HIGH NOON ON THE HIGH STREET

In this blog I revisit a favourite topic of mine: the future of the high street. In a previous blog (Time to Say Goodbye) I reflected on attempts by various individuals and organisations to revive the high street. The general thrust of this blog was that it was becoming increasingly difficult if not impossible to achieve this task.

Perhaps the most focused approach emanated from Mary Portas. She has established a reputation for flair and entrepreneurship in the retail sector and in the early part of this decade also achieved some fame as a TV personality, running her own programmes about analysing current retail businesses and providing advice as to how they might be turned around.

A natural follow-on from such programmes was an invitation to carry out an investigation and come up with a report on how the high street might be turned around.

The context for this initiative was clear. Since the 990’s and noughties, the high street appeared to be in irreversible decline. The inexorable growth of internet shopping clearly playing a significant part in this development. No longer did “time-poor” shoppers have to drag themselves with the same frequency as before, to physical shopping units in the high street. Instead of visiting shops during their lunch-time, they could place their orders from the comfort of their office, home or on their way into and from work.

The large retailers, across the different sectors: food, clothing, electronics, furniture, toys and so on, continued to beat the smaller shop on key factors such as price and range of merchandise. Put simply smaller shops, typically to be found on the high street could not cope very well with such threats, apart from offering a more personalised and intimate shopping experience. This advantage was in danger of being eroded further as lower prices continued to drive shoppers away from the high street to the internet and to out-of-town shopping centres.

A walk up and down the typical UK high street in any typical town or central business district area would typically identify the following characteristic. Betting shops, charity shops and boarded up, derelict outlets and a general atmosphere of poverty and hopelessness. This was the case a decade to fifteen years ago. I made the same walk around my high street recently and it is even more prevalent and hopeless. If anything it has got worse.

This is despite the fact that we are told the recession of 2009 is finally ebbing away and that more and more people are in gainful employment.

Mary Portas came up with a report which made a number of recommendations.

The government made available a sum of £1.2 million to spend on twelve towns in the UK in order to implement the initiatives proposed in her report. I go into more detail about some of these ideas in the earlier blog so I will avoid going over old ground.

Her main themes revolved around making the town centre / high street more attractive as a destination for people to visit and shop. Something akin to the Christmas markets (very popular in parts of Europe) was highlighted. This would allow interesting outlets and pop-up stands to emerge, selling unusual or “craft” oriented items.

She strongly recommended the abolition of parking charges. From her investigations she realised that a major “turn-off” for shoppers visiting town centres was: inadequate parking, exorbitant charges, the ever-presence of traffic wardens, only too happy to issue tickets and the reality that five minutes at most would be available to visit a shop and make a purchase in order to avoid a fine.

She argued for more realistic approaches to rents. Many landlords operated a policy of upward only rental agreements, in some cases annually. This made many rents unrealistic for small, independent retailers.

Business rates were also seen as being prohibitive.

The problem for small retailers was exacerbated by the arrival of the large retailers in the high street. Many actually launching new concepts which had the appearance of being independent retailers but were actually part of the major retailer’s operations. Such retailers could afford the rentals and this only served to push the costs higher and higher.

Five years or so on from this report and its recommendations what has happened?

The news, (if you are a supporter of high streets and their rejuvenation) is not at all positive.

Across the twelve towns which participated in the study, a net loss of around 969 outlets was recorded. This is graphic evidence that the initiatives introduced by Portas were ineffective.

In addition to the long recession and rental issues, other factors such as a rise in the living wage and spiralling property prices have made even large retailers such as Next struggle on the high street. They are forced to rethink their property portfolio in light of the increasing growth of online channels.

The major reason for the failure of the initiatives in my view has to be put down to a lack of commitment from the government. During this period they reviewed the business rates and this led to a substantial increase (for many retailers) in what they would have to pay. This attracted major criticism and the government attempted to “water down” the effect of this by allowing them to appeal. However as with most appeals, it became tangled up in bureaucracy and delays. The net effect is that some retailers could not absorb such increases – leading to more of them disappearing off the high street.

This lukewarm approach was also reflected in the attitude of government to doing away with parking charges. Instead they supported initiatives such as “ten minute grace periods” and a more lenient approach by local authorities of the towns. Of course in practice this had little effect. Local authorities have become increasingly dependent on income from such sources. Without adequate support from the national government it was never likely they would embrace such recommendations with enthusiasm.

The sum of £1.2 million was also in my view very little if some of the more ambitious elements of the Portas report were to be implemented. Even recruiting a sufficient number of retail experts (which was not feasible, given the budget) still meant that volunteers would still have to play a major role in implementing the initiatives.

So where does that leave us and more importantly the high street?

Some high streets have improved. Those that fall into this category have succeeded because of a partnership approach between all of the key stakeholders such as retailers, landlords, local authorities and developers. Treating the high street as a form of leisure destination is probably the way to go in the future.

We always say in marketing that any product has to have a point or a couple of points of differentiation. Otherwise why would anyone purchase such as product? Likewise with the high street. It has to offer something that is different from the value proposition that a shopper can experience on the internet or at an out-of-town shopping centre. Unusual craft and artisan type outlets in a pleasant setting (live music, eateries and coffee shops) can go some way to providing this different type of shopping experience.

Unless we see greater flexibility on the part of local councils we will not see much progress in these directions.

Politicians and local council members in my view have no understanding or appreciation of how small independent retailers operate. Their approach to business rates appears to reflect the view that this is a major source of revenue: it does not take into account the practical realities of having to deal with the harsh realities of spiralling costs in an environment which is ever more competitive. The opportunities for entrepreneur to make a living a sinking by the day.

While some exceptions will always occur, we have most probably seen the death of the high street.

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