3 The changing nature of retail |
If town centres are going to be the focal point
of our communities in future, they have to change and, in order
to do that, they need a plan. [Bill
25. The way in which we shop has changed and will
continue to change, given the increasing popularity of online
shopping. Figures from the Christmas period of 2013 highlighted
Internet sales, which are seasonally adjusted
for the first time in this release, increased by 11.8% in December
2013 compared with December 2012 and by 1.8% compared with November
Liz Peace, Chief Executive of the British Property
Federation, described the changing nature of the retail sector:
Certainly, we have seen a very substantial changeparticularly
in relation to the impact of retail on town centres and high streets.
Basically, town centres and high streets blossomed. Lots more
retail came through the 20th century, but now it has
shrunk and it will have to shrink back again. There is less demand
for retail in traditional high streets. Obviously, what you have
seen is a blossoming of malls, property malls, out-of-town shopping
centres and out-of-town supermarkets. [
] We do not challenge
that change; we think we merely have to adapt to it. The key,
from a sociological perspective, is how you adapt to the impact
that has had on the town centres and high streets. We cannot put
the genie back in the bottle; we have to learn from it.
26. Much of our evidence pointed to the fact that
customers use a variety of ways of shopping, by using their mobile
devices, their computers, browsing in shopsboth on the
High Street and Out-of-Townand any combination of the above.
However, there is an imbalance between online and physical retail,
most clearly seen by the issue of Business Rates, which adversely
penalises traditional store-based retail. The future health of
the online retail market requires a vibrant physical retail sector.
The British Retail Consortium described this significant change:
Our industry is undergoing a structural transformation
on a scale that we have not seen in the past. Consumers have proved
themselves very adaptable to new technologies and hungry for the
new ideas from our sector that are improving and enhancing the
experience of shopping. Critically, this on-going development
of digital technology and the explosion of different ways to satisfy
consumer demand are having a monumental impact, not only on the
sector but the shape of our communities and society. This represents
a very significant increase in the impact of commercial decision-making
beyond the boundaries of business, into the shape, structure and
culture of where we live and work.
The High Street
27. The 'High Street' is a phrase often used, but
little understood. It is a geographical location that can lie
in city centres and town centres, and in suburban and village
shopping areas. It has common characteristics but varies enormously
across these diverse geographical areas. Significantly, the High
Street needs to recognise that it is facing a historical change
in shopping preferences. CACI Ltd, a consultant in location planning,
wrote, "policy makers should be wary of looking back to a
nostalgic view of traditional 'High Streets'".
This runs the risk of property owners basing their future strategies
on unrealistic, outdated expectations.
28. Fiona Wilson, head of Research and Economics
at USDAW, highlighted the emergence of 'showrooming', when shoppers
will look at the products in store, and then leave and buy the
product on their mobile devices.
Meryl Halls, from the Booksellers Association, described the effects
that showrooming can have on independent shops:
That is one of the main challenges to retailers:
they have got all of the overheads of their premises on the High
Street, but unless they are an omni-channel and can think of their
shops as showrooms, they cannot possibly compete. The independents
cannot treat their shops as showrooms because they have not got
anything to fall back on. It is very hard.
29. This method of retailing has resulted in a surfeit
of 'bricks and mortar' shops, which Professor Bamfield, Director,
Centre for Retail Research, described:
Due to the structural change and the change in
technology and innovation, our conclusions are that there probably
are too many shops and we may well see 20% of them disappearing
over the next few years.
The British Council of Shopping Centres agreed with
the prediction of a significant reduction in bricks and mortar
But the most significant impact of multi-channel
retailing on our industry is the reduction in the quantum of physical
space required overall by multiple retailers to reach their desired
market, the resultant obsolete space, where this is likely to
be located in the retail hierarchy, and how the industry deals
with this oversupply.
However, CACI Ltd highlighted the positive relationship
between online and physical shops:
The relationship between online and 'bricks'
should not be seen as mutually exclusive. Analysis we have undertaken
for major retailers show that some omni-channel retailers increase
their online sales when they open a new bricks & mortar store
because of the 'brand anchor' and 'showroom' effect.
30. Intu Properties plc believed that local authorities
have "frustrated the natural evolution of social hubs in
the community through trying to protect the traditional retail
role of the High street", and Bill Grimsey, businessman and
author of The Grimsey Review: an alternative future for the
told us that "the last thing this country needs is more
retail space. It needs less retail space and it needs public spaces
used for community wellbeing".
The Association of Licensed Multiple Retailers highlighted
the positive aspects of food and drink to Town Centres and High
High streets need to offer more than just retail
to attract customers back. Research by CACI reveals how integral
a robust eating and drinking out offer is to the health of retail.
