‘Market Matters’ – August 2018
Consider the UK’s High Streets. Hard on the heels of House of Fraser’s announcement of dozens of closures and the rumours about Debenhams you could almost forget how long they’ve been a bad news story. It was back in 2012 the penny finally dropped they were in trouble and it couldn’t be blamed on the 2008 banking collapse or the previous Labour government. Grant Shapps MP, the keen young DCLG Housing and Local Government minister launched the ‘Portas pilot towns’ competition backed by David Cameron and Mary Portas banging on about Markets as the saviour of High Streets. But what happened then? Not much. The money and policy initiatives fizzled out as attention shifted to Brexit and Cameron and Shapps disappeared faster than a Blockbuster store.
The traditional heart of a town survives despite the oversupply of ‘Bricks ‘n Mortar’ retail and Landlords bleeding to death on empty rates.
And yet somehow the High Street still staggers along. The traditional heart of a town survives despite the oversupply of ‘Bricks ‘n Mortar’ retail and Landlords bleeding to death on empty rates. Here are a few Losers, Movers and Bruisers we’ve seen over the last few years….
The Losers:
Woolworths: Founded in 1909, 830 UK stores in 1995 then administration in 2008. What happened?
Our Price: Crashed out of Vinyl, DVD’s and Cassettes in 2004 thanks to online streaming. At about the same time Radio Rentals (remember them?) finally threw in the towel, followed by Blockbuster Video in 2013.
British Home Stores: Closed it’s 160 stores in 2016 amidst allegations that owner Philip Green starved it and the staff pension fund of investment. Well over half the former BHS stores still remain empty today.
Poundland: Owned by South African retail giant Steinhoff with 700 stores, many being former Woolworths units. Currently involved in a major accounting scandal – rather like Tesco 18 months ago.
New Look, Carpetright, Monsoon and Mothercare: planned closures announced.
The Movers:
Marks & Spencer: 280 stores in 1997 and now over 1,000 – shifted from fashions and clothing to luxury foods at edge of town locations.
Argos: 380 stores in 1996, now some 850 mainly at edge of town and retail park locations. Bought by Sainsbury and central to the Asda merger because of their excellent distribution network.
Currys/PC World/Carphone Warehouse: Merged then downsized and bailed out of the High Street to retail parks where they’re doing OK. Mind you Carphone Warehouse on the High Street is having a rough time with 100 closures expected.
Boots Chemists: More than doubled their town centre outlets from 1,000 in 1995 to 2,500 today by adding another 1,500 edge of towners.
The Bruisers:
Charity shops: over 11,000 in the UK at the last count. Welcomed with open arms by High Street Landlords desperate to avoid empty rates liability.
Coffee shops: Costa now have 2,200 stores across the UK. Don’t mention Starbucks, Vat and Corporation tax in the same sentence.
BooHoo: Doing very nicely online thank you amongst 16-30 year-olds thanks to no business rates and ‘Bricks ‘n Mortar’ overheads. A fine example of how to target a specific consumer group and their lifestyle.
Mergers, consolidation, moving online and relocating to the edge of town is THE pattern
What this shows is just how little sentiment there is amongst the big boys. Mergers, consolidation, moving online and relocating to the edge of town is THE pattern. According to the Centre for Retail Research the number of online retail sales as a proportion of total retail sales has risen from 2.5% in 2004 to 22% in 2018. That is a simply staggering growth rate and any retailer who ignores the trend is dead in the water.
So who will replace multiples on the High Street?
So who will replace multiples on the High Street? The Centre for Retail Research says don’t despair – it will become a social centre. It will shift from commerce to leisure with more space given over to restaurants, ‘artisan’ foodstores, health & beauty and ‘lifestyle’ outlets. Less errr…’glamorous’ locations such as Mudford-on-Sea will have to make do with Charity shops, bookmakers and vape stores. ‘Lifestyle’ retailers such as Joules and Ted Baker are doing well, but only in top 100 towns. Future casualties will to be shoes, household goods, furniture, textiles and music/games. Those offers are increasingly replaced with Amazon collection boxes.
E-commerce is like one of those creepy robot lawnmowers
The CRR also highlighted the rise in ‘Showroom’ and ‘Concept’ stores. These are sparsely-staffed display units which allow Customers a hands-on experience but retain the cost advantage of selling online. E-commerce is like one of those creepy robot lawnmowers – it works for you 24/7 whatever the weather and if you’re a home producer selling on Ebay or Etsy gives you a physical showcase for your products.
Dyson have just launched an Oxford Street demonstration store where you can test drive their vacuum cleaners and hairdryers, helped by charming young men who can’t do enough for their lady customers – or for the men either come to think of it. Note the cunning combination of hairstylist and vacuum cleaner salesperson. Wow.
You can’t underestimate how activity stimulates confidence
To attract leisure-users and investment High Streets need to differentiate– offer something which makes them more attractive than the High Street in the next town. The easy fix is to spend zillions on repaving and relighting but to my mind it is better to spend it encouraging small businesses. More rent and rates caps, pop-up shops in empty units, Town Council and landlord partnerships, events and Markets. You can’t underestimate how activity stimulates confidence. There are some towns where an energetic and innovative B.I.D or Town Centre Partnership is really making a difference.
Don’t feel you need to spend zillions on retail demand surveys
And finally, if you are a B.I.D. don’t feel you need to spend zillions on retail demand surveys. Henry Ford, the mastermind behind mass-produced automobiles was once asked what he thought about Customer research. He replied: “If I’d asked the public what they wanted they’d have said faster horses….’
