News that the government is focusing on revitalising Britain’s high streets comes as no surprise. With the increasing bite of the economic downturn, consumers are counting their pennies more than ever and are staying away from shops.
But while the business news tends to focus only on the sales and share prices of the listed retailers, the story of gloom reaches much further afield – specifically to the small provincial towns, where an increasing number of shop owners are shutting up for good and where the niche retailers are disappearing to be replaced by identikit chains.
The government’s sentiment is laudable but there is nothing new about the decline of the high street as a centre for the community (it probably goes back to the time when cars and fridges became cheap enough for the average family to buy, meaning that people did not need to buy food from small shopkeepers on a daily basis or purchase their clothes and other household goods from the nearest retailer).
The question is, should we look upon the decline of the high street as a commercial issue, a social issue or a mixture of both? From a social perspective, shopping is no longer just a functional experience that people need to go through.
Anyone who makes the trip to Westfield, in London, on a typical weekday will see that. Come rain or shine, people make the trek not only to shop, but to meet friends, have lunch, take their children to classes at the kids club, get their beauty treatments at the salons or watch a film.
And it’s all in one place, with acres of car parking space directly underneath. How can a small-town high street compete with that? Apart from saving niche shops from going out of business, one can understand why the government would like to return us to a bygone era when the high street was the social heart of a community as this certainly dovetails well with the coalition’s vision of “the Big Society”.
But what about the plight of the shop owner? From a purely commercial perspective, does it really matter if the high street does not have the pulling power it once used to?
Decline and fall
The growth of out-of-town shopping centres, mail order catalogues and the internet may have contributed to the high street’s decline but, from a business perspective, all three provide efficient channels through which retailers can reach their target markets.
As places like Westfield show, shopping centres can offer shoppers much more than just shops – they represent an attractive place for retailers to establish a presence. Businesses successfully harnessing the power of the internet are able to reach a larger audience in a far more cost-effective way than a retailer selling its wares through the high street alone.
And mail order catalogues still have a role to play in raising awareness of a retailer’s product offering, with catalogue sales invariably leading to spikes in online traffic as consumers read the catalogue and then visit the website to explore products further.
Ultimately, with the upwards-only rent review system, it is sometimes hard for smaller businesses to justify keeping a high street store open when it is not bringing in the cash and, in these markets, there is no shame in pulling out of a particular town if it is not working. The key point here is to do what is right for you.
The government is coming from a different, social perspective in seeking to address the decline of the high street and it is not wise or appropriate for shopkeepers to get sucked into that debate.
Smaller businesses must focus on the commercial factors affecting their business and, while some retailers will be able to adapt their offering and make the high street work for them, in some instances it may be more appropriate for retailers to pull out of the high street altogether and explore other routes to market.
This would clearly be a massive blow to those provincial towns that do not have a Westfield around the corner.
Similarly, for an older generation who are not used to shopping online, the slow decline of the high street is something that will disproportionately affect them. The government is right to look into ways of addressing the issues facing the high street.
Otherwise, in 20 years from now, we could find ourselves with high streets populated entirely by discount stores, charity shops and assorted fast-food chains, which would be a sorry state of affairs for a country once described by Napoleon as ‘a nation of shopkeepers’.
However, even if the era of a bustling high street full of people shopping in small, one-off stores is likely to be consigned to history in the long term, it is important to recognise that it no longer represents the only option for retailers.
Wol Kolade is managing partner of ISIS Equity Partners, having joined in 1993. His role encompasses overall responsibility for the strategic development of ISIS, and active involvement in investments. He was chairman of the BVCA in 2007/08, is a governor of the London School of Economics and Political Science, and is a trustee of the Guy’s and St Thomas’ Charity.