Comment: the future of the high street destination shopping or extinction?
Despite flickering hopes of a return to growth in the UK economy it doesn't seem likely that our high streets will ever be the same again. And maybe for a successful future for retail they shouldn't be.
Online shopping now accounts for roughly £1 in every £10 spent on retail, and internet sales are growing at a phenomenal rate. Omni-channel shopping is transforming consumers' worlds, 50% of people never turn off their mobiles so it's unsurprising that it is fast becoming the shopping mode of choice.
This change in the way the UK shops is the backdrop to the announcement this week by planning minister, Nick Boles, that the government will grant local authorities far greater freedom to convert retail premises into private housing, encouraging councils to focus on a few prime streets for retail development. Seen by some as 'abandoning the high street', the minister claims that more housing near those prime retail spots could actually help business.
This dramatic shift in policy from hiring Mary Portas to rescue the high street two years ago could be due to the fact that the retail world is so fast evolving that rather than restoring the high street to its former glory, the government is now seeking an alternative 'destination shopping' experience for town centre retail.
The Government needs to support town centres to thrive in this new era, the launch of another Government consultation recently could see landlords increase their investment in the UK’s high streets by allowing them to contribute to Business Improvement Districts (BIDs). A BID is a vehicle that allows traders and businesses within a designated area to come together to fund improvements to that area.
It was a key recommendation of the Portas Review that property owners would be allowed to match the funding that retailers put into BIDs – and be able to vote and have a voice on proposals such as planning and strategic decisions that affect their property.
Currently landlords are able to make voluntary contributions to BIDs, but have no right to vote on proposals. This would be another way to generate strategic plans for areas and more funding for high streets and town centres.
Retailers have also been urging the Government to overhaul the business rates system which has placed a heavy tax burden on retailers that have been weathering the depressed economic situation for several years now. The BRC claims that business rates are now a key deciding factor when calculating whether a new store opening is financially viable and stunt investment by retailers in stores and jobs.
Although the future of the high street will be different, it is a key part of the retail world. And retail, as an industry, is clearly not dying. Many retailers, such as Robert Dyas and John Lewis, continue to announce increased profits. A recent report by the CBI reported that UK retail sales rose to a six month high in July and the latest British Retail Consortium-KPMG report says July sales hit a 7 year high. The high street must evolve to be a truly relevant part of the future of retail, along with online shopping, but it will never disappear completely.
By Gavin Matthews, head of retail at Bond Dickinson.
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