Obstacles that threaten the reinvention of the high street

There are a number of obstacles that threaten the development of the high street: business rates, parking availability, parking prices, bank lending stubbornness, supermarket dominance, opportunist landlords and even societal attitudes.

Obstacles that threaten

These have all come under scrutiny when attempting to pinpoint the problem that small, privately owned and family run high street businesses face in getting off the ground. The following are three key areas that must be addressed if the high street wants to remodel itself.

Tax avoidance

Last year it emerged that a number of multinationals had failed to pay the correct amount of corporation tax, in some cases for a number of years. Their argument was that they were not doing anything illegal. Technically, they are correct. But in terms of fair trade and ethical values, many of these multinationals have brought upon themselves irreparable damage to their brand which could prove costly, in the long run.

British Labour MP Margaret Hodge suggested that there was a danger of corporation tax becoming voluntary by saying “Multinationals are exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK”.

A public outcry prompted the government into taking action. According to Accounting Web, a clampdown by Her Majesty’s Revenue and Customs (HMRC), the British tax collection authority, promises to target 50,000 businesses which fail to submit their VAT returns by the end of the tax year.

Speaking at the World Economic Forum in Davos last week, British Prime Minister David Cameron strongly attacked companies that avoid paying their fair share of tax and who indulge in corrupt business practices in poor countries.

He said: “It’s a world where some companies navigate their way around legitimate tax systems – and even low tax rates – with an army of clever accountants. We need to lay down the rules of the game, and we need to be prepared to enforce them. Proper companies, proper taxes, proper rules.”

Not everyone is convinced by these measures. The War on Want charity which pursues fair tax regulations said, “Osborne and Cameron are happy to talk tough on tax. But, in reality, their plans will only go after the small fry while giving a green light to multinationals like Amazon, Google and Starbucks to continue avoiding billions in tax”.

What is evident is that for the high street to thrive, a fairer tax system needs to be implemented that helps rather than hinders small businesses. A culture of multinationals making billions in profit and paying not a penny in tax hurts the government’s tax kitty, the consumer and the high street.

Customer service and community spirit

The high street retailer needs to focus on playing to its strengths. Small businesses with high overheads cannot compete on a price basis with big brand retailers but it does have two advantages over them: the high street beats the online merchant for face to face customer service hands down. Being greeted with a friendly smile by your local greengrocer is much more gratifying than reading a monotonous “welcome back” message on a supermarket website.

The high street also benefits from the sort of ‘community spirit’ that a large out of town Retail Park cannot hope to offer. Using the local greengrocer analogy again, it is much more pleasing to have a familiar face who knows your tastes and preferences like the back of his hand than it is to ask a random assistant in a mega-sized supermarket for directions to a particular aisle.

The high street needs to re-engage the consumer with exceptional and friendly customer service.

Learn from the luxury sector

On a personal note, I come at this particular point from an unfair point of view. As a consumer, I’m often found in luxury shops that build the worth of its brand around excellent customer service. Going the extra mile towards making the customer feel more valued than the product they are buying.

Even so, every time I step into a Gucci shop at an airport, I might be treated to feel like a welcome customer but I am not recognised at each individual store in the same way I would be by my local high street retailers.

It is this level of personal service where the high street has real strength over its competitors, whether it is large shopping centres, mail order companies, online retailers or luxury shops. That communal spirit needs to be at the heart of the high street.

I experienced this first hand recently. In a local convenience store, I was standing behind one customer who asked the man behind the counter if they sold a particular brand of whiskey. The man furrowed his brow, darted his eyes up and down the whiskey bottles behind him and said “I’m sorry my friend, we don’t stock this, but I can order it for you if you like.” Giving the customer what they want. That’s about as genuine as customer service gets.

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