High Street Cluedo

Every couple of months I come across an article about the receding British high street. Each article briefly touches upon various factors contributing to the decline of the high street. The usual reasons are; supressed consumer spending, competition from multi-channel retailers such as Tesco, high business rates and there is the odd mention of the internet. Throughout this blog I will investigate some of the reasons why I think the high street isn’t as successful as what it once was.

If you Google something along the lines of ‘fall of the UK high street’ you will be greeted with endless pages of articles and statistics for the last few years. If you don’t have time to rake through the plethora of results don’t worry because I have. Essentially the recession has not been kind to the British high street, not only SME’s but also larger chains of retailers. In the first 6 months of 2012, the high street saw 35 failed retailers, it doesn’t sound like a huge number but those 35 retailers had 3053 stores between them. Some of the stores we have lost so far in 2012 are Peacocks, Past Times and Julian Graves.

The number of retailers that went into administration peaked in 2008 and has fallen significantly since. The peak in 2008 coincides with when the UK went into recession, consumer confidence was low, banks started to tighten their lending criteria and redundancies followed. I’ve already talked about consumer spending in another blog: To spend or not to spend, that is the question? It goes without saying that the recession has impacted consumer spending, but they are still spending. Many would consider it foolish to think that the recession hasn’t had a negative impact on the high street, and I agree but I think there is more to it.

Another threat for the high street is the expanding portfolio of multi-channel retailer’s such as Tesco, Asda and Sainsbury’s to name a few. Not only were they responsible for endless closures of local convenience stores, butchers and grocers but over recent years they have continued to diversify their product offering. Who would have thought twenty years ago you would be able to book a holiday, buy a mobile phone, buy clothes or a car insurance policy through your local supermarket? A number of major supermarkets even have their own bank and one has recently announced they now offer mortgages. Not only have they extended their product ranges but also increased the number of stores in their portfolio.

Online shopping is having a major impact on the high street, and I think this is set to continue. Even the way in which we can buy online is evolving on almost a daily basis, gone are the days waiting for the dial up connection, to then lose the connection at the checkout stage. Now we can access our favorite stores on a multitude of devices such as mobiles and tablets, more importantly 24 hours a day, 7 days a week.

  • In 2011 online sales in the UK were £50.34 billion which accounted for 12% of UK retail trade.
  • 87% of internet users have brought something on line in the last 12 months (from February 2011)
  • Online spending exceeds that of any other European country.
  • Ofcom estimates that average online consumer spend is £1031

The internet hasn’t only increased the products we have access too but more importantly how consumers make their purchases. A company at the forefront of this change is Tesco. They have recently opened the UK’s first interactive virtual store at Gatwick. The virtual store will allow passengers to browse as they would in a physical store. Shoppers are able to order goods from the virtual store using barcode scanners on their smartphones, their shopping will then be delivered when they return from holiday. This may be new concept for the UK but it’s been in place in Korea for a year now, allowing commuters to shop in subways and at bus stops.

Amazon is another online retailer which is constantly revolutionising online shopping. You can buy practically anything on Amazon now. When they first started they connected retailers to buyers, but they encountered a few fulfillment problems. Back then if you purchased something through Amazon and the retailer failed to send the goods the consumer blamed Amazon for the missing items, even though the liability fell with the retailer and not Amazon. In order to protect their reputation Amazon opened their own fulfillment centres (they have 8 throughout the UK). Now if you order something via Amazon it is likely that the item has been dispatched from their fulfillment center and not directly from the retailer. It has also allowed Amazon to offer a same day delivery.

Most of us will be aware that a large proportion of consumers research items online prior to purchasing them in store. One retailer to take advantage of this is Argos with their click and collect service, you can browse and order products online and then pick them up in your chosen store.

In summary, there are a number of issues contributing to the failing British high and I don’t think we can pin point one particular reason. One thing is clear; in order for high street retailers to survive they need to develop their online presence/strategy. Companies such as Amazon and Tesco have set the bar so high in terms of their online services; other retailers need to attempt to catch up.

Do you have any examples of developing retailers? If so please leave a comment below or email me jodi.stuart@realradio.co.uk or tweet me @realradiojodi

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4 Comments

  1. realandsmoothscotland

     /  August 30, 2012

    Interesting blog. Makes you wonder what the look of the typical British High Street will be in 15-20 years time… a desolate Mad Max esque wasteland if the worst of the doom and gloom merchants are to be believed!

    Reply
    • Hi Keith, I’m guessing the ‘typical’ British high street won’t be as we currently know it! I love the idea of the Tesco virtual shopping though.

      Reply
  2. Hi Jodi,

    What about the high rents that internet shops don’t have, councils, HMRC and other services that bleed you dry and the poor British weather that we are having at the moment. As someone who runs a business on a high street these are more of a factor than Tesco.

    Kevin
    Liking the blogg if it get me to comment its provoking thought.

    Reply
    • Hi Kev, thank you for the comment. I think the high rents and other business ‘expenses’ could be covered in a different blog. Have you checked out Mary Portas website? If so, what do you think to what she’s doing?

      Reply

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