Where are all the local retailers going?

I have commented several times about London being a different country to the rest of the UK for a variety of reasons. The main one is the illusion that the world is a happy, prosperous place due to the concentration of wealth in the capital.

However out and about at the weekend we saw a sight I was very surprised to see when we stopped off at Barnes High Street. For those who don’t know the districts of London, Barnes is a well heeled leafy village like place just south of the Thames. The surprise was the number of empty shop premises. We saw at least 6 closed shops in the space of 100 yards or so which I found quite startling in an area that has a reputation for being upmarket and prosperous.

In recent times we have seen a number of well known retail names hit the buffers and I had assumed it was a consequence of less well off areas feeling the pinch and trade declining but Barnes doesn’t fit this (ill-informed) assumption. According to an article in The Times (6th June) the footfall in high streets has dropped nationally by nearly 13% year over year to April. Out of town and shopping centres are flat year over year so the high street looks like the big loser.

Also we have  had several conversations with estate agents recently and they all claim property values continue to increase bucking the national trend. According to a Knight Frank survey in the FT (7th June) Westminster in London has seen an 8.9% growth in property value during the same period. So a property worth £1m a year ago would now sell for about £1.1m, beats cash being left in the bank.

So on the one hand we have seen a -13% decline in high street footfall yet a +9% growth in property values in Westminster. So if the money is there to stimulate the property market why isn’t it converting in to the high street? Or is the bull market in London property confined to prime areas only? And/or do the minted elite shop only in equally elite retail emporiums?

One possible answer is that the impact of internet shopping. According to the Times article internet shopping now accounts for 8.5% of all retail sales values. Maybe the growth of buying on-line is slowly killing off certain kinds of retail businesses?

Guessing I would say the internet has been with us since around 1990′ish. The growth and influence has clearly been massive but where are we on the curve of development? 20%/40%/50%? Assuming one effect has been to see traditional local high streets suffer as consumers migrate to on-line buying the question must be how much further will this effect continue to grow? What would the high street look like in ten years if internet shopping’s share of all retail sales had risen to 30%? That’s devastation to the old order of things.

Our economy is like shifting sands becoming more and more mixed, less and less homogeneous.

This has big implications for the marketing community because it is dangerous to move forwards by looking through a rear view mirror. 20 years ago the economy moved up and down like the tide whereas now some go up and some go down – the problem is knowing who will do what when. Lee Manning, president of R3, the insolvency practitioners’ trade body said, “The internet is cannibalising ‘bricks and mortar’ retail, so retailers need to adapt their business to stay ahead of the curve.” This comment reinforces the need for the marketing community also to look forwards as routes to market will continue to change, cutting off historic channels.

One distribution idea that could emerge from these changes is collection centres replacing door to door delivery. So maybe a few of those empty retail premises in Barnes could become DHL Local, you get an alert on your mobile to let you know your CD’s from Amazon have arrived. Makes sense, more efficient, safer, and you still get an excuse to have a walk to the high street. They could also be places to send parcels, far better than standing in line at the Post Office. [The problem with the Post Office is all of the non-post stuff they have to do, it's not a great experience on any level. Again an out-dated operation in desperate need for modernisation.]

As a post script I see many conferences dedicated to social media but none about the changing landscape of retail channels, maybe I’ve missed them, however given the visible impact on our high streets the ripples of influence will impact across a wide range of those involved in marketing in many sectors.

Image: http://www.flickr.com/photos/beglen/6090267236

 

 


4 Responses to Where are all the local retailers going?

  1. joel says:

    I think you are wrong about the collection site idea, people like stuff showing up at their door, an in an affluent area time is more valuable than a few dollars saved.
    I live in Manhattan, every day dozens of parcels from Amazon, Zappos, and netflix are deposited in my lobby.

    The real issue is that most luxury stores aren’t really luxurious anymore. The question any high street vendor needs to ask is what are they offering in goods and service that makes a more compelling reason for shopping in person than shopping on-line.
    In the old days you shopped locally because there was no alternative. Now a store selling high end goods either has something so unique that they have the margins to offer service and they also deliver the service that makes people want to shop at their store in person. Or the customer will get the same product on-line for a lot less, at more conveniently.

    I shop at Zappos because the shoes arrive the next day, I can easily return them, and when I shop in person I get a salesman who rarely knows the product line, has no interest in helping me, and I have to physically go to the store. Why would I waste my time going to the store?

    I would suggest that the landlords of those vacant stores look for small craft operations selling interesting stuff they made, people like dealing with a maker in person even if the maker sells on-line. or YACS (yet another coffee shop)
    joel

    • Paul Simons says:

      Thanks Joel for your fast response. I wasn’t being literal, more about what are the likely options in the future. In the UK the demise of the ‘high street’ is quite sudden and I agree with your reasons, same here.
      I just pose the question that people running some of the high street chains are getting ambushed by change they should be seeing coming. Thanks again for taking the time.

      Paul.

  2. rob says:

    paul, very interesting blog post as always. read this recently in the economist and paints an interesting picture of how ecommerce might grow over the next few years (the chart isn’t all ecommerce but it makes up a large part of it)- it doesn’t bode well for the high st.
    http://www.economist.com/blogs/graphicdetail/2012/04/daily-chart-2?page=2

    also noticed this the other day in a shopping center on the finchley rd, amazon delivery boxes that you unlock with a keycode that they give you – http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200742950

    • Paul Simons says:

      Cheers Rob, I’ll have a read of the article. Retail isn’t my area in truth but I think it is more about reality than the macro stuff we hear and read about. Empty shops are a very clear signal of harsh times.

      Paul.

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