Posts in August
Reports in daily newspapers (Daily Telegraph 05-08-13) that the planning minister Nick Boles is to grant local authorities greater freedom to convert stores into private housing may be exaggerated but they have resulted in some commentators expressing concerns that High Streets are to be sacrificed. I share concerns that High Streets, especially historic ones, should be treated sympathetically, but I don’t think we should preserve them in aspic. Neither should we jump to the conclusion that traditional town centres will be the only ones to come under pressure to adapt. Let’s look out of town too!
In a previous post – Better Shops not More Shops – I made the case for a more strategic approach to planning our retail landscape. I also cited some examples of shopping areas in Oxford which would benefit from conversion to housing rather than expansion for retail. And I still maintain, as many others do, that we have too many shops that were built in the last decade or so to satisfy an overheated property market or the expansionist ambitions of the retail titans. The internet, the economy, and increased focus on localism means that we no longer need out of town ‘super stores’ – the very term sounds old fashioned – and far too much speculatively built space is struggling to find tenants and pay its way.
An admission that the days of the retail behemoth are numbered comes from Tesco in an interview last month with The Grocer magazine in which the company sets out its plans to re-invigorate the tired ‘hypermarket’ formula. Its first attempt comes in the form of its refurbished Tesco Extra store in Watford which wants to re-create a ‘community’ feel. But, notwithstanding Tesco’s efforts, if the old model is failing, doesn’t it make more sense for society to put this land to better use? Why not convert these sites – already tainted by development – to housing rather than let speculative developers rip up more countryside to build the houses we are said to need. And while we’re at it let’s turn our attention to unwanted offices too!
That was the headline on a recent online discussion in which I played a very minor part. The heated debate that ensued was based around a recent survey of 2,045 book buyers by The Booksellers Association. It found that 63.5% of shoppers browse in a bookshop and then buy online. Of that number, 75.9% were unsurprisingly 16-24 year olds and 51.7% were aged 55 and older. More surprising was their attitude towards show-rooming: the younger group (60%) felt more guilty than the older group (39.6%) about the practice.
The discussion that followed got me thinking. Is show-rooming a really a problem for retailers? If so, how should they combat it, and are there any fundamental changes that they must embrace to stay in business? Isn’t the real challenge with show-rooming the fact that technology is empowering both the customer and the manufacturer – at the expense of the retailer? As a customer, I can find the product I want, go and see it in a shop to check that it matches my expectations, and then find the right price and delivery offer for me! For some that means the internet is less an economic engine of growth, more a rush to the lowest common denominator. Its super efficiency results in low prices, low asset values, low employment and low tax. It may be inevitable but is it ultimately positive or negative for retail? And how do we level the playing field?
On one side of the debate stand those who believe it is down to retailers to develop better outlets, better technology, and enriched content. Be this by taking a ‘curatorial’ approach to stock; editing choice and enhancing brand values; or enriching the offer by offering expertise and service above and beyond the call of duty. However, some think that helpful and knowledgeable staff are actually part of the problem and have already hastened the demise of some traditional retailers. As evidence they quote the case of HMV and Jessop’s – the two best trained, most passionate workforces on the high-street – who spent ages helping customers identify their perfect product, only to see them buy it cheaper on Amazon.
Then there are those that want to level the financial playing field by forcing landlords to charge less for retail space; by imposing an online sales tax; or even – as in one Australian example – charging customers to cross the threshold! There are problems with each approach. First, you’ve got to be über cool and confident to levy casual browsers. Secondly, landlords are engaged in a struggle to the death with their financiers over asset to loan values and both would rather have space stand empty than reduce rents. And lastly, the offer by certain retailers to pay an online sales tax on their own businesses isn’t a ‘generous’ offer to pay more, but a tactic to secure a relaxation of tax on the high street! But isn’t this just worrying about the symptoms without trying to diagnose the underlying illness?
So what’s to be done? First things first, why differentiate between online and traditional retail – it’s all just shopping – so why can’t we utilise both to enrich the customer experience and make profit? It’s not that much of a paradigm shift is it? Can’t we revise the old business model, look at its component parts, eliminating the unnecessary, and invest in the rest? As you know from previous articles, I’m a fan of click and collect and think that under certain circumstances – when goods are needed in a hurry, or like jewellery, where customers want the reassurance of bricks and mortar before they part with their money – it can be a godsend. I also see the value in offering things that competitors simply can’t? Just like the jewellers I’ve described in previous articles, whose brand is all about designing and personalising individual products.
Apple wouldn’t be investing so heavily in Apple stores if there wasn’t something in this model. Without the link to customers – and the chance to build and reinforce the brand by imparting knowledge and expertise – would the iPhone, iPad, and iPod be so big. So, while manufacturers think they don’t need retailers to get their goods to market anymore, isn’t it really the case that retailers often add the magic to some pretty indifferent products? Why should retailers warehouse them for ungrateful manufacturers? Isn’t it time both sides realised that they are locked in a symbiotic relationship where both feed off each other. The retail environment builds the excitement, glamour, and electricity around what are otherwise inanimate boxes; for the internet to force shop closures would be a Pyrrhic victory.
Take another example. It would appear counter intuitive for Amazon to partner with Waterstone’s, but they are canny enough to realise that physical bookshops fuel the desire for books – electronic or otherwise – offer the possibility of serendipitous discovery, scholarship, whatever, in a way that a website can’t – and so they need bookshops to stimulate an interest in books! The challenge for the bookseller / retailer is to monetise that relationship.
And as if to prove my point, last month the online diamond jewellery and loose stone retailer 77 Diamonds was promoting the demise of Hatton Garden with headlines including ‘Jewellers shut as buyers prefer online links.’ This month it is reported that they have relocated their head office and showroom to a 1000 sq ft space in London’s Mayfair to seamlessly merge its online and showroom shopping experience! Not so much a revolution – more a continuous evolution!