THE BLOG

At The Crossroads

06/02/2017 16:38

Technological change has led major retailers to warn one million retail jobs could disappear in the next few years. A threat to jobs on this scale in any other industry would provoke a national outcry. But the government has barely acknowledged it.

The retail industry fails to feature in the prime minister's modern industrial strategy, becoming the poor relation to more fashionable sectors like pharmaceuticals, high value manufacturing and digital.

The absence of the UK's biggest industry - which employs over four million people - from economic plans gives the impression its future does not matter to policy makers. But we simply cannot afford to ignore it. The future of jobs, high streets and communities depends on it.

This major shift is being predicted because of changes in the use of technology. In the future, shopping centres, high streets, their stores and the people they employ will increasingly have to compete with a new breed of retailing in which goods are bought online, processed by bots in warehouses and delivered by drones, buzzing like bluebottles across our skies.

A number of retailers have looked at these trends and failed to see any other future. Retailers like the American chain Gap are pulling out of shopping centres and high streets up and down the country, leaving a surfeit of boarded-up premises, charity shops and pound stores.

And too many of the bricks and mortar stores that remain have become service-light imitations of their former selves, with a shopping experience so devoid of joy that customers are starting to decide that they might as well stay at home.

High streets are becoming deserted. The very sense of community is disappearing around us.
There is, of course, an alternative. There is a way forward that is both more human and more economically vibrant. A future where technology does not itself determine the shape our lives take, but rather enables us to lead richer lives. That is, after all, what technology is intended to do.

The alternative cannot be a nostalgic, rose-tinted re-imagination of 1950s high streets. Instead, we have to be bold and brave enough to see how government policy can support practices that are likely to make the future of retail more enjoyable, more productive and one we will look forward to. Local markets, high streets and shopping centres are central to people's ideas of place in both urban and rural areas. We have to re-invent them.

Let's start with top-level strategy. Retail should play a prominent role in Theresa May's modern industrial strategy, backed by investment in a new catapult centre for innovation in the sector.
For this to work, we need to make sure the benefits of technology are fairly shared across the country. This means ensuring local businesses and makers have new technologies at their disposal that can strengthen the services they offer. Greater access to digital printing, for example, has the potential to reduce manufacturing costs for many smaller craft businesses.

Given the growing lack of public trust in big businesses, many are looking to rediscover their human touch. A relationship with a highly trained, adequately paid person who can help customers get what they need can never be replaced by faceless algorithms, even if they might seem cheaper at first. We can see how successful small chains like Richer Sounds have been in following this more human path to growth.

Retailing needs to be opened up to more competition for smaller chains and local traders offering more variety and locally sourced products and services. This will not only strengthen local supply chains but also offer the potential for ongoing customer relationships in which goods are serviced and reused, not just disposed of.

Local communities need to be encouraged to take greater ownership of mutual ventures which better serve their needs. For inspiration we should look to the rise of the craft brewing movement, in which small, locally owned players are now beating global brands. And the proceeds of their growth by in large stays in their communities, rather than being siphoned off to unknown recipients overseas.

Finally, a reformed tax system needs to be the central pillar of a more human retail industry. We urgently need a return to a level playing field on which businesses are no longer incentivised by our tax system to trade on the web rather than on the high street, and in which global online retailers continue to avoid paying their fair share of taxes.

The recent meeting of the world economic forum was dominated by discussions about how governments and businesses should respond to growing disruption brought about by technological change. While different solutions were put on the table, one thing was absolutely clear: governments ignore the consequences of this change at their peril.

Here in the UK, the future of the retail industry needs to be right at the heart of this consideration. The future of communities, high streets and millions of livelihoods depends on it.

The final report of the Fabian Society's retail taskforce, At the crossroads: the future of British retail, was published this week.

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