There seems to be no good news for the high street and retail, we have seen some heavy weights on the ropes and in administration the latest being HMV – but we are told that they will not be the last.
Multiple factors to blame
When it comes to blame most see the Internet as being the main culprit (See eBusiness Internet Sales Impact the High Street) , latest figures suggest that the UK spent 15% of all retail purchases on-line during December according to the latest figures, at the same time high street sales were dire contracting in real terms.
But this is in itself not the only factor that finally did for dear old Nipper the HMV dog, the management of HMV had made a series of poor decisions as to where the store should be experimenting with different ranges and retail environments. However they had resisted the on-line option – Amazon still sells a great many CDs and DVDs on-line and they also failed to batten down the hatches. Like many over the Christmas period I went in and purchased a CD from HMV [The Rolling Stones Grrrrrr – if you must know] and I was amazed at the size of the store and the volume of stock stacked everywhere, I am always shocked at how awful retail is, and clearly HMV was not giving its customers the best experience and that is something you cannot afford, Internet or no Internet.
High Street Prices
Another problem retail is facing is the cost of high street space – HMV had a very large footprint and to have that size the return per square meter has got to be there. Of course this is not only effecting HMV all retailers have their fixed costs such as rent and rates to pay and both seem to be on an escalator, in fact many retail premises have upwards only reviews – so store owners cannot negotiate their rent down. This not only cuts the profitability of the high street but makes out of town developments look even more attractive which takes some of the big names out of town a reduces the foot fall.
The Retail Experience
No matter what happens we will always want the shopping experience and there are plenty of examples of high streets that work with small boutique shops, markets and atmosphere – but this takes investment from all concerned. We are social animals and enjoy community, currently many high streets are not offering this, in fact some malls and out of town centres are doing better with pop up shops in the wide walkways events, markets and fairs as well – so it is possible. Too often the retail experience is not good with shops chaotic, crowded and good poorly displayed with too few staff to help – one of the things that has kept John Lewis at the top.
Robert Peston the BBCs economic correspondent made an interesting point, the string of failures we are seeing now are actually a good thing, echoing Schumpeters ‘Creative Destruction’ the new economy can only spring from the destruction of the old. Investors are actually pulling out of what is not working and will invest in new retail models. In the same way landlords will create new tenancies that reflect this new model – perhaps shorter, cheaper or linked to performance – who knows. Perhaps we will see high street premises split into lock up units or pop up spaces so a more flexible retail environment can foster the post Internet high street.