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IRUK Top500 The Customer Report: 2018

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The future of the high street

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The future of  the high street
The future of the high street
High streets have reportedly been “dying” ever since the first hypermarket opened at Cwmbran in 1973. Having battled with superstores, shopping malls and out-of-town retail parks will the internet prove to be the final nail in the coffin? Penelope Ody investigates.

LISTEN TO the retail pundits and you hear that the store is a vital component of the omnichannel offering: a fulfilment centre providing a digitally enhanced experience to promote the brand. Walk down many high streets, especially in less affluent parts of the country, and it seems a very different story. Shop vacancy rates may have fallen in recent months to the lowest in four years, but there are still around 52,000 empty outlets around the country, many of them in those economically challenged districts.

At the same time footfall in the many high streets is declining and is easily affected by adverse weather conditions. According to Springboard, average high street footfall was down by 5.3% year-on-year in February, as heavy rain persisted in many areas. In March it was 2.6% up, the greatest increase for almost a year – although as high street footfall for March 2013 was 7% down on 2012 figures, traffic clearly remains well below the levels of a few years ago and many high streets continue to struggle. Joshua Bamfield, Director of the Centre for Retail Research, argues that around 50% of high streets are coping pretty well, another 20% are in a “very difficult” situation, while 30% “could go either way”.

High profile initiatives, such as the Portas Pilots and Government backing for 330 “town teams”, may hit the headlines, but last year’s report from Bill Grimsey dismissed them as “little more than a PR stunt and to lay the grounds for a lucrative TV makeover show”. If shoppers are continuing to desert many high streets then rather more radical action is needed than simply encouraging pop-up shops and foodie markets.

MANAGING THE DECLINE 

“The Government must act to repurpose many of our high streets,” says Tony Stockil, Managing Director at consultants Javelin Group. “Some will have to return to residential use and we’ll be left with fewer, bigger, better retail high streets. It’s all about managing the decline.”

Matthew Hopkinson, Director, Local Data Company is rather more cautious: “Many areas are over-supplied with shops, especially in some of the northern industrial towns. The vacant units need to be taken out of stock; some could become residential but in poor or depressed areas why would people want to buy them?”  Professor Bamfield also believes the residential option may be suitable for some: “High streets in traditional market towns were once a mix of houses and shops and many contain attractive properties that could be reconverted back to houses,” he says, “but that certainly isn’t true of every high street. Many of those shopping parades built in the ‘50s and ‘60s are a real mess. Units are often small, with inadequate IT and poor access to the back door and serious remodelling will be needed over the next 10 years.”  In many areas, argues

Professor Bamfield, small shops, inappropriate for 21st century omnichannel trading, will need to be enlarged – typically by converting five outlets into three – but with fragmented ownership in many areas co-ordinating that sort of development will not always be easy. Local authorities remain significant landlords in some high streets, leading some to suggest that bringing many of those services which were once found there – such as public libraries, job centres, schools, police stations, council offices or doctors’ surgeries – back into high streets could both encourage footfall and create a greater sense of community.

Practical help in the form of major changes to the business rating structure, simplified change of use rules, or even local sales taxes used to support high streets could all help. “The Government seems interested in the high street but they don’t really have a great policy,” says Professor Bamfield. “They don’t understand retailing. Matthew Hopkinson agrees: “There have been some Government initiatives but it needs investment and no-one is really looking at what is happening at a local level. For example, if a successful independent owns their shop but the area is in decline who will help them move? What happens to poor areas where the conversion to residential option really isn’t viable? There has to be a top-down initiative.”

For those 30% of high streets that “could go either way” change will certainly be essential. “High streets in future will be less homogenous,” says Natalie Berg, Global Research Director at Planet Retail. “There needs to be food, drink, leisure, community rooms – somewhere for yoga or wine tasting – and independents to give excitement.” She suggests “marketplace” outlets providing a high street presence for the sort of small businesses and start-ups that currently sell via online marketplaces like Amazon.  While independents and community groups may be the mainstay of tomorrow’s high streets, national brands could become few and far between as the big chains reduce their estates: “Instead of 200 outlets across the country some are starting to opt for 50 or 100 in strategic locations with other areas served by online sales,” says Professor Bamfield. Perhaps a decisive factor in the coming 18 months will be the very large number of 25-year leases taken out in 1990, when prices were low, which come up for renewal next year. If many of these, as forecasters predict, are not renewed then the vacancy rates in our high streets could soar.

Consultant Claire Rayner organiser of the recent “Future High Street Summit” believes that fundamental changes are needed. “One of the key points that emerged from the conference was that we have to move away from the idea of the high street being primarily a transactional retail centre. It needs to become more of a community hub with services, hospitality, entertainment and social activities – and it needs to adopt very different trading hours. Springboard presented some research at the conference which showed that while high street footfall had fallen 26% since 2007 during traditional retail trading hours, it had actually increased significantly between 5pm and 8pm – which is when most retailers have shut up shop for the day.”

CHALLENGING DYNAMICS

According to Matthew Hopkinson around two-thirds of high street shops are currently independents. In the past many of our most successful retail companies started from a single outlet in their local town and experimental start-ups have always brought variety and excitement to the retail mix – but independents may also find changing consumer dynamics challenging: “They need to open in the evenings and on Sundays,” says Claire Rayner, “but many say they like ‘family time’ so they don’t. I’m sorry but if that is their attitude they shouldn’t be in retailing – not only is it the wrong approach but they’ll miss 20% of their sales.” Retailers, she adds, need to go where they are relevant or adapt to match changing consumer demand. “If they do neither then they’ll die.”

The Government backed “town teams” are supported by the Association of Town and City Management which offers a raft of ideas and supporting materials to raise the profi le of the high street, although judging from some of their questionnaires they appear to be targeting already reasonably successful shopping streets with little mention of the discounters, pound shops, gaming outlets or credit unions that can dominate more challenged areas.

While many high streets are in serious decline, they often still serve a local community – and could have an even greater potential market if parts were returned to residential use. “We also have an ageing population,” says Matthew Hopkinson, “and many will want to shop locally, especially if they no longer drive, so there is a case for supporting local high streets to provide essential shopping.”

Tony Stockil has referred to the local pharmacist as “the last man standing” – an outlet serving essential needs which can often be found on even the most depressed high streets. Add the current tendency for supermarkets to focus on convenience stores, the need for centralised collection points or locker units for online orders, some local authority services and a fair sprinkling of coffee shops or restaurants and smaller, mixed-use high streets – even in the more depressed parts of the country – could survive as community hubs. The national chains may have deserted them but such streets could well provide the proving ground for tomorrow’s retail success stories.
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Featured In
InternetRetailing Magazine – May 2014, Volume 8, Issue 4

InternetRetailing Magazine – May 2014, Volume 8, Issue 4

Featured In
InternetRetailing Magazine – May 2014, Volume 8, Issue 4

InternetRetailing Magazine – May 2014, Volume 8, Issue 4

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