The internet, recession and regulation have all had a telling impact on our high streets. But, far from being dead, Britain’s treasures are changing at a considerable pace. The entrepreneur’s task is simply to keep up
At the economy’s lowest ebb in recent years, 32 shops were closing a day in Brighton alone. Without a doubt, boarded-up windows provided a stark visual reminder of how bad things had got. The sight of a Woolworths, Barratts or Blockbuster becoming nothing more than an empty shell will stick long in the memory.
Of course, a lot of the heartache has been felt by the smallest of businesses – the local family-run enterprises that have struggled to survive the harsh trading conditions – but the demise of more established retailers has driven the reality home.
And, alongside the recession is something that has triggered a changing of the tide. It will come as little surprise to learn that e-commerce will soon account for more than 20% of British retail sales. Technology has advanced at such a rate in the last decade that some firms have been unable to keep up.
“If you take a look at Blockbuster, there have been new companies coming into the marketplace who probably had lower start-up costs as a result of not having to have a high-street retail presence,” says Richard Jones, vice president of national accounts at Groupon UK & Ireland. “But equally, perhaps if Blockbuster had been more forward-thinking, it would have recognised that it needed to challenge these newcomers with its own online presence because at the end of the day, it had the database of customers, it had the brand, and it is clear that it failed to leverage that.”
The high street, it is said, has suffered a double blow and an even more damning declaration has been heard in some quarters: the high street is dead.
But the basis for such a conclusion depends heavily on one’s definition of the high street. Indeed, it appears that those who believe the high street to be on its last legs see it as the domain of retail; a place for window shopping, snaring a bargain and stocking up on essentials. Indeed, the disappearance of the retailers listed above may go some way to supporting their claim.
However, the overwhelming feeling is that there is still a future for the high street – and a bright one at that. It may just be that retail isn’t as prominent there as it once was. “It is inevitable that we will see some movement away from the high street just being known as a retail space,” says Tim Denison, director of retail intelligence at expert body Ipsos Retail Performance. “In the future, it will just be part of the mix.”
Indeed, the rampant development of town centre residential spaces and leisure clubs show that this is already starting to take hold, and the food service and hospitality sector will only get stronger.
Nevertheless, even where retail is concerned, the word on most people’s lips is evolution. The high street is not dying; it is changing. The factor that has probably caught many businesses off guard is quite simply the rate of that change.
Still, it is becoming apparent that the opportunities for enterprise are nothing if not positive and online appears to be a key player in this, not a threat as many have suggested. From the multitude of mobile apps attempting to draw people towards the high street, and the rise of websites like Groupon, the internet looks set to revolutionise the way we operate in the offline world.
“It is evolving but that evolution has come at a really rapid pace,” says Martin Blackwell, chief executive of the Association of Town Centre Management. “But if you look at some of the rhetoric a year ago that said ‘the internet is going to kill the high street’, the same rhetoric now says ‘the smartphone is going to save the high street’.”
Clearly, there is an onus on businesses of all size to match their high street presence with a compelling proposition online. “The most successful retailers of the future will be multi-channel businesses, those that do have stores and a credible online presence,” says Bryan Roberts, retail insights director for Kantar Retail EMEA. “It is no surprise that John Lewis for example has been so successful because it has succeeded tremendously at joining together its in-store and online offer in a very compelling fashion.”
And a host of companies are looking to follow in John Lewis’s footsteps. Argos, for instance, is starting to roll out a click-and-collect service to accompany and enhance its physical stores, of which there will be less. “What Argos did is accept that there are companies like Amazon, however there is a still a need for people to come onto the high street and spend,” says Emma Jones, founder of business network Enterprise Nation. “But it has also realised quite quickly that it should reduce its property portfolio. It blended improving the online experience with a reduced number of shops.”
On the flipside, Amazon is beginning to see the value of having a presence in the real world, not least because Argos also aligned itself with eBay as part of its click-and-collect drive, if only on a trial basis. “The big weakness that Amazon has is that lack of physical presence and it is trying to remedy that through the opening of lockers and Connect Plus locations,” Roberts adds. Elsewhere, Holland & Barrett is set to double its store numbers over the course of the next year in a show of the support for the high street, whilst still giving consumers an option to shop online should they so wish.
It’s not all doom and gloom then; there is still very much a place for the high street. Consumers in particular don’t want to see its demise, if a recent piece of research from Groupon and Kantar is anything to go by. Based on a survey of 2,000 shoppers, The Future of the Great British High Street: Voice of the Consumer report revealed that 42% of consumers do like the convenience of online shopping, but 58% still prefer the in-store experience. It adds that a more tailored customer service will continue to give high-street stores the edge over online, with a further 46% saying they would like high street businesses to know who they are and what they want.
Of course, there is still room for considerable profits to be made in the offline world. Even if it was driven by an unprecedented wave of pre-Xmas sales, the £1bn spent by high street shoppers during the festive period was a very encouraging sign. The UK’s first ever Small Business Saturday also helped in this regard, with local businesses experiencing some much welcome footfall at a time that they needed it most.
