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What does retail need from Government?

The news from the high street isn’t encouraging. This week the British Retail Consortium announced that the national vacancy rate for stores had reached 10.3%, the highest since 2015. Meanwhile footfall in July dropped 1.9%, more on the high street (-2.7%) and in shopping centres (-3.1%), the worst July drop for seven years.

So is retail doomed? Let’s take a moment to step back. Most of us still shop on the high street, even online shopping fans get some of what they need offline, and even if retail moved online completely we’d face other problems, like not being able to move for white vans.

All the same, physical retail deserves to be able to compete on a level playing field and that means the government will have to help. 

This is not a case of trying to restrict online companies. Some of the supposed solutions, such as additional taxes, ultimately risk penalising the consumer. Rather we need lower business rates for high street retailers and lower rents. Clearly lower rents aren’t in the government’s gift, unless we’re going to contemplate rent caps for commercial property, but the government could make it easier for landlords to do their bit.

Access to retail properties

We also need to tackle the major issue of access to retail properties on the high street. The supply chain has had to adapt to highly restrictive constraints on delivery times and the size of vehicle allowed access to our town and city centres. These make retail operations more costly and more difficult to manage. Even a moderately smart government minister can work out that shops needs stuff on their shelves for people to buy. The alternative, the empty shop, only ever really worked in the Soviet Union and on Bond Street. So all that stuff somehow has to be delivered to stores

In many towns and cities empty retail space is being replaced with living accommodation. Of course, many people love the idea of living right in the middle of things. But they only want to live there because these are vibrant places to live, and that vibrancy is largely down to the retail and food and beverage outlets that line our high streets.

Well, people living in city centres still have to get their shopping somehow. If it’s not from local shops it could be via car journeys to retail parks on the outskirts. In many US cities there’s been a doughnut effect with retail and residential activity moving to the ring roads while the old city centres have been hollowed out – a horrendous thought for anyone who loves the ambience of our historic towns and cities. The alternative is white vans making home deliveries – significantly less efficient and environmentally friendly than delivering to shops. Once again here’s a question for the government; why are white vans allowed to make daytime deliveries in towns and cities while retail deliveries are restricted? In the city of London they’re appealing to online shoppers not to have parcels delivered to their offices because it causes major traffic problems. But it’s just an appeal to shoppers not proper regulation.

Curbing inefficiencies

Online retail may seem very modern but at times it’s also hopelessly inefficient. Most products make multiple journeys with shoppers ordering multiple items knowing they will only keep one or two, if any. The rest gets returned. We can’t talk about sustainability and turn a blind eye to multiple unnecessary journeys. Then there’s the cost – another hidden tax on the consumer.

I sense a bubble. A fair few online businesses don’t seem to have much of a business model, only staying afloat on the largesse of venture capitalists hoping for the next Amazon. The question is whether this bubble pops before it takes down good, well established, feet on the ground retail operations. A levelling of the playing field might hasten its bursting so we’re left with real, viable businesses, online and offline, while the more speculative operators disappear.

Retailers are very good at understanding the supply chain, micro-managing their inventories and getting the right products to the right shops for each local community. With people now living more densely in town and city centres, high street retail makes more sense from an efficiency as well as an environmental perspective. We’re still searching for a more sustainable mode of living, but I can’t see us finding it in a world where you can’t walk round the corner to do your shopping. We need Government to coordinate policy so good retailers and online businesses can survive and serve the community in a way that is fair to all and sensitive to the burden we’re putting on our planet. Ultimately we’re all consumers and we all share this precious and fragile orb we call home.    

Andrew Blatherwick is chairman emeritus of retail planning and replenishment solutions company RELEX Solutions. He has held leadership roles in numerous other retail technology companies and had a distinguished career in retail at Boots and Iceland.

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