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Rory Cellan-Jones

Will the web kill the High Street?

  • Rory Cellan-Jones
  • 11 Nov 08, 08:29 GMT

I heard something shocking the other night when I visited some friends. As their teenage daughter set out on a dark evening, she explained where she was heading: "I'm going Westfield, innit." It was not her mangling of the English language that shocked me - that'll be familiar to anyone with teenage children - but the fact that she was heading to a new shopping mall, Westfield. Why on earth was someone of her generation bothering with a visit to a real world shop, rather than opening her laptop and going online for a little light retail therapy?

Online shopping screenBy now, according to the internet visionairies of the late 90s, the high streets should be deserted, full of boarded-up shops, with the odd piece of tumbleweed blowing past. Back then, it was assumed that online retailing would soon triumph over traditional stores. A combination of convenience and the lower prices that came from operating without all those shop-fittings would do for the High Street.

Of course it didn't work out like that. Amongst the many casualties of the dotcom crash were all sorts of fancy etailers, from boo.com to clickmango, which over-estimated the public's appetite for online shopping and shoppers' patience when asked to wait in line for a shiny website to load on a dial-up connection.

But now could a recession accelerate the death of the High Street and the triumph of online shopping? The British Retail Consortium - which has always been a bit sniffy about the impact of the internet - has just published its first set of online shopping figures, alongside its regular survey of the High Street. It shows that, while sales fell on the High Street for the first time since 2005, online sales rose by more than 16%. The BRC is keen to stress that online only accounts for about 4% of total retail sales and says online sales growth "looks eye-watering but don't run away with the idea that the internet is 'killing the High Street'".

Richmond High StreetAnd it's true that online retailers still look puny compared to the High Street names. This week I visited a firm I've watched closely for the last decade, the online gadget retailer Firebox.com. Back in 2000, two years after its birth, this business just about survived the dotcom collapse. It was fortunate enough to have grown modestly in the early years, with a handful of staff and a small office where everyone helped in getting the orders out. In 2003 it made its first profit - something that has still eluded a number of online retailers - and its steady growth has continued. Now it has a big warehouse on a Croydon industrial estate, and is cautiously optimistic about Chrismas. But this is still a small business, with just 50 permanent employees. Those dotcom dreams of taking over the world have been replaced by more modest ambitions.

But firms like this, with smaller overheads than their High Street rivals, may have a better chance of surviving a deep recession than some of the big retail names. Shops selling electronic goods, books and music will find it ever harder to compete. The economics of "the long tail", where web operators can make money by offering a vast selection of goods that no single store can acommodate, may now prove irresistible.

So the internet may burrow deeper holes into the High Street, but it won't kill it. A website cannot replace the social experience of shopping. And without all those shiny new shopping malls, where would teenagers have to hang out? Innit?

Comments

  • Comment number 1.

    Oh not this old tripe again. The web was never going to kill the high street, it was always going to be an alternative.

    It can never replace certain aspects of visiting a real store.

    For one thing there is browsing, you can cast you're eyes over several hundred items of clothing in justa few seconds by walking into a shop and turning on the spot to see what catches your eye, web sites often show only a dozen things at once.

    Searching a web shop is brilliant if you know what you want, say a cofee maker, rubbish if you eithr don't know or don't know how to describe it, 'trendy but warm jumper' won't get you much useful in a web search.

    You also don't get the practicle side of being able to try things on for size, feel them for quality or sometimes even know exactly what size somethign is from a picture.

    And that's without talking about any social or theraputic aspects.

    I am a huge fan of the online store, but it wont fully replace the wandering into town, looking through market stalls and having a cup of coffee in the quadrant.

  • Comment number 2.

    As someone who has spent their entire adult life buying on-line (OK, I'm pretty young!) I must admit that although the prices and the range are a lot more favourable in most products, I still prefer to visit real shops.

    Why? Firstly, can I be bothered to pay £10 on postage for an item that only costs slightly more on the high street, and then wait for 2-4 weeks for it to get to me (talk about taking th buzz out of impulse buying!)
    Secondly, I recently bought a fantastic 'netbook' (the one with the 8 hour battery life). Although I heavily researched it on-line, it was impossible to tell if I could get used to using such a small screen or keyboard without tracking it down at a local chain (toy!) store and having a hands on demo.
    Finally, my Dad has only just got the hang of e-mail. It'll take more than a few years to get him comfortable with on-line shopping.

    So Rory, I agree with you! Even the shiniest on-line store will not replace the hand's on, crowd fighting, pavement pounding, totally human experience of shopping.

  • Comment number 3.

    Agree with all three. If you know what you want - the web can be great - CDs for my niece? 2 mins on the web - in one of my stored dispatch addresses - delivered in less that 48 hours. When it comes to something expensive that can break down, I really think twice - buying from a shop you can take the product back to and pick up from is so much easier. The web price has to be seriously good to beat that.

  • Comment number 4.

    It might not kill it, but it will almost certainly reshape it.

    Admittedly it is difficult to establish a successful online business these days, unless that is you have the existing infrastructure to support a business at any meaningful scale.

    Who has that scale? The current national bricks and mortar businesses - they have the infrastructure and the buying clout to succeed online.

    I'll put a fiver on some significant changes over the next 3-4 years. Bricks and mortar retail in many sectors is too costly to exist without a decent e-commerce presence to support it - rents alone are punitive and competing online operators create huge margin pressure.

    e-commerce has been slow to gain traction as a percentage of total retail sales, but I think they’re probably distorted by the supermarkets. For many sectors, especially those in the discretionary goods sectors, I'll bet that the changes we'll see will be pretty radical. I'm sure that an analysis of e-commerce sales by sector would be illuminating.

