What does the future hold (or not) for the High street?
Whether or not you keep up with business trends, I’m sure by now you’ll have heard about the recent purchases made by online retailers. Online retailer Boohoo and Asos have been buying up what is left of the high street. Boohoo has just recently acquired Dorothy Perkins, Wallis and Burton brands for £25.2m, however they will not be taking on any of the stores, meaning a loss of 2,450 jobs. Back in January, Boohoo purchased Debenhams’ brands for £55m. As well as this, last week a company that can be seen as Boohoo’s biggest rival Asos, bought other Arcadia brands, including Topshop and Miss Selfridge. Respectively these deals will mean major changes for the high street as we know it. Neither deal includes the notion of keeping any stores open. Recently I have seen mass hysteria in news media claiming that this is the death of the high street happening in front of our very eyes, and that the future of shopping is online.
Why buy up struggling High street stores?
It’s safe to say that 2021 has already begun with a record breaking number of takeovers but where does this leave the high street? With the recent lockdown complications due to the pandemic it is easy to find the answer as to why stores are struggling, however it isn’t as easy to answer the question of why online companies are buying up what are considered “weaker” elements of the retail industry. Especially in the case of Boohoo who already own Karen Millen, NastyGal, Oasis, Warehouse and Pretty Little Thing why bother to buy up the rest of the market?
There’s no denying that the brands recently bought by Boohoo are struggling, however there also is no denying that they are still very popular with different parts of the fashion industry’s audience. Collectively, people bought about £180m of items from them in the last year. Boohoo was able to pick up various businesses with an already established brand reputation for a cool sum of £25.2m. This of course sounds like a lot of money but in the grand scheme of things Boohoo weren’t simply buying a clothing brand they were buying their long established reputation.
Richard Lim, chief executive at Retail Economics, stated that "The main thing is, this comes down to price. It's just seen by Boohoo as an opportunistic chance to acquire brands at a price that they see as offering them a good amount of value.” Although to a lot of younger members of the public they might not dream of shopping in the likes of Dorothy Perkins, Wallis and Burton these places do in fact cater to a large amount of the more mature population. So I guess when you learn all the facts Boohoo aren’t stuck with dying brands they actually made a very savvy business move and bought up brand names and reputation with pre-existing audiences. Online giant Boohoo may be one of the only companies to actually benefit from the pandemic, otherwise never in a million years would the Arcadia brand stores be sold so cheaply!
So what does the future hold for our town centres?
While this is all well and good if you are the owner of Boohoo or Asos, for everyone else what does this mean. Personally I couldn’t imagine not going into town and having a walk around the various clothing stores. Regardless of whether or not I actually bought anything it was a hobby that myself and a lot of young people had. Findings from a survey conducted by responsesource back in December 2020 found the following;
· 61% of people are worried the high street will disappear completely in the next ten years due to the ever increasing number of big-name store closures.
· Fashion, food, beverage and value brands are predicted to be the biggest victims of the high street due to online competition.
· Convenience is a key factor that affects our shopping habits.
Whilst the high street has been in decline for many years, the problem has accelerated at an alarming rate this year. According to research by The Local Data Company and PWC, the first half of 2020 saw over 11,000 outlets shut. Recent studies have found that 87% of the UK public now shop online, the highest compared to other European nations and even higher than North America. Throughout the course of the pandemic the UK has spent an additional £5.4 billion online.
MP’s in Britain have been told that the coronavirus pandemic will “vastly accelerate” the decline of the British high street, where the number of shops could more than halve in the next two years. Melanie Leech, the chief executive of the British Property Federation, said “inevitably there will be casualties” among retailers, and that predicted 50% reduction in shops on a typical high street was now likely to take place over a shorter timeframe. As well as this Andrew Goodacre, the chief executive of the British Independent Retailers Association, told MPs that 20% of its members may not reopen because it would be more expensive for them to run their shops if footfall is low.
…On a more positive note
After all that doom and gloom, there is a little bit of hope at the end of the tunnel. The high street unlike any online retailer has been in operation for 100’s of years. Its existence is by no means stringent, and as we’ve seen through history it has the capacity to change and adapt to customer expectations as required. A lot of people enjoy the high street shopping experience. Research from Doddle has shown that, while ‘80% of the UK population concede that the online experience is quicker and more convenient’, ‘only 14% find the concept of physical shops outdated. As well as this over a third (38%) still enjoy the social experience they offer and two-thirds (62%) value being inspired.
The CEO of Doddle Tim Robinson, says “Whenever I’m asked about the death of the high street I point to cinema. Its demise was predicted with the arrival of online streaming and yet it’s thriving. Because cinemas have understood that people are social animals with a desire to make an event of activities. The high street is under a similar threat from digital advances but has a chance to carve out a long-term role for itself by undertaking a re-energising assessment of strengths to play to.” He points out that other business like Nike have been able to recognise that playing to their unique strengths they can enjoy brand loyalty and longevity. Nike have shown this through the development of their “Speed Shop” located in New York, a building that offers nothing but convenience, here customers can reserve and save items online and then simply pick them up and try them on in a locker with their name on it.
In that case, if it’s the customers that control which market is more popular, it looks like it’s up to us to save the High street.