Retail environments which include a broad and varied mix of licensed
retail environments encourage customers to stay for longer and
to spend more. Moreover, consumers who eat and drink out as part
of their retail experience have a higher per capita spend and
dwell time than those who do not.
This point was also supported by much of our evidence,
including that from the British Retail Consortium (BRC):
Successful High Streets will become places people
visit for a wider experience, encompassing more than just shopping.
The retail offer must work with, and complement, the omni-channel
experience. Many locations are indeed already doing this with
successful local partnerships driving innovation, fostering the
optimal retail, social and municipal mix. For many the focus will
be on marketing, accessibility and ensuring there is a shared
local vision for the retail centre.
31. David Owen, Chief Executive of GFirst LEP, spoke
about the need for town centres to encourage such community life:
Town centres are absolutely vital to our local
communities, because a dead town centre creates an atmosphere,
environment and culture in an area that becomes increasingly challenging.
People do not see opportunity; they do not feel good about the
place in which they live or work or play. I think Town Centre
First is absolutely the right approach.
Interestingly, David Owen and his colleagues gave
us a tour of Gloucester town centre, and we saw an example of
the innovative use of a retail outlet as a PopUp shop, to advertise
the courses on offer at Gloucestershire College. The following
day, Peter White, Executive Director of the College, explained
that the move to the city centre meant reaching out to people
who might not have thought of studying:
The footfall over the eight-week period was over
1,600 people. We actually took 169 applications for courses, so
pretty much one in five people who came in applied for something;
83 of those applications were for full-time courses at the college,
and on our conversion ratiowe convert at around 65%you
are talking about £189,000, so £23,000 a week.
When asked whether those figures amounted to net
additional recruitment, Peter White replied that it was impossible
to know, but lots of careers information was given out, which
in itself was a good thing.
32. This example illustrated the fact that a town
centre can have a mix of retail and other businesses, including
information outlets, which add to the fabric of the community
hub. This call for meaningful community hubs was a thread running
through our written and oral evidence.
Tony Wheeler, Head of Branch at Peter Jones, told us of his positive
experience of working at Kingston upon Thames, where the community
was involved in the town centre strategy:
I was chairman of the Business Improvement District
at Kingston upon Thames, and during that time I found the relationship
between private and public sector really fascinating. The value
we got from an integrated strategy for that town centre, which
involved retail, public sector and community groups trying to
make sure that we had a strategic vision for the destination that
attracted consumers into that space was absolutely vital.
33. In order to achieve an integrated strategy for
a town centre, Liz Peace, Chief Executive of the British Property
Federation (BPF), stressed the need for strong leadership and
a strategic plan:
It is not much use just going on about Town Centre
First unless you have a strategy and a plan for how you are actually
going to implement that to create something out of your town centre,
which might be very different to what it was 30 or 40 years ago.
When asked about the need for stronger community
hubs, which will emerge from a strong retail sector in the area,
the DCLG Minister, Brandon Lewis, told us that this was for local
authorities, rather than the Government, to shape:
It is not one size fits all, 'We know best in
Whitehall', but actually it is your town centre. It is your community.
You have the power to do something with it. We have to cajole,
encourage, nudge and motivate all our local authorities to look
really carefully at what they can be doing with the powers that
we have given them. I do not think we should underestimate the
amount of power we have devolved that does allow councils particularly
to do this.
34. With the dramatic rise in internet shopping,
retail businesses are no longer locked into one way of working,
and likewise, the High Street is no longer just about retail;
it is also about creating a leisure experience, including opportunities
for visiting cinemas, restaurants etc. However, for community
hubs to survive and flourish, the High Street needs support from
the Government. We do not recommend that the Government spends
huge sums propping up an outmoded way of retailing. However, we
support calls for Government to help shops to remain on the High
Street, and for new, independent shops to be able to open on the
High Street, by reviewing the burden of Business Rates, which
are still based on an outmoded pattern of retail.
35. The United States has a different tax structure,
but lessons could be learned from its approach to local taxation
and rent. We appreciate that this is complex, but it is something
that the Government should explore as an alternative to the current
system. The Government should look into encouraging a more flexible
approach from landlords, and discouraging upward-only rent revisions.
This would will result in a fairer and more sustainable system.
Local Enterprise Partnerships
36. The BIS Retail Strategy highlighted the
role of LEPs in England, to promote and support their local retail
sector. However, the experience is mixed, and 'retail' is missing
in the strategy of many LEPs:
Retailers are the prime movers behind Business
Improvement Districts (BIDs) and are on the boards of several
Local Enterprise Partnerships (LEPs). LEPs are beginning to explore
what they can do to support retail in their areasnot just
as part of the local economybut as important engines for
] The Government will work with local partners
to better understand market conditions and challenges and to undertake
activities that maximise retail's contribution to growth in local
economies through identifying opportunities and sharing best practice.
