The vanishing high streetPosted: May 27, 2011
As all retail watchers know (not to mention the millions of retail employees), these are difficult and unusual times on the high street.
The government – influenced by a bit of recession here, a bit of Big Soc there – has noticed that the high street, and most of the physical retail sector, is struggling. They don’t know what to do about it, but there are some hopes that a quick fix might be found.
Most retailers can point quickly to the cost and hassle of parking, and/or inadequate public transport; an entrenched landlord world-view (not just institutional – many high street landlords are small and local); and a slow and unimaginative planning regime. Mr Cameron has had retail leaders round to No. 10 for coffee, so one would hope he has heard these messages already.
Absolute shop numbers are falling, and will continue to fall, because the public no longer needs as many shops. This is the result of a severe spending downturn, combined with the no-plateau-in-sight rise of online retailing. The physical retailing cost-base – occupancy, payroll, red-tape – can only bear a limited and temporary fall in sales before serious restructuring is required.
120 Focus DIY stores are now set to close down following the company’s collapse; Mothercare is exiting a quarter of its estate (and warning of more, future closures). Retailers large and small are quietly trimming their portfolios wherever the right opportunity arises.
This retrenchment is unlikely to be followed by a roll-out programme any time in the foreseeable future. The biggest retailers are relying on international expansion to create growth. At home, the talk is not of new stores; M&S is committing another £600m to refurbishing its existing store base, working as hard as a cash-generative business can to stay relevant in an increasingly online world. The few physically expanding retailers are looking dangerously like bubbles.
Although there are some major schemes under construction, new store numbers at, say, Westfield Stratford will be counterbalanced by closures on the high streets of East Ham, Romford and the like. Consumers want to use the major centres with the big anchors, and they want to buy cheaply online; they have yet to demonstrate (away from the likes of Marylebone) what sort of high street experience they will be prepared to support in the future.
All of the above is (I hope) reflecting a long-term perspective, illustrated through a few current activities. The high street isn’t going away – but it has to change, radically, and it will take the combined and hard-headed efforts of government, councils, landlords and retailers to make those changes work, on a town-by-town basis. Tough times are the best times for challenging orthodoxies and thinking the unthinkable.
Mind you, consumer confidence is “soaring” apparently, though I suspect that this is a stuttering improvement built on broader, briefer feelgood factors; the May retail figures will provide a more objective measure.
In the meantime, here’s a comparative situation. From the 1970s onwards, Britain’s manufacturing infrastructure progressively transferred to low-wage countries, and the country became increasingly dependent on the service and financial sectors. The view took hold that we “couldn’t” make things in Britain any more – rather than taking the view that old-fashioned metal-bashing had passed on, but specialist, R&D driven manufacturing could have a real future in a country like ours. The tide is now turning, a little, though there are fears that too much expertise has simply vanished, and that the foundations for a manufacturing renaissance are too small and too weak.
Old-style, “till-bashing” retailing is now in a similar position. The job can be done more cheaply and often more efficiently by a combination of the internet and large out-of-town supermarkets and shopping centres. The high street that’s left then becomes today’s Jarrow or Merthyr Tydfil. This doesn’t have to happen – the unique qualities of a strong, local high street are valued by communities who have them. However, any slight sense that turning the clock back to the 1950s will work is wrong – just as keeping the shipyards open was doomed.
I don’t know what the high street of tomorrow will look like, but I know that good communities have centres, and that any gathering of people can translate into commerce. Finding a role for the old high streets in the online/megamall world will be interesting – and for some, potentially very rewarding if they have the scope to look to future opportunities, rather than just today’s P&L.
“Shopping With Mother” – image taken, ironically enough, from http://www.find-me-a-gift.co.uk.