70,000 retail jobs were lost in the final months of 2018. This has been caused primarily by the recent and aggressive rise of online shopping according to The Guardian. Likewise, Deloitte claimed that by the end of 2018 e-commerce accounted for 20% of all retail sales and this is expected to continue to grow. This claim was based on data from the Office of National Statistics. The ONS figures show that the High Street suffered the biggest drop in sales since 2015 for Christmas of last year (2018) which should have been the busiest time of year. By contrast e-commerce sales had increased by over 20 % since the previous year.
The cost of running a store is becoming financially unviable and a major contributing factor to the decline of the High Street. The British Retail Consortium (BRC) wants to see an end to what they refer to as the ‘Business Rates burden’. To put in to perspective the cost that business rates have on High Street stores in comparison to online retailers, an investigation carried out by Altus Group revealed that Amazon pays £38 million in rates on its 189 sites across England and Wales. This figure sounds impressive; however, it is only £2 million greater than the yearly amount due from retailer House of Fraser’s 59 sites. This is despite Amazon boasting a nine billion pound per annum revenue which is over ten times that of House of Fraser’s annual income. Furthermore, it has emerged that online retailers such as Amazon, Shop Direct and Asos were enjoying tax cuts after the rates for their distribution centres declined whilst retail rates for high street stores increased.
Cas Paton, who is the managing director of the online marketplace ‘OnBuy.com’ has stated that for the High Street it’s a matter of adapt or die. She claimed that ‘People love the ease and confidence of selling and buying online now’… ‘shops on the high street need to adapt if they want to compete with online retailers and therefore survive in today’s digital age’. According to a report by PWC, ‘experience’ retailers such a beauty stores, specialty coffee shops and ice cream parlours which cannot be replaced by e-commerce are bucking the trend of decline with net increases in stores. Coffee shops had a 6% growth in 2015 and a predicted 26% increase by 2020. Likewise, female spending is up 19% and Male spending is up by 23% in beauty salons. As a result, 90% of salon owners were optimistic about business prospects in 2017.
Moreover, Peter Watson (MD of digital marketing agency Distract), has said that the Toys R’Us could have survived Amazon’s monopoly if it had repositioned itself as the prime location to visit, ‘experience’ and enjoy toys. The MD suggested that if the retailer had included entertainment sections within their stores such as a café for the parents and other activity or play areas for the children, then consumers would have been drawn to the Highstreet stores. Instead, the vendor branded itself only as a ‘place to buy toys’ putting them in direct competition with the much more convenient and accessible online rivals such as Amazon
The bottom line seems to be that the e-commerce is thriving whilst the High Street is learning to adapt. If the High Street can position itself as the place for consumers to visit for ‘experiences’ rather than shopping, there’s no reason why it can’t thrive alongside the online giants like Amazon who can’t offer ‘experiences’ . . . For now.
NR Insights 