37. However, the Government's A Strategy for Future
Retail paper, published a year later, expressed concern over
the lack of focus on retail by many LEPs:
Many LEP strategies include actions that will
benefit retail, for example through the leisure economy or town
centre regeneration, and several have retail and town centre specific
activity. However, only a few LEPs have retail as a priority sector.
There is more that can be done to help LEPs to recognise the importance
of retail and town centres to local and regional economies, and
in demonstrating the value that LEPs can add. This was a recurring
issue during the Business and Skills Select Committee inquiry
into retail in 2013.
The Co-operative Group welcomed the relationship
between BIS and LEPs, but highlighted the lack of LEP funding
[I]t is paramount that LEPs are furnished with
the level of resources they will need to succeed. We believe that
currently LEPs do not yet have the capacity, both in terms of
funding mechanisms and powers, to deliver substantial economic
David Owen, Chief Executive, GFirst LEP, described
the reasons behind the success at Gloucestershire:
We set up a very strong retail-sector group alongside
nine other sector groups, which cover our key sectors in Gloucestershire.
They are purely business people; they are genuine business people
running businesses right across the county. That is at the very
heart of what we consider our role as a local enterprise partnership
to be. We have strong leadership from a chair with a very credible
business background who is well known locally; we have very strong
relationships with the local authorities, because we cannot deliver,
as Local Enterprise Partnerships, without a genuine partnership
with our local authorities; and we make sure that the LEP is seen
by local businesses as being led by business for business, to
grow the economy.
38. However, the Rural Shops Alliance was not so
complementary about the Gloucestershire LEP:
The major output from Gloucestershire LEP, as
the first LEP retail pathfinder, has been a report under the Successful
Town CentresDeveloping Effective Strategies banners, subtitled
'Understanding Your High Street'. This is a quite interesting
academic approach, albeit one based on traditional hierarchy of
shopping centre models. However, it delivers few ideas on how
to actually address the problems it discusses. It is perhaps pertinent
that of the 20 main contributors only one, Boots the Chemist,
is an actual retailer. The techniques used hardly seem cutting-edge
and based on the published documentation, seem to lack the rigour
employed, for example, by the sophisticated geo-demographic mapping
models employed by major multiple retailers.
39. This concern about local authorities' general
lack of planning and oversight in the context of regenerating
High Streets and town centres was reiterated by Mike Davidson,
Head of Retail Operations, Land Securities. He highlighted the
good intentions of his local centre managers and centre directors
to engage with the local communities in which they were investing.
Quite often they have a limited amount of time
and resource to be able to give to those things, because ultimately
they are still running a business, and quite often, therefore,
it is difficult to know where to invest that time. Is it the LEP?
Is it the BID? Is it the local strategy partnership, of which
many towns I have worked in have a plethora of groups that are
meeting to talk about? Is it the retail community? Is it the leisure
and tourism community? There are dozens of these, and cutting
through all of that to get to the point where you can spend your
time most productively doing things that are going to develop
some sort of strategic change, rather than sitting in numerous
talking shops, is what we would like to be able to do.
40. When the Secretary of State, Vince Cable, gave
evidence to the Committee in January 2014, in reference to the
Department for Business, Innovation and Skills' Annual Report
of 2013, he told us that LEPs function in "varying quality
and competency across the country".
41. The Government has placed the 39 Local Enterprise
Partnerships (LEPs) at the forefront of supporting the local retail
sector, yet many of them lack the necessary resources and influence
to succeed. The Secretary of State for the BIS Department acknowledged
this to us in evidence. The Government should call on LEPs
to develop a strategy for retail, in order to demonstrate their
commitment to the Retail Sector.
42. Given the substantial contribution of retail
to employment, we recommend that all LEPs consider appointing
a retail representative on their board. For independent traders,
this may not be feasible. However, national retail businesses
should do more to encourage their local or regional management
to participate in LEPs.
34 Q352 Back
Office of National Statistics, Retail Sales December 2013,
January 2014 Back
Ev 172 Back
Ev 57 Back
Ev 166 Back
Ev w30 Back
Bill Grimsey, The Grimsey Review: an alternative future for
the high street, September 2013 Back
Ev w13 Back
Ev 174 Back
Brian Binley MP, a Member of the BIS Select Committee, was Chair
of the Conservative Parliamentary Enterprise Group, which published,
in July 2008, A Strategy for Successful Community Hubs: Commission
into Small Shops in the High Street. Back
BIS Retail Strategy, page 7 Back
A Strategy for Future Retail, p
Ev 179 Back
Ev 187 Back
Oral evidence taken on 22 January 2014, HC (2012-13), Q70 [The
Rt Hon Vince Cable] Back