As Topshop heads online for good, is this the death of the high street?

2 months ago 11

The beginning of 2021 has been disastrous for retailers.

Non-essential stores remain shut for the foreseeable future and big names including Debenhams, Topshop and Miss Selfridge look set to disappear from Britain’s high streets.

Brick-and-mortar retail’s loss has been online’s gain, with Asos buying Topshop and Miss Selfridge and Boohoo snapping up Debenhams this week, with products available on websites only.

With more of us than ever shopping online, does this finally sound the death knell for the traditional British high street? And, just as importantly, what does that mean for all our small retailers?

Retail experts say that store closures are not entirely down to the pandemic, which has merely accelerated a move away from physical shopping and towards having items delivered.

But while this might seem to spell the end for the country’s high streets and shopping precincts, some commentators are optimistic that it will be a time for updating and change, rather than simply decline.

‘There is a place for retail,’ says Daniel Abrahams, commercial property expert at law firm Memery Crystal. ‘There are things people don’t want to sit at home and wait for, and then there are experiential stores like hairdressers and coffee shops. The existential debate, though, is: what is the purpose of the high street?’

A watershed moment

While the high street has been losing custom for a while, experts say that we’ve reached a point of no return for many businesses.

David John, CEO and founder of retail-tech white label Loyalize, says the closure of Debenhams and Topshop ‘will be marked as a watershed moment for UK retail’. He adds: ‘It will highlight that the business model of large stores with high costs such as rent, business rates and service charges is no longer viable, especially in a world where consumers can now choose how, where and when to spend their money, all without stepping foot outside of their house.’

Even before the pandemic hit, online shopping was booming, but since the arrival of Covid, a combination of necessity and fear of contagion have ensured we are doing much more of it. Ian Wright, founder of portable card machine business Merchant Machine, says that online sales grew 46 per cent in 2020, the largest increase since 2008.

This corresponded with a huge reduction in the number of physical stores available, with 2,450 major stores closing and only 477 opening to replace them.

‘Asos’s acquisition of Arcadia’s brands — Topshop, Topman, Miss Selfridge and HIIT — earlier this week underscored the high street to online transition,’ Ian says.

‘After analysing spending habits across the globe, we found that [those in] the UK spend an average of 15 per cent of their entire salary online, which we predict will continue to rise following the Covid-19 pandemic.’

Studies from KPMG show that, even if we do eventually buy a product in a physical store, we begin by searching for it online, with 89 per cent of customers beginning their buying process with a search engine.

Simon Quirk, from retail expert Kantar, says that we were already spending heavily online but the change brought by Covid-19 is unlikely to reverse. ‘Online has stepchanged for ever more,’ he says. ‘The longer it goes on, the more businesses not properly geared for online will struggle.’

While Debenhams and Arcadia are seen as bellwethers for the health of the high street in general, consultants say they hastened their own demise by failing to update their offerings for customers.

Don Williams, Retail Partner at KPMG, says that the businesses had failed to invest in their stores due to the economic climate.

‘These businesses were already challenged. The stores were dull. You haven’t really been surprised by a single business failure yet.’

Tomorrow’s high street

Now that we all shop from home, there is simply more retail space than we need, meaning that we face the spectre of many empty stores unless we rethink our town centres.

Don at KPMG says we now have 30 per cent too much retail capacity in the UK. Only stores that innovate will still be able to stay in business on the high street, alongside newer offerings that reflect our changed shopping and living priorities.

These may include healthcare hubs, experience-based stores that act more like showrooms for products, and even retirement living space.

In many areas, there will be far more people living on the high street than in recent memory. Even on Oxford Street in London, the number of homes being built now outnumber the shops, with nine new residential schemes being built.

‘Technology and the internet have also changed the face of retailing,’ says Mark Pollack, director of estate agency Aston Chase.

‘Advances in logistics mean that stores no longer require large stockroom areas on their upper floors, so new development can provide retail on the ground and basement levels, with new apartments above.’

Vidhya Alakeson, who sits on the government’s High Streets Taskforce, says that as retail space is given up when stores like Debenhams fail, large department store buildings need to be repurposed, to fit a new type of shopping experience.

‘Retail on that scale is not going to return to the high street but what these buildings could offer is flexible multi-use spaces that can act as a destination on the high street, bringing more people to the local area and encouraging activity in other high street businesses.

‘These multi-use spaces should offer a mix of retail, housing, shared workspace and community services like health centres, community hubs and libraries.’

Small and local

While major shopping thoroughfares have struggled this year, there’s been an unexpected boom for some local shopping areas, because so many of their customers are now working, and spending from home.