  • Comment number 5.

    Personally I use Amazon for just about everything. Saying that, without high street stores I would be lost. Quite often I will just fancy going into town, as everyone has said, it's the social experience and just nice to get out of the house.

    If we were all to believe the dotcom rumours of the late 90's then no one would ever leave the home as work would all be done over the internet (a possibility but certainly not plausible for most), you wouldn't need to meet up with friends as you have your handy webcam and all of your shopping needs can be met online. We all know with the glorious benefit of hindsight that none of this was ever likely or is ever liekly to happen.

    The web makes things easier and the notion that it will ever be a replacement is ridiculous!

  • Comment number 6.

    Perhaps in the 90's this argument had merrit, but not in the modern world.

    Ask yourself how many shops you typicaly see on a highstreet don't already have an online store? Quite frankly the only large store I can think of that seemingly took forever to get an online store (but has now done so) was Ikea.

    Since the vast majority of highstreet stores like WHSmiths, HMV, Zavvi and the like already have a huge online presence, the success of purely online stores like Amazon, Play, Dabs.com and Ebuyer are really irrellivant.

    So long as the big-name stores remain in the highstreet, there will always be an attraction for people to go there .. and while there is always the attraction, the big names will continue to be there.

    As it stands, the only shops that stand to suffer from the online shopping world are those too stubborn to branch onto the web themselves. Really, the with the aide of Ebay, Play Trade and Amazon Marketplace there is no real excuse for a shop not offering online sales and failing to do so, in my opinion, is simply bad management.

    It isn't online shopping that will ultimately kill the highstreet, it is the large multiplex shopping centres like Lakeside and Bluewater - these are the things that have already caused Highstreets to suffer.

  • Comment number 7.

    You cannot lie on a lap top when you're buying a bed, any more than you can perch on a monitor when you are buying a chair.

    The value in the web (if you can call it that) is in identifying your needs in the High Street then placing your order on the internet at a discount.

    Problem is, it is just this kind of deceitful practice that will kill off retailing higher priced items like furniture and electrical appliances - for the shops are not going to stand idly by and feed the internet traders forever. They'll close - just as I did.

    Manufacturers must decide which side of the fence they want to service; at the moment they sit back and rake in the orders from wherever they come. They couldn't care less about the effort that some small retailer has invested in the "customer".

    The sooner the retail trade wakes up and insists on a suppliers exclusive relationship ... the sooner we might see some sense return to the High Street.

  • Comment number 8.

    One common misconception is that it is "much" cheaper to run an online store as compared to a high street store.

    Aside for the warehousing and distribution overheads, there are hosting fees and web site design costs.

    However, there is also another layer of costs that most people in the real world are not aware of: I am referring to display advertising (i.e. banner ads) fees, pay-per-click fees, affiliate commissions, discount codes, agency fees, higher processing costs for Credit Cards, etc.

    Taken with the fact that online competition between merchants drives prices down, these hidden costs of online commerce mean that most online retailers simply don't have the margins available to expand.

  • Comment number 9.

    CAM Edin1.31pm

    I don't think people are necessarily using the term 'much cheaper' to describe running an online store but the facts behind the growth of Amazon and the like shows that profits can still be made at heavily 'discounted' prices.

    All of the on costs mentioned have a counterpart in one form or another in basic retailing ; eg. storage and distribution, advertising, sales commission, the cost of processing credit cards, display etc - but the on line market doesn't have to pay so highly for knowledgeable staff and High Street rental and rates, the latter often giving a free service to the sheds in the country offering on line discounts.

    On line trading has one value only - the price. In terms of service, you can forget it for at that level everything is but a number.

  • Comment number 10.

    Rory,
    probably not....some people still like the high street for shopping;face-to-face.

  • Comment number 11.

    I have to agree as much as i love the internet and the transparency it has brought to online retailing it will never take over the high street, i believe the two will learn to leave with each other giving a true multi-channel shopping experience for customers where you can purchase a product online but return it in store or find a product on the interent, either go in store to pick it up or reserve and pick up in store. Such mechanisms are what some of the larger retailers are putting in place to further provide channels where you can communicate and sell with your customers.

    But the one thing that i particularly like the internet for is the ability to find prices and deals, wheather in promotion / discount codes or online exclusive offers. Such offers and the ability to provide such offers to a mass audience in a short turn around time is somethign that a high street store might find had to implement, more importantly in the current climate is what is helping some online retailers be better suited to take another large chunk of this christmas's share of sales. A suppose this would be to no supprise that alot of websites such http://www.savvydealsonline.co.uk are promoting offers and money off tips for online shoppers.

    My moto will always be I can't find out how comfortable a bed or sofa is online but I can sure research instore and then find a cheaper outlet online... Merry Christmas all..

  • Comment number 12.

    Ultimately brands must have touch points at all levels.

    There are a host of pure play websites now which thrive as they don't have the overheads of their offline competitors however, for growth and true presence major and key positioning on the high street is vital - if only for branding and retail theatre.

    The same can be said for online publishing - the highest and most respected publishing houses such as Conde Naste should be wary of trending and fashionable blogs such as http://www.7thingsfab.com

    Online is definately here - but presence across all channels will be were brands win.

  • Comment number 13.

    Would I meet anyone intertesting in a online store? Doubt it!

    Would my freinds be so happy to join me in internet shopping for a few hours? Very unlikely.

    Would subway deliver my sandwitch because my hard shopping has been finished? Not a chance in hell.



    The high street is so strong for many things that internet could never provide. Shopping in the high street can be as much a social thing as it is to purchase items. In fact, I see people I hadn't sen for years in the high street because we went in different path's after school... I don't see that sort of socialising happening on www.currys.co.uk anytime soon!

 

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