SECTOR FOCUS /Retail

The return of the high street

Illustration by Grace Helmer

The return of the high street

Big chains and department stores may be leaving in droves, but it's not all doom and gloom for Britain’s town centres, says James Ashton

When John Lewis announced plans to double the size of its business just over a decade ago, the expansion made eminent sense. Back in 2007, the department store favourite served Britain’s middle classes with dependable furniture and fashion from only 26 outlets nationwide. For many shoppers it was too far to drive to one or a treat reserved for Christmas shopping and the sales.

Fast forward to 2018 and the distinctive green-and-white John Lewis fascia has popped up everywhere from Leeds to Chelmsford in Essex. The format remains reassuringly familiar, but the retail landscape in those intervening years has been shaken by changing consumer tastes and the impact of technology. Ahead of the opening of her 50th store, John Lewis boss Paula Nickolds was forced to claim there was “still a role for shops”. You suspect her business will be fine – just – but what the future holds for the high street is anyone’s guess.

Consumers only have to walk down their nearest shopping thoroughfare to see what is going on. Boarded-up units, closing-down sales: the shop used to be a vital window for retailers’ wares but now it is often an unjustifiable cost when so much commerce has shifted to the internet. Online shopping has been the biggest trend to catch a host of well-worn names napping, including BHS, Toys R Us, Austin Reed and – disappearing a decade ago this Christmas – Woolworths. In the last 12 months, the Centre for Retail Research counts that 23 retailers have gone out of business, affecting almost 21,000 staff and 1,851 stores – the largest number since 2013. Many brands that battle on do so with a reduced number of stores. New Look, Carpetright, Mothercare and House of Fraser have recently got that shrinking feeling. They are racing to rebalance themselves. With almost one pound in five spent online in the UK, it is much more important to have a high-tech warehouse that can dispense goods in one-hour delivery windows than yet another flagship store. So-called phygital (physical and digital) or omni-channel retail are the ghastly buzzwords for today. They act as a reminder that what remains paramount is giving the customer what they want, no matter how they choose to shop. But it does not solve the problem of what role the high street should play in this new world order where footfall is falling and shopping malls offer an all-weather alternative.

Rising overheads

The return of the high street

Figures from business research analysts LDC's Retail and Leisure Trends Reports 2017/18 show that the number of independent outlets has risen all over England in every region during the past year, while chain stores have declined.

The simple act of running a high street shop has become tougher because of internet competition, but also costlier at a time when Amazon and friends are busy undercutting. The minimum wage has made staff more expensive. A bigger problem is business rates, where calls for reform have fallen on deaf ears over several years. The £28bn tax is too lucrative for government to tinker with even though its levy on the physical stock of property – regardless of how efficiently those bricks and mortar are used or how much revenue is generated – appears arcane in a digital age when all businesses are being encouraged to focus on productivity. The Chancellor, Philip Hammond, brought forward a switch from the Retail Price Index to the Consumer Price Index to measure rates. That will save UK retailers more than £2bn over five years, but it does little to rebalance the playing field versus those new-wave retailers that operate only a handful of out-of-town fulfilment centres.

And it is easier than ever to give up on stores. Company Voluntary Arrangements (CVAs) have become commonplace for chains in a rush to downsize their estates.

High streets must make themselves over as destinations and become places where people want to spend time

The veiled threat to landlords is: let us extract ourselves from loss-making leases and fix deep discounts on our remaining rental costs or we will have to shut up shop completely. Even the Holy Trinity of pound shops, coffee shops and charity shops that have populated high streets over the last decade are showing signs of strain as Poundworld announced the closure of its remaining 190 stores.

However, many high streets are finding their own way forward. First of all, there are chains bucking the trend and expanding as property costs are driven down. Sports Direct is buying freeholds when many retailers are desperate to give up onerous leases. Joe & The Juice is another notable chain expanding fast, regardless of concerns that UK shoppers cannot possibly take another caffeine hit. Stationer WH Smith is holding firm on 600 UK high streets and has taken the local Post Office in-store in many towns and villages. And Boots remains convinced that its place dispensing medicine and advice remains at the heart of local communities. Meanwhile, Waterstones returned to profit after cutting middle managers from the business and investing in better lighting so shoppers were encouraged to browse the bookseller for longer.

The shift to leisure

There is a changing focus, from pure retail to leisure. Pubs, banks and travel agents are contracting, according to the Local Data Company, while barbers, gyms and pizza takeaways are on the rise. This trend is not without trauma. Witness the contraction of some so-called fast-casual restaurants over the last couple of years. Pizzeria Prezzo, upmarket burger bar Byron and Jamie Oliver’s empire have all rethought expansion. But the direction of travel is clear.

High streets must make themselves over as destinations from which consumers don’t just carry home a whole new wardrobe. They must be places where people want to spend time. That means mixing retail and residential space more effectively, particularly to reduce the number of outdated shop units. It helps to have a plan. Some of the most prosperous outdoor shopping destinations are those in sole ownership, such as Marylebone High Street and Carnaby Street in London, where it is easier for landlords to invest in their surroundings. Coal Drops Yard, a new shopping street opening this autumn behind King’s Cross station, is also expected to do well.

It isn’t just London however. There are numerous local examples that buck the gloom. Ely in Cambridgeshire is a haven of independent shops and regular town centre gatherings, such as a literary festival and an annual race where locals lug sacks of potatoes through the streets. York’s Bishopthorpe Road – known locally as Bishy Road – has won awards for its thriving community feel. It maintains an array of retailers – a butcher, baker, hardware shop and chemist – that hark back to an age many thought had been lost.

Part of this resurgence can be attributed to local organisation. Business improvement districts (BIDs) came to the UK in 2005 and there are now 300 groups, such as Essential Edinburgh and Love Wimbledon, dedicated to improving their commercial district by speaking up for the public realm and organising events.

They can point to a more positive future, which some research backs up. Management consultancy McKinsey said a few years ago that despite everything seemingly going digital, bricks-and-mortar would still account for about 85% of US retail sales in 2025. It has to do with people. Many are comfortable ordering food and clothes on their laptop sat at home, but many more feel the need to interact and browse. In outer London, some 47% of businesses are on a high street. Retail may falter and remake itself, but human beings – even those with eyes glued to the latest smartphones – will continue to crave contact with others.

Sticky streets

A people-first approach is reviving city centres

Sector Focus /Retail

We’re not talking about gum on the pavement here – the term was coined by Brent Tode­rian, ex-chief of Vancouver city planning and urban design consultant. For decades, urban planners have designed streets to make them as efficient as possible for pedestrians or traffic to move through. The result? They have become what Toderian calls featureless ‘Teflon’ spaces, where there’s no incentive to linger. A ‘sticky street’ is one that has interesting shops, tables outside cafés, terraces outside restaurants and bars, streetfood stalls, buskers, public art, places to sit and people watch – things that encourage you to stop and enjoy your surroundings. It’s an approach that Toderian says requires a rethinking of the urban planning rules, one that prioritises walking, biking and public transport over cars. Some European cities, like Paris and Barcelona, have more than their fair share of sticky streets and Copenhagen is the poster child for cities that have overcome the challenges of a northern climate to create an all-year-round café culture.

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