BRC Annual Retail Lecture 2010
The high street is under great pressure as a number of major trends continue to work against it, but there is some hope for its future provided retailers can work together to support the UK¬ís town centres. By Glynn Davis
This was the message conveyed by Andy Hornby, group chief executive of Alliance Boots, to attendees of the BRC Annual Retail Lecture 2010 in a low-key presentation that befitted an executive making his first public appearance since being ousted from his role as chief executive of HBoS following its downfall.
“The high street has such a huge social function that it will be here forever but we’ll have to work together [to ensure this]. The growth of property prices, social media, out-of-town developments and online sales are trends that have pushed against the high street,” he stated.
Hornby cited the move of the major supermarkets back into town centres as a positive effect and Alliance Boots’ presence (with its 2,500 stores) on the UK’s high streets as another helping factor as it was often seen as an anchor brand that offered support to many under-pressure town centres.
However, beyond these two contributions, he suggested there was no simple answer to saving the UK’s high streets while such a lot of its problems were structural, with property (and ever-rising rentals) remaining at the heart of the issue.
Hornby’s presentation highlighted many of the social and retail-specific trends that are now taking place in the UK, many of which are increasing the pressure on the high street. These included the growth in online sales that he said could account for as much as 12 per cent of total UK sales over the next couple of years.
Although the growth in out-of-town developments has slowed over the last five years Hornby said it continued to grow: “The sheer speed of growth has been staggering and the average-spend in them is 50 per cent higher than in town centres. Their impact on small stores is very significant and even now the trend continues, but at a slower pace.”
He also pointed to the growth of digital media that is changing the way consumers communicate with each other. Hornby suggested this has significantly affected the level of trust people now place in large organisations like major retailers. “Large organisations need to work on how they communicate with customers,” he stated.
Part of this is driven by digital media placing greater power in the hands of consumers. Although Hornby suggested “we’d sometimes like to turn the clock back” he acknowledged this was not possible and that retailers therefore had to adapt to this power shift in their relationships with customers.
“They have the knowledge and power and we must satisfy them in order to stay ahead,” he told the audience. His recommendation was for retailers to keep their communications “calm and modest”.
This could almost have been the description of the presentational style of Hornby who chose to keep his renowned intellect in check during the lecture, which suggests he recognised the last thing his return to the centre stage needed was fireworks. If the Lecture provided us with one insight it was that he will likely therefore be a very good fit at Alliance Boots.
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