Stores are dying. In the UK one in seven traditional 'High Street' shops is closed(High Street being the equivalent of Main Street in the US). In the US, malls have unprecedented vacancies and some malls are closing. Though it is easy to blame this on the growth of internet shopping, the reasons are more complex: household income decline for over a generation, an ageing population whose needs are not always reflected in the current retail mix, the growth of passtimes other than shopping.
In addition, as Alan Mitchell comments in Brand Republic (hat tip Thierry de Baillon), many retailers have forgotten that their key element of differentiation is service. As he points out, there are some products that can be digitized. But there are some for which feel, smell - and cost, demand physical presence and the helpful assistance of someone who knows the product - and possibly even your name. JL:
"When I wrote ‘Right Side Up’ ten years ago a BBC reporter asked me ‘does that mean the end of the high street?’ I ummed, erred and fluffed, not wanting to say what I should have said: ‘Yes. As we know it’.
Today’s high street is in crisis. One in seven shops are vacant with the Government tapping Mary Portas on the shoulder for advice on how to save them. Mothercare is just the latest of a long list of stores announcing partial or complete closures. So is there a future for the high street and if so, what is it?
The answer lies in the context of the evolution of retailing, which is entering a new phase. Here’s a broad view of the evolution of retailing.
Gaining critical mass
Before the twentieth century ‘the shop’ was a marginal player in commerce. Most people relied on mixture of MIY (make it yourself – food, clothes, furniture, entertainment), the weekly market, itinerant peddlers, and annual fairs for big ticket items.
To establish themselves as the main focal point of exchange, a number of ducks had to line up for the shop, including urbanisation (high concentrations of footfall, workers paid in cash), transport infrastructure (secure, efficient delivery of supplies), plus retail innovations like fixed, displayed prices (so that shoppers weren’t intimidated by the prospect of not being able to pay).
Critical mass to hegemony
The shop triumphed as a mom-and-pop affair. The next phase of retail was the arrival of chains driven by further confluence of factors such as supply chain efficiencies from distribution depots, the development of transferable retail skills (formats, ranges, merchandising), buying power, plus further retail innovations such as self-service. These factors initiated the age of the retailer as the gateway to customers – the era of ‘retailer power’. They also instigated a proliferation of new retail formats, many of them out-of-town and unable to flourish within traditional High Street constraints.
Retailing triumphed by merging three critical functions into one seamless offering. There were: secure and efficient points of payment (the till/check-out); a logistics staging point (retailer delivers to store, shoppers takes away from store); and a source of decision-making information (going window shopping, inspecting items competing on the shelf).
Now, however, the Internet has unbundled that triumvirate. You can pay online using plastic; the payment point can be separated from logistics (which can be handled by a third party logistics provider) with different staging points – direct to consumer’s home. Plus, there’s the ability to search and research online separately from the store.
In other words, the shop is being unbundled and out-competed: staffing, stocking and supplying physical distribution outlets is eye-wateringly expensive compared to the new distribution/sales business models that are emerging.
Digging deeper into this, the very notion of ‘retailing’ – of someone buying up loads of stock and then re-selling it – is potentially questionable in the emerging era. What about new forms of marketplace where buyer meets seller without any re-selling (where the sale happens when an order is made) or even more innovative, where customers effectively club together to sponsor particular suppliers, as Rowan Gormley is now trying to do with wine? Even if, still, the vast majority of goods are sold by volume in shops, a declining proportion is now sold on high streets, and the growth has moved elsewhere.
Is the high street dying?
Does that mean ‘the death of the high street’? Actually, I don’t think so. I think it means the death of a particular vision of the high street – as a place where something called ‘retailing’ happens.
In fact, what happens on the high street is service. Any retailing that happens is a byproduct of the service. One of the sillier bits of Internet hype was the thesis of total, rampant globalisation; “your competition is only one click away from some lean, hungry start-up in China”. It’s true (partially) for some physical products. But as people like Tom Stewart and Paul Krugman have pointed out, vast swathes of the global economy are inherently and (for now) unchangingly local – because they are basically driven by touch. If you want to smell a rose, kiss your loved one, drink a pint of beer, eat a sandwich, have your hair cut or get a manicure, you have to be within touching distance.
If you look down your local high street that’s what you’ll find – touch-driven businesses: pubs, restaurants, fast food outlets, hairdressers, convenience stores (providing immediate access to products), banks and estate agents and betting shops (now also in decline because of competition from the internet).
This is the new fault-line in all ‘touchpoints’: between those sources of value that can be digitised and those that cannot – where ‘touch’ literally matters. Seen in this way, there could be a flourishing for our high streets, involving a vast range of different players (including for example, local councils as service suppliers). It’s just not helpful any more to see the problem through the lens of ‘retailing’.
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