We still need vibrant high streets
DID you know the UK has become the third largest online retail market in the world? We are behind China and the US but way ahead of Japan, Germany and France.
And although we can’t know for certain, we probably have a higher proportion of retail sales online – at just under 20 per cent of all purchases excluding fuel – than any of our nearest rivals.
That makes us pioneers in a transformation of shopping that is as big as anything we will see in our lives.
It is as big as the switch from grocers to supermarkets from the 1950s onwards – the supermarket trolley with the hinged rear panel that enabled them to be stacked was patented in 1949 – or the rise and decline of the great department stores from the early 1900s to the 1980s.
What nobody knows yet is how far this revolution will run.
At the moment, the proportion of stuff bought online is rising by about 1 percentage point a year. So in ten years’ time it could be 30 per cent of total sales. But it may be speeding up.
Store closures hit a record in the first half of this year. If the rate of closures speeds up further it is quite plausible that in 20 years’ time more than half of all retail sales could be online.
If that proves right it will not be just our high streets that will be utterly different. Our whole way of life will be different too.
There are two main challenges here.
One is for retailers, who face decades of retrenchment. If even John Lewis is in trouble – which it is, judging by its decision to withhold 20 per cent of the service fees it pays to some of its landlords – it will be tough indeed for groups with a weaker reputation and less loyal customers. Yes, some will manage the shift to online, but not all will.
The other – and in a way bigger challenge – is how to reshape our high streets and out-of-town shopping malls.
At least in town centres, there is an underlying demand for space for housing and for the services that householders will always need in their daily lives. You can’t have your hair cut online. What you do with a fading shopping mall on the outskirts, however, is a trickier problem.
There is no magic wand here. But I would urge troubled towns to look at success stories: Margate has focused on attracting and promoting art, Hay-on-Wye has done similar with books and Salford with the media.
These towns have found there is, rather wonderfully, a stream of entrepreneurs who will take up a lease on an empty property and try to build a business there – if you encourage them.
Vibrant town centres are so important, but they will need all the help they can get. IT IS pretty hard to defend Donald Trump’s imposition of duties on a range of European products, ranging from Dutch cheese to Scotch whisky. The stock markets, in the US as well as in the UK and Europe, gave their verdict on that last week, and in a most brutal way. As has been obvious for some months, the world is heading into some sort of slowdown and ramping up the trade war will make a deeper dip than it otherwise would be.
This new attack wasn’t the only factor, but it was a trigger for wider fears. But there is a silver lining. Do we need to ship so much stuff around the world? Could we not produce more locally, and of higher quality too? At the top end, this is already happening. Louis Vuitton has just announced that it is opening another factory in France. Its chief executive, Michael Burke, says: ‘If we let the craftsmanship leave, I think it’s inevitable that the creativity in the sector will follow.’
Another example is English sparkling wine, now fully competitive with champagne – so much so that Taittinger has bought land in Kent to produce here.
The question is whether this trend will spread downwards. I think the answer is yes, for two reasons. One is that so much of the cost of producing anything is in design and marketing, rather than manufacturing. So why not build locally, even if it costs more? The other is concern about the environment. Hostility to complex supply chains and the throwaway culture can only rise. And not before time too.
The shift online presents challenges for retailers – and our town centres