In a previous article “Burberry’s digital make-over leads the change in bringing the consumer back to the high-street”, I touched upon the decline of the high street and how technology could play a big role in its revival. Following the announcement in the first few weeks of the New Year that three of the biggest names in retail are going into administration namely, Jessops, Blockbuster and HMV, I want to examine whether this is as bad for the high street as many are making out.
There are currently three main retail models, namely: eCommerce, large out of town shopping centres and the high street. The roles of each of these have shifted dramatically in recent decades. If you go way back, the high street was more about having a social purpose for the local community. There was a time when you could visit the nearby shoe store, barber or music shop and you and the owner were on a first name basis. That all changed when the big names in retail came steamrolling into town.
In an attempt to survive the threat posed by big franchise retailers, local business owners made the mistake of trying to compete directly on a product basis. By selling identical items at inflated prices to cover the costs of their overheads, local businesses were doomed to failure. Additionally, there was a shift in consumer attitudes where low prices took precedent over customer service and to a varying degree, product quality. Over a number of years, this completely changed the face of the high street.
The irony of all this is that now eCommerce is having that same impact on big brand franchises that they once exerted over small local business owners and is once again having a huge impact on consumers.
It came as no surprise that any of the aforementioned companies (Jessops, HMV and Blockbusters) had plunged into bankruptcy as they have been following an obsolete business model for a number of years. All three appeared to be in a state of denial about the changes that were being affected by eCommerce and there appeared to be no new strategy to cope with declining sales.
These three along with last year’s casualties GAME and Comet are all home entertainment/electronic gadget retailers. The internet has made the requirement of physical stores for these particular goods redundant. Electronics can be purchased online for a fraction of the cost of buying them in-store and the internet has produced a wealth of options for accessing home entertainment from the comfort of your sofa. You can stream films and television programmes online, download games directly to your console or smartphone, music to your computer and books to your e-reader.
eCommerce has impacted which kinds of physical stores are necessary, but it has not, as many sources like to dramatically suggest, killed the high street. In fact, eCommerce could be heralded as restoring a bit of much-needed balance. There are still a number of areas where eCommerce cannot compete. You cannot order a latte over the internet, or get a haircut online and while you might be able to surf the web, the only way you’re going to be able to enjoy a swim is by visiting the local swimming pool and throwing yourself into it. What this means is that whilst home entertainment/electronics stores have been shutting up shop, that vacant retail space in the large out of two malls have been replaced by a more communally vibrant series of expanding fashion chains, gyms and restaurants.
The gaps left on the high street, however, have largely remained unfilled. This is because big name brand retailers are happy to have a presence in large cities and shopping centres where consumers flock. The aggressive expansion by these chains to the high streets no longer makes business sense where overheads outweigh profit.
How does a big brand exodus from the high street help its survival? By moving the big boys out of the local community, rent prices crash and there is both room and opportunity for small business owners to re-emerge.
This will be welcomed by consumers for the simple reason that it gives them more choice. Those tired of the bland and dissatisfying experience of shopping in soulless one-size-fits-all supermarkets will now have eCommerce, home entertainment, big brand retailers in major malls and cities and independent business owners/boutiques on the high street.
Not only does this create diversity but it helps to restore local communities and social values. That old chestnut “you don’t know what you’ve got until it’s gone”, applies to the growing resentment of consumers who are disillusioned by the apathetic approach to customer care by supermarkets and who yearn for a return to good old-fashioned days when local business owners were doing more than just people trying to squeeze money out of them.
This isn’t to say that a high street revival is inevitable, far from it, but all the signs are there for an opportunity to reshape and restore a high street that works for and serves the local community.