The Chancellor’s announcement last week to cut business rates by a third for all retailers in England with a rateable value of £51,000 or less was welcomed by the retail industry, who have long campaigned for changes to the rating system. However, this will have little if any impact to London’s high streets or the larger retailers whose doors are closing all too quickly. It may help small local retail parades and neighbourhood centres in the regions and most economically challenged parts of the UK but the relief or assistance needs to do more to help larger retailers and city high streets which continue to be under pressure.
The announcement of the Future High Street Fund was the most exciting announcement for the country’s high streets which have long been the life and soul of our towns and cities. It was refreshing to see the governments recognition of the high street to ensure they remain vibrant and a place to enjoy. There are a number of issues facing high streets that need addressing alongside the Future High Street Fund to ensure that high streets are fit for purpose and cared for in the long term.
By far the biggest threat to the high street is the way we shop. Online shopping has increased exponentially across of retail sectors, this growth is set to continue. However, online retail doesn’t offer the social and interactive piece. There is an opportunity for retailers to evolve and adapt to meet the social changes and demands of the high street. Modernisation in the retail sector has been far outpaced by online convenience. Every business has threats and challenges which they must face and solve. Instead of embracing change many retailers are quick to pass the buck and blame others for their decreasing performance (the recent rise in the use of CVA’s to move the issue on to landlord and get out of existing lease obligations being the obvious example) rather than look at innovative solutions to survive and increase profitability. Successful businesses have diversified or varied their models/offering to increase profitability and ensure survival. A handful of retailers have followed suit and benefitted from offering an experienced or bespoke approach which has seen them flourish. Other Retailers need to do the same and work with their online counterparts to meet consumer demand.
There was an interesting article I read recently regarding the rise of online shopping and in particular Amazon. It is clear that Amazon are successfully attracting major brands such as Nike to their platform but they are using their data and fashions to identify trends and produce Amazon branded products that will directly compete with the major brands. When this happens, major brands will no longer want to be a part of the platform and the very essence of the Amazon vision – a multi product and brand offering with fast delivery – will falter. Equally, Amazon cannot offer the social connection and interactive entertainment and enjoyment that high streets and shopping centres can offer. This is the opportunity that high street retailers have to seize.
Landlords also need to offer more flexible lease terms so retailers have the ability to adapt. The old 15-20 year retail leases are already decreasing (now more like 5-10 years) and there is more room for further flexibility. Office leases, following the RICS voluntary lease code which encouraged flexibility, is a good example of a successful reform. The ‘norm’ of institutional 25 year leases have reduced to 3-5 years. These shorter leases are now institutionally acceptable and valuers have adapted too. Interestingly this is perhaps where the similarities continue between office and retail uses. The opportunity to create co-living, co-working environments intertwined with a leisure, shopping and dining experience is exactly the vibrant, social offer that cannot be replicated with the online offer and could make the difference in attracting shoppers to the high street. The ability to redevelop redundant retail units into office and residential uses and create a diverse offer is something Councils should be supporting.
With the High Street Futures Fund, Councils will be given greater responsibility to help promote and support landlords and retailers. We hope that this will involve innovating the current planning system, which in many areas is a handbrake to progressive reform of high streets. Bracknell Council is an excellent exemplar of a council that has actively supported and promoted regeneration and a strong retail and leisure offer. The new Lexicon shopping centre, which had huge support from the Council has transformed the town. With the Council, landlords and retailers working together the opportunity for retail is just as bright on the high streets as online.