The UK high street is challenged but online not only force to twist knife
As part of a series of posts focussing on the often misinterpreted impact of e-commerce on traditional high street stores and logistics sector, Stephen Springham, Head of Retail Research, challenges the populist view that online has supplanted store-based retail.
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As has been well-documented, the retail sector continues to undergo seismic change. This change is structural, as opposed to cyclical, meaning that the landscape is shifting, rather than merely undulating. Digital capability and the unrelenting rise of e-commerce / online shopping is unquestionably one of the key catalysts to this change.
E-commerce has prompted each and every retailer in the country to re-appraise their respective business models. Contrary to widespread belief, e-commerce is as much an opportunity for store-based retailers as it is a threat, although harnessing this is a perennial challenge. Retailing is neither bricks & mortar nor online, it is both – ‘multi-channel’ or ‘omni-channel’ are the prosaic buzzwords, but in essence, everything falls under the more mundane banner of ‘shopping’.
"“I’ve been in retail for 30 years. There has been more change in the last five years than in the previous 25 combined” – Andy Clarke"
_, Former President & CEO Asda
Within the wider retail eco-system, the supply chain process has risen up the agenda. E-commerce is asking questions of logistics and drawing up challenges that were not there before, particularly in terms of lead times and delivery frequency. The industrial warehousing sector is in many respects as embroiled in this structural change as its retail counterpart
E-commerce – the populist view is wrong
For all the column inches written on e-commerce, the concept is still woefully miss-understood. The populist view is that online has supplanted store-based retail and that consumer spend is increasingly gravitating away from the high street, shopping centres and retail parks.
In the face of this, traditional stores are increasingly redundant, hence waves of store closures, rising vacancy rates and a raft of retailer administrations and failures. If the rise of online is exponential, the decline of the high street is supposedly inexorable.
This view is as wrong as it is simplistic. The UK high street faces a multitude of challenges, but it would be short-sighted to lay blame for all the malaise at the door of online.
Many of the negative manifestations of these challenges are the result of more fundamental weaknesses, not least the fact that the UK retail market is overly-competitive and over-shopped. Many retailers are also guilty of over-expansion, having taken on too many sites in the ‘good times’.
Many outlets are over-rented – if not always in the strictest ERV sense, then on the basis that the retailer that occupies them is struggling to turn a profit. Many high streets, and indeed shopping centres, are also suffering from basic neglect, under-management and lack of investment.
The rise of e-commerce has not been directly responsible for this apparent distress. It is one of a number of forces that have conspired to undermine the weakest parts of the retail sector. This decline would have happened in any case, the rise of online has probably only accelerated the pace.
Online has not killed the high street any more than video has killed the radio star.
To discuss any of the issues raised in this article, please contact Head of Retail Research Stephen Springham or: