More perspectives on our changing shopping habits
There have been plenty of recent blogs on the problems faced by struggling firms on the UK “High Street”. You’re all encouraged to think through these problems, perhaps using a framework like PEST analysis.
This blog adds a couple more perspectives, from recent articles in The Guardian and The Economist that paint a pretty grim future for the High Street - at least in its current form. All is not well for the out-of-town grocery chains either.
The Guardian story takes the profound view that a consumer revolution is changing the way we shop. The recent poor Tesco results might be a sign that we are even turning our backs on a supermarket queues, spelling the end for the weekly shop, with more buying food daily from convenience stores, and consumers – increasingly cash- and time-poor – turning to the internet. And major retailers are already adapting. Tesco’s chief executive has admitted that the power of out-of-town hypermarkets is waning, and the internet is now dictating strategies. Online spend in the UK in 2011 grew 16% growth on 2010. “Click and collect” is up, as is “mobile shopping”, with around 15% of Google search queries now go through mobile devices. John Lewis is said to be “really going after the mobile online sale” by inviting customers to do an in-store price match.
Some industry-watchers predict more “dark stores” – supermarkets where the public are banned as staff fill trolleys for thousands of online orders. Retailers will be forced to compete heavily on delivery prices. “The home delivery market has been growing at double digits. It’s going to continue growing for the foreseeable future,” says one analyst. “Out-of-town hypermarkets are having less impact because people are buying online, and then they are topping up in convenience stores,” says another.
Perhaps this gives hope to local retailers on the High Street. Some critics of the big chains can hardly conceal their delight. The author of Tescopoly is quoted to believe that supermarkets of the future will also be influenced by so-called “amateur economics” and a backlash against “the big, impersonal, alien shopping experience. One of the mantras of the amateur economy has been the need to repair, reuse, renew, recycle. Initiatives such as Freecycle will have an impact. In the future I think shopping patterns will be more diverse. It is entirely possible you will be doing more shopping online, and entirely possible you will be doing more shopping locally, from more different players as well”.
The Economist takes another perspective, reporting on the fact that almost 15,000 shops in town centres closed between 2000 and 2009, with a further 10,000 losses in the past couple of years - leading to the proportion of retail spending captured by town centres falling from 49.4% to 42.5% since 2000. Their argument: there is just too much capacity in the high street.
Curiously, though, Britons claim to treasure their town-centre shops. But suburban supermarkets are certainly strong competition. Sainsbury’s, Tesco and Waitrose now allocate more than one third of floor space to things other than food. Sainsbury’s is the seventh-largest clothing retailer by volume; Tesco is one of the country’s leading opticians. The supermarkets together sell almost as much music as HMV, the dominant high-street music shop—and more than Apple or Amazon. Perhaps a solution would be to have fewer, bigger shops in town centres. Higher petrol prices have also contributed to changes in shopping patterns. Fundamentally, the costs of operating on the High Street have to fall significantly. That may then return High Streets to what they used to look like, with a jumble of economic activity taking place: the notion that they should be purely for retail is fairly recent.
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