Ailing high streets appear to have been offered a lifeline in this Autumn’s budget, with Chancellor of the Exchequer Phillip Hammond announcing a £675m future high streets fund.
Along with a dedicated high street task force, the future high streets fund is intended to support physical retailers, enabling councils to “support local areas to prepare long-term strategies for their high streets and town centres” and to “invest in the improvements”.
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In addition to the funding boost, Hammond announced business rates relief for nearly 500,000 small businesses. All businesses with rateable value of £51,000 or less will have their business rates bill reduced by a third, intended to help independent businesses compete with online retailers. According to The Guardian, this will result in savings for 90% of shops, restaurants and cafes.
Faced with a rapid growth in ecommerce, the British highstreet is going through trying times. Between 2007 and 2018 online sales increased 6-fold, leading some to predict that the ‘death of the highstreet’ may be imminent.
In 2017 the UK’s high streets suffered 5,855 store closures, and retailers such as New Look, Mark and Spencer’s, Mothercare and Debenhams all announcing branch closures this year. According to figures from August, more than 35,000 retail and restaurant jobs have either been lost or at risk.
But will the future high streets fund be enough to stave off store closures, or does the solution lie elsewhere?
The high street of the future
In today’s highly connected world, what consumers expect from brick-and-mortar stores is changing. According to research by Yoyo Insights, personalised customer services, such as recommendations, discounts and offers, are what is missing from today’s high street.
According to a survey conducted by SOTI, two-thirds of consumers are more likely to shop at a store that integrates technology into the shopper experience.
the future high street fund policy paper acknowledges this change, noting that “consumers are changing what they want from their local high street: there is an increased importance on the overall ‘experience’ of high street shopping. People want local high streets to provide convenience, a sense of community and to add value through services not offered online.”
In this context, it is clear that funding alone is not enough to facilitate the change in focus needed to keep up with the growth of e-commerce.
VP EMEA of retail and ecommerce expert 2Checkout, Laurentiu Ghenciu, believes that although the future high streets fund and investment in smaller businesses are by no means a negative thing, they do not go far enough to protect high street shops:
“The government spending plan, laid out in today’s Autumn Statement, intends to help brick and mortar retailers to stave off threats from the likes of Amazon. However, although a step in the right direction, this still raises the question of how smaller retailers will cope going forward. How else can they stop themselves from becoming defunct?
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“Retailers must think of and plan for digital transformation if they are to stay competitive, and learning from online businesses, especially those who sell internationally and “put their eggs into more than one basket”, is a good way to start.
“Tools such as localisation, including accepting local payment options, support in multiple languages, ability to sell across channels, and flexibility to mix business models (for example selling physical goods such as groceries or office supplies on a subscription model), become increasingly critical.”
Re-imagining the retail environment
In order to compete against the convenience and low prices offered by e-commerce, physical stores must re-think there strategy. Many are doing this, with an increased focus on creating a unique customer experience that cannot be replicated online.
Retailers are waking up to the need embrace innovative technologies in-store, with many trialing the use of mobile technologies to make checkout processes simpler, incorporating virtual reality into their in-store experience and adding technologies such as smart mirrors into dressing rooms to aid with trying on clothes.
Others are going even further, and re-thinking the retail space altogether. Opened last week in London’s Kings Cross, new retail space Coal Drops Yard is shifting the focus from utility to enjoyment, by incorporating workshops and live music into retail.
This therefore suggests that the problem goes far deeper than a lack of investment, and in fact lies in shifting consumer demands. The bottom line is, if their business models no longer work, no amount of investment will provide long-term protection for the British high street.
Long-term investment in the technologies needed to future-proof the high street, as well as support for projects taking a different approach to brick-and-mortar retail, such as Coal Drops Yard, may in fact go further in ensuring that.
Mandeep Singh, CEO and co-founder of e-commerce platform Trouva believes that it is the government’s responsibility to ensure concrete plans for integrating technology into the high street are put in place:
“The £675m pledged to transform the high street is vague in that it also includes providing housing on the high street in an attempt to drive footfall. It’s the government’s responsibility to help small retailers take their experience to the next level; and one of the ways they should be doing this is through helping them invest in technology to deliver the very best omni-channel experiences that customers expect.”
This is echoed by Chris Griggs, EMEA GM at Skytap, who believes that the necessary technological infrastructure is vital to making this a reality:
“Today’s announcement is an encouraging move in the right direction for the Chancellor. Retailers must now create an infrastructure that will form the springboard for new, rapidly delivered services. There’s a lot on the line and no retailer wants to disturb daily business operations by biting off more than it can chew.”