Don at KPMG says that these streets have seen a resurgence. ‘If a local retailer has delighted you, there is no reason why you wouldn’t continue to spend with them once this is over?’ he says.

This gives smaller retailers an opportunity to thrive, if they can get their offering to the community right.

‘Distinctiveness, adaptability and agility are very important. But understanding the needs of local people and responding to the wider social and economic needs of the local community will be key,’ says Vidhya.

‘This is exactly what community businesses do. Run by local people and trading for the benefit of local people, they are locally rooted and with that comes greater support from the local community. Businesses of all shapes and sizes will have to adapt their approach to keep pace with this emerging model with community at its heart.’

Heading into the dark

While some businesses will adapt their bricks and mortar offerings to remain high-street relevant, others can thrive by being online first and giving up storefronts. In order to do this they will instead need warehouse capacity, which may be what happens to retail space in less attractive areas.

Andre Hordagoda runs Go Instore, a retail technology business that helps companies interact with customers via live video. He suggests that businesses should repurpose their empty shop fronts into ‘dark stores’ — hubs for online orders and video shopping that work similarly to ‘dark restaurants’ which prepare food for takeaway only.

‘Dark stores can transform abandoned high streets to reflect current and future shopping habits and develop — rather than wipe out — the high street,’ he says.

A community undertaking

As we emerge from the Covid-19 pandemic, reviewing what is on offer from Britain’s high streets is going to be vital, so that we can rely on shops that offer what customers need in their rapidly changing lives.

Vidhya says that getting this right is important for local communities.

‘High streets are huge sources of civic pride, and the plight of a community’s high street can have a huge effect on people’s perceptions of their place. There is a growing recognition among national and local leaders that high street decline is one of our most pressing challenges.

‘Any response needs to be built in partnership with local people. After all, they’re best placed to determine what mix of services, business and activities they need. To enable this, we need to enable more community ownership of land and buildings in town centres.

‘We also need to build new decision-making models which provide communities with genuine power to drive the reimagination of their high streets.’

‘We worry about who will take on the shop units’

Kelly Cheesman, travel director of Beverley Travel, works out of what she describes as a ‘really lovely’ shopping precinct in Beverley, in Yorkshire.

However, since the spring shutdown, many empty units have started to appear.

‘We are based next to a now empty Outfit store with Debenhams, the only department store on the precinct, set to close in July,’ she says. ‘At the moment the only shops that are open are Greggs, Costa and Wilko. I worry about the bigger units — who is going to fill them?

‘We’re all worried about the high street and how it will look after the pandemic, but I do think that people will want to shop again in person once everything reopens.

‘I also think people will want to buy their holidays in person, so many people have been burned during the pandemic by buying their holidays online and not getting refunds. The window shopping element is important, too — we have a really big display and people come in because they’ve seen it and want to buy those particular holidays.’

‘When larger stores can’t survive, then it feels scary for smaller ones’

Tatjana Apukhtina is marrying into the menswear business. Her fiancé, Tom Bowden, is the fifth generation of his family to work for the company’s three stores, Wakefields in Horsham, Warwicks in Windsor and Weir Rhodes in Guildford.

The pandemic has hit the company hard, with Tatjana saying that many people in the business were ‘reluctant to change’ and that the company’s stores had no e-commerce model at all before Covid, just one-page websites for each store.

‘We had to close our shops for a third of the year as well as pre-Christmas, which is usually our busiest time,’ Tatjana says. ‘We’re trying to stay positive and make the most out of it.’

Tatjana and Tom, who both have a background in digital commerce, spent much of 2020 helping the family business get online, and customers can now buy products through the website.

‘It’s been a big job, but we have been making sales since December,’ Tatjana says. She adds that the news about the closure of Debenhams is ‘discouraging’.

‘If a large company like that can’t survive then it’s so scary for smaller businesses,’ she says.

‘The one advantage we have is that we can change quick and can improve quicker, so we’re trying to do that.’

‘This is the time for the independent shops to shine’

Sarah Laker, who runs Marple Stationery Supplies and Giraffe Gifts in Manchester has opened a second stationery shop since the summer as she is so encouraged by the future of the high street.

She says: ‘I truly believe that the high street isn’t dead. Yes, it’s a massive blow to lose the retail giants but that opens the door for smaller, niche shops,’ she says. ‘I have friends who think I’m bonkers taking on another shop in the middle of the pandemic, but I think it’s the perfect time.

‘I feel that the pandemic has changed the face of the high street for ever, but that it’s the time for the independent shops to shine. We do need to work on our offering. We need to promote ourselves as specialists and provide a shopping experience through good customer service, product knowledge and an offering that you cannot get online.

‘Yes, retail will change. It will become an incredibly lovely experience in town centres where the business owners have vision.’

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