However, there is still a sense that the very role of the high street and its individual parts is undergoing a revolution. Experience and innovation are becoming an essential component of its offering, and it is also serving as a testing ground for aspiring entrepreneurs. The pop-up phenomenon cannot be ignored, and Jones is undeniably its biggest champion. “If anyone comes to me and says they want to launch a high-street brand, I always advise them to try a pop-up first because it is a great way to test the market, experiment, meet customers and do it on a low-cost, low-risk basis,” she says. “Out of the 320+ tenants we have had in our pop-up shop, just under 20% of them now are looking to go into full-time physical space which I think is fantastic.”
Another trend has also emerged as a result of the steady rise of e-commerce. Aside from being mere testing grounds, firms are also going the extra mile to give people a reason to amble into their outlets. “For the successful businesses, the buzzword is ‘experiential’ and making it an experience to be in the store,” explains Dan Morgan, policy adviser at the British Retail Consortium. “So obviously a lot more investment is going into flagship stores. They look a lot better than they did a few years ago; they are a lot more exciting places to be, but obviously there are fewer of them, so the role of the store is definitely changing given that more and more sales are going online.”
The change that is taking place is unavoidable and exciting in equal measure. However, the fact remains that empty premises act as a blot on the landscape and there is a lingering sentiment that more support is needed for entrepreneurs to have a realistic shot at high street success. The government has recognised this, taking on board the recommendations put forward by Mary Portas and establishing a Future High Streets Forum to take advice on how town centres can adapt and maintain their place in British society. But, whilst business rate hikes are to be capped at 2%, the system still doesn’t sit well with the majority. “Business rates are dependent on the property in which a business is trading; they don’t give any recognition to the turnover it is generating,” says Jones. “The government could go further in coming up with something that is a little bit more creative in how it rewards small businesses.”
Local councils have also come under fire for the parking charges that have driven people away from high streets towards out-of-town retail parks and in some instances for their failure to come up with a real action plan for the future of town centres. Denison offers some practical advice in this regard. “If you have got too many unused retail units, you need to create multi-purpose spaces,” he says. “That’s not just shops, but some offices, some housing, some social space – libraries, welfare offices, restaurants and coffee shops – so that it is a far more complex but rounded offer on the high street. It is happening in some places and not happening quite as the residents would have liked in others.”
Our high streets may not be the pockets of individual treasures they once were but there is still considerable room for entrepreneurs to come and stamp their mark. To a large extent, they are the key ingredient when it comes to shaping and securing the future of one of Britain’s most cherished institutions. Denison concludes: “I think they are probably in the best place to make it happen.”
A tasty little niche
With retail slowly taking a step back from the high street, the food service sector continues to thrive. However, with the larger restaurant chains expanding at a rapid pace, new entrants to the market have to do something unique to stand out from the crowd. Thai tapas concept Giggling Squid is certainly making a name for itself in this regard. Launched in Hove, East Sussex in 2009, the company is set to open another seven to eight sites in 2014, to add to its existing portfolio of nine, and is looking to take the estate to between 50 and 70 sites in the next five to seven years.
“There is a definitely a need for a high-quality, reasonably priced, more contemporary Thai restaurant operator which is what we are trying to be,” says co-owner Andy Laurilland. “A lot of Thai restaurants are quite traditional so we are trying to do something different in the sector.”
Laurilland believes the future is bright for the high street but adds that businesses need a little extra help along the way. “I think there are huge opportunities on the high street for a brand or a concept. The things that are potentially getting in the way of it are councils just not catching up in time,” he says. “Entrepreneurs absolutely drive change and innovation in the high street and the spare capacity could only unleash a wave of new ideas of what can be done with the space.”
Bucking the trend
Given how easy it is to book a holiday online nowadays, one could be forgiven for wondering what the future holds for the traditional high street travel agency. Nevertheless, as far as Glasgow-based Barrhead Travel is concerned, it still plays a very important role. The company has rolled out around 15 new high street stores in the last 18 months and upgraded several stores to larger premises, creating around 100 new jobs and investing more than £800,000 in 50 modern apprentices.
“We decided about five or six years ago that although we have a strong presence online, we should really position the company to be selling products where people are not comfortable booking on the internet,” says Bill Munro, founder and chairman of Barrhead. “We are chasing a quality market where people want to be absolutely sure that where they are going will meet with all their requirements, and they are required to speak to somebody in order to get that.”
Selecting the best sites has been no easy task for Barrhead, but Munro says there is plenty of opportunity to be had. “Some high street locations are unfortunately dying a death for a variety of reasons but the places that we have our shops include disused petrol stations to where people can actually drive and park free of charge,” says Munro. “We are operating through about 55 high street locations and to us, a shop in a good location is still extremely profitable and very worthwhile.”
Barrhead also tries to set itself from the crowd with some imaginative interior designs, as demonstrated below. “Visually, it has got to be different,” adds Munro. “When people walk in, they have got to think ‘my goodness, is this a travel agent?’”