The high street in the UK is, in my opinion, in big trouble. Dieter Helm sums it all up quite nicely for me.
Estimates of vacant shops vary, Experian has Loughborough with 22% vacancy rate and Leicester at 26%. The evidence of our own eyes is enough to convince me that 20% is roughly where it’s at.
A new report from The Retail Think Tank says that there is still a shortage of primary retail space. They claim that the recession is not the primary cause of store closures but long term trends are much more to blame: Shopper habits have been changing gradually Primary retail sites have been built-on and improved Consumers are shopping for choice and value and are today very mobile. Forty years ago a retail chain like would have to have 200 stores across the UK to reach 50% of shoppers, today that number has shrunk to 85. Large amounts of tertiary, and some significant numbers of secondary sites are, or will become vacant in the next few months. In the same way that primary retail sites are increasingly popular for retailers, they are with shoppers, and some towns risk becoming tertiary towns, relegated to being a mish-mash of obsolete stores, charity shops & low value retailers Whilst primary sites grow. The RTT is encouraging local authorities to review policy and consider a change of use for obsolete retail property. Effectively shrinking the retail stock to provide a more concentrated, highest possible quality. Certainly there is no mention at all of retail returning to the heady days of 2 years ago and no possible need for expansion of secondary or tertiary retail space, just more contraction. The RTT is encouraging local authorities of these tertiary towns to rethink how shops and shopping centres could be used in future and address the associated planning issues. So, there are now too many shops because we’re all spending less and it won’t go back to how it was 2 or 3 years ago before the easy flow of credit was cut off. But I also think that the online shopping is causing, and will increasingly cause more store closures.
In my opinion, discretionary spending is migrating away from the High Street to the Internet. I believe that the economic climate has forced change on how we shop, led to the demise of some borderline retail businesses and highlighted just how flaky retail space has become in the real economy. In the coming years we will see the number of financial retail outlets reduce quite quickly because of consolidation and profit drivers, already Lloyds Banking Group has announced the closure of C&G and other branch closures, Santander’s decision to rebrand A&L, Abbey and B&B will be the first step in a major consolidation process. For some years I have been telling clients that High Street discretionary expenditure was being channelled more and more away from stuff to things like travel, entertainment, eating out, software, digital media, financial products and other items not reliant on the High Street. The threshold shifted for me when two years ago in the USA, paid for media exceeded free media (paid for by advertising) for the first time because it told me that the population had changed it’s perception of where value was. The greatest challenge for retail today is how to grow a truly multi-channel offering to consumers that will embrace a growing trend to online browsing, research and transactions. I believe that High Street’s increasing role is to provide experience whilst accepting lower levels of browsing, research and transactions at the store. Here are some questions you may be asking your self. Is it realistic that we’ll spend 40% on the Internet?
The answer is that some existing High Street businesses, like Argos are already seeing a migration to home / internet shopping. options like Check & Reserve are proving very popular with shoppers
Boots just announced that it is introducing Click to collect, ensuring that you can shop from Boots’ extensive range available in it’s largest stores, but collect from the smallest
And a new service being rolled out Nationally, called Drop & Collect, will allow us all to shop on any web sit and have our parcel delivered to a local convenience store, mostly with extended opening hours, when convenient to us.
And DHL are introducing a similar service, as more are.
New retail types are also coming to market, like Shopping Clubs, which are very popular in Germany, France and Spain and are yet to take off here. They have a constant flow of Fashion Products available on a when it’s gone it’s gone basis and very low prices compared to High Street stores. It’s a bit like TK Maxx but online and very low prices.
Web 3 is on the horizon & promises: 3D Portals Avatar representation Interoperable Profiles (the user interface will be determined by your personal profile) MUVE’s (Multi User Virtual Environments) - Virtual Worlds Integrated Gaming, Education & Business All media flows in and out of virtual worlds
The handset is very likely to play a major part in increasing online spend. As networks evolve to the new LTE standard and web sites are built for mobiles more and more, the interactivity and capability of the handset will come into it’s own. You’ll be able to take a photo of a barcode and have Google search for the product whilst you’re in the store so you don’t have to pay the retail price. it’ll also be your phone, camera, satnav, credit and debit card, Scenario 1 – driving along and Satnav suggests where to eat, even offers you money off vouchers? Scenario 2 – you’re in Currys, looking at a new TV and wonder if the price on display is good? You take a photo of the barcode with your handheld computer and Google searches for the product and offers you the opportunity to buy it from a list of other retailers, or second-hand from Ebay, or even direct from the Manufacturer for free delivery the next day. Scenario 3 – Your handheld is your ID card. The good news is that all the technology exists for us to do all these great things now, we the consumer are what’s holding it all back.
As with a lot of technology, Japan is showing the way forward and driving toward a Web3.0, Mobile Internet revolution.
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