something that used to be the biggest barrier to it: work. The pandemic has driven an already growing trend for home working. As more people generate livelihoods at home, or within strolling distance, they’ll be more invested in the areas that they inhabit. Homes and residential streets will become more than just a place to ‘rest our heads:’ and increasingly the centre of daily life.
We’re already observing a trend for Millennials to move away from busy urban centres to more communal spaces. A recent Ernst & Young survey shows more American Millennials now own or rent in the suburbs than in the city. Today 41 percent would rather live there than anywhere else: up from just 36 percent in 2016.
3.2. Fifteen minute cities
Future citizens will seek out those neighbourhoods that let them fulfil more life tasks, and enjoy more experiences, within walking distance of home. They’ll want to be within walking distance of amenities, from shops to gyms. A survey from the National Association of Realtors found that, when purchasing a home, over three quarters of buyers today consider it important to live within easy walking distance of amenities. Millennials are particularly keen. 62 percent of them prefer walkable communities and short commutes.
This will pave the way for walkable ‘15 minute cities’ – as championed by Paris Mayor Anne Hidalgo – and growth in bicycle and e-bike sales. There’s likely to be more space on the High Street for local entrepreneurs, and more sharing of goods between neighbours. Companies will need to ‘act local’, as residents prove wary of ‘outsider’ brands. But there will be more opportunities to drive local loyalty by sponsoring neighbourhood amenities.
The trend could also drive a shift away from cities altogether, towards more suburban and rural living. Because, as people begin to value good local amenities, there’s less requirement for access to big population centres. Rural locations could win out here. Far fewer people will need to be within easy reach of a central location to earn a living. Good data connectivity will be vital of course: for both work and leisure life. Advances in 3D printing will help too. As it becomes smarter and cheaper, it will enable better local production, providing quick access to more products for those outside of the main centres. It’ll also shorten haulage routes.
4. Tomorrow’s High Street
As citizens focus more on their immediate neighbourhood, their expectations will grow. This will affect what they’ll want from their local High Street.
Residents will increasingly look to their local area to provide the means to satisfy all their daily needs. As a result, they’ll seek retail outlets that provide things it’s preferable to purchase ‘in real life’ such as perishable, locally sourced and artisanal products. They’ll want easy-to-use click and collect centres. There’ll also be demand for ‘tabletop tycoons’ to showcase their products: markets and pop-ups that act as physical approximations of Etsy and eBay. As they become yet more locally focused, residents will increasingly seek local versions of traditionally more regionally-based amenities. For instance, instead of a single large hospital serving many different communities, we expect more local micro-hospitals with small A&E departments and ‘pop up’ theatres for minor operations. These would grow alongside consulting rooms for local osteopaths and acupuncturists.
Remote working and the splitting of companies into several localised hubs, will drive demand for more shared and co-working spaces, and business service companies like accountants and law firms. And to service these small businesses, there’ll be demand too for 3D printing and manufacturing workshops. Home working will also encourage leisure facilities to run all day, as more people discover the freedom to swim or use the gym whenever they want.
Demand for local businesses and hyper-local tradesmen will grow too, from a customer and employee standpoint. Consumer trust in small, local and artisanal commerce will rise at the expense of larger organisations. And while young people used to leave their hometown for better prospects, in future they may be more likely to begin their careers just around the corner.
4.1 Think local
If tomorrow’s consumers shrink their focus to what’s within a one-mile radius of home, they’ll be increasingly wary of companies headquartered outside that space. This will be a concern for business. Smart brands will find multiple ways to connect with the local community.
Localising one’s company is not a new strategy of course. What is new is quite how important it’s about to become for consumers. The more value consumers place on their local area, the more central to strategy businesses’ localisation efforts will need to become.
Companies who already have close ties to the local community will have an advantage, such as leisure centres, museums, pubs and cafes. So too will smaller, more nimble brands, who can adapt well to specific local needs.
National retailers will need to think local. Several chains, like the Co-op, now include the name of the local area on their shopfronts, and employ more locals in senior positions. We expect this to intensify with neighbourhood-specific products offered in each store; and with each running its own social events and social media account.
Advances in artificial intelligence and the Internet of Things will help too. As usability increases and costs decline, these will provide retail and leisure chains with the ability to personalise customer interaction at a local level, for example recognising customers as they approach and reminding reception staff of their name and history. Predictive analytics, artificial intelligence and machine learning via digital assistants, tablets and wearables, will contribute to increasingly personal interaction. Such a high level of knowledge from a stranger will feel unsettling at first, but we believe it will quickly become ‘the norm’ as consumers enjoy greater personalisation and convenience.
“The retail store of the future will actually take us back to the past, when shopping was something we did locally, in our own communities. The large suburban malls with their harsh fluorescent lighting may soon be a quirky thing of the past, a weird place where people used to pass their time in the ’90s.” Elizabeth Segran, Fast Company
4.2. Sharing is caring
Local collectivity will drive local shopping. But it could drive local sharing too. As a result, today’s purchase-only retailers will need to reassess their relationship with leasing and rental.
As neighbourhoods become closer and more trusting, more people will start to question the need for multiple individuals to purchase some products at all. Why buy a big-ticket item when you can borrow it from a friend, neighbour or work colleague? This could impact a range of products, from lawnmowers to cars.
Lockdown showed the way. Social sites became venues for barter and sharing. The Washington Post found many new Facebook groups dedicated to product barter. The Daily Mail reported how sites like Facebook and Next Door were “flooded” with posts from those wanting to exchange items with neighbours. The more neighbours interact with each other, the more they’ll trust each other. And the more comfortable they’ll be sharing not just products but data, ideas, skill sets and space. We’ll see more locally-run amateur car clubs, locally-sourced energy sharing, shared community centres and crowdfunded amenities.
As rental becomes more normalised, the High Street – real and virtual – will see greater demand for it. New rental-based retail initiatives, such as those from Selfridges or Oxfam, will be accelerated by locally-driven consumer demand. Sharing will also drive demand for secondhand goods, as consumers start to care less about owning a ‘shiny new’ product.
5. Next steps
Any company currently involved in physical retail needs to understand the changes above. They also need to determine the opportunities – and threats – they will provide retailers, and how to take advantage of them.
Next Big Thing offers the solution. We provide tactical and strategic consultancy on the topic. We’ve created an action plan for companies looking to thrive on tomorrow’s High Street. Company founder and popular conference speaker Will Higham has also created a talk on the topic that he’s able to deliver online and in-person. It delivers practical strategies that companies can use to appeal to tomorrow’s more locally-focused consumer.
At Next Big Thing we’ve spent years exploring how companies can best prepare themselves for a changing market. We’ve helped businesses find success across a range of macro-shifts: from the migration from physical to virtual and mobile, to the emergence of Generation Y and Z. We’d love to help you and your products appeal to tomorrow’s fertile new neighbourhoods.
To find out more, just call (020 3542 1900) or email (firstname.lastname@example.org).