THE BLOG

It's Not the Health of the High Street It's the Chemistry of Commerce

28/10/2014 13:03 GMT | Updated 28/12/2014 10:59 GMT

By Paul Todd

You ask 10 people and you will get 10 different views on the health of the high street. Then you will get others asking if the high street is still relevant any more. It's not that the debate is polarised, as much as the fact that the changes that have hit retail have been so profound and have happened in such a short space of time that we struggle to make sense of them. Data and statistics only cloud the issue further.

However, amongst the confusion, some things are clear. High streets across Europe have been impacted by a confluence of factors, economic, political and cultural as shopping undergoes seismic, generational change. Some areas, such as the north east of England where I was born and raised, have taken the brunt of this. The complexion of the high street has changed as retail gives way to service and leisure, and shopping becomes synonymous with lifestyle.

But rumours of the death of high street shopping are greatly exaggerated. Some people imply that physical retail is dying, and that's not true. There is a fundamental anthropological need for shopping, and that's not going to go away. You would be forgiven for thinking different, but eCommerce only accounts for around 20 per cent of retail sales, some analysts put it even lower. People still love going out and shopping together and they always will. Some prefer department stores, some prefer browsing markets, but we all love that ritual. Technology is driving a shift in shopping, but it will never be a replacement for it.

The reality is that the high street has been evolving since the Middle Ages. Retailers are responding to the technological, behavioural and cultural shifts that are happening in the UK, and many are profitably embracing this new dynamic. Perhaps unexpectedly, eCommerce, often held responsible for the decline of the UK's high streets, is actually a key factor in their success. Partly, that is down to what I call 'chemistry'.

Respected retail commentators have spoken about the centrality of community to the high street. They have spoken compellingly of the notion of shared experience as the glue that sustains it. Really, they are talking about chemistry. The urban ecosystem is complex - successful retail hubs mix retail with entertainment, convenient transport, the right licensing rules, smart planning and increasingly, eCommerce. These days, eCommerce is just as essential to creating the right alchemy as anything else.

The ubiquity of the smartphone, and the all-pervasive nature of perma-connectivity, has transformed everything. There has probably not been a moment of change like this since the industrial revolution. Our mobiles are now our 'mission control', and they have delivered an intoxicating blend of speed, convenience, personalization, and self-expression which are redefining how we live our lives.

Retail, like any other industry, has had to adapt to this new reality, and it will need to be part of the chemistry of any future high street. But what few people know is that the disruption that this new technology has brought is already resulting in more sales for stores, whether they are online or not. eCommerce is driving footfall back to the high street. How is it doing this? By making the supply chain more cost-efficient, and by optimizing the convergence of online and offline sales strategies, for instance by curating inventory for the benefit of the customer - giving a much more personal in-store experience. Now you can go into a store and expect a much more personalized service, with a bespoke experience more closely built around your needs, than you could before, whether that's engraving a watch in real time or helping you to pick out a special gift for someone you love. Ultimately, it is proving to be a key driver of sales.

Let's take the example of Click and Collect, where you can pick up your item on a day and at a time that suits you (eBay does this with Argos but many others do it too). More than two-thirds of UK shoppers have now used click and collect at least once, up from 51% in 2012. That gets people back to the high street, where they spend more money. It can be a symbiotic relationship.

Far from being the enemy of the high street, it is becoming apparent that increasingly online needs stores, and stores need online. The lines between the two are blurring into an 'omnichannel' world as sellers recognize that the optimum way to run a business is to combine your online and offline strategy, and buyers increasingly seek out the best of both worlds.

Interestingly, a report earlier this year by Southampton University said that up to 1-in-6 UK SME e-tailers are planning to expand into physical stores this year as they feel the competition from online. Mountain Warehouse decided to open outlets in France, Germany and Italy after its eBay channel proved so successful. This is a new frontier and the rules are being defined by the consumer as much as the retailer.

In many ways, technology has helped bring about a democratisation in selling, empowering smaller sellers to compete. We are in a participatory economy that rewards entrepreneurism, giving more people more opportunities, and it complements the high street.

We are at the beginning of an age of shoppable storefronts, facial recognition payments, beacon tech where consumers are alerted to offers through their smartphones, wearable technology and even 3D printing. The high street will remain as relevant as ever, but it will be very different. It will be truly connected commerce.

The fundamentals of retail won't change - it's about the right inventory, in the right place, at the right time. Giving people what they need and love. But today that can only be achieved, and the customer will only be satisfied, if we get the chemistry right - mixing the physical with the virtual, and engaging in smart planning to create a fertile environment that allows us to reboot how we interact with and enjoy our high streets.

Paul will be speaking on Tuesday 28th October at the Intelligence Squared debate, 'The High Street is Dead, Long Live the High Street' at Kings Place. Follow the discussion on Twitter with #highstreet and for more information visit www.intelligencesquared.com.