Is the takeover of House of Fraser by Mike Ashley really going to turn the department store chain around and boost the Great British High Street?
It’s a hot topic as Mike Ashley boasts that House of Fraser is going to become ‘Harrods of the High Street’. Yet, it also begs the question, does everyone really love shopping at Harrods?
I must admit, I find going into Harrods quite frustrating. In the early years of living in London, I would always make my way up to the quiet 5thfloor, where Warehouse and French Connection were to get out of the way of the crowds. It wasn’t a particularly nice shopping experience and definitely a place to be avoided at weekends and holidays.
Back to the original question, is this really going to boost the Great British High Street? It’s going to take a lot more than the twist of a department store. Which I assume (and will be pretty happy with) a combination of Sports Direct, similar to Macy’s in America whereby the sports section takes up a floor and there are huge ‘Last Act’ sales twinned with high end clothing.
Whilst, yes it will get me heading into the department store… I work my own hours so can go there at any time. The High Street needs a bigger shake up.
N
Think back 10 years, to the pit of the recession. At that point retailers were losing A LOT of trade and to stop retail tenants from leaving completely, Landlords were offering discounts and concessions for retailers to stay. Where shops became vacant, Landlords were similarly having to offer cheap rents and massive incentives for tenants to take up units.
Fast forward 5 years (to 2013) and the economy had picked up. People were shopping again. The boost in trade meant that retailers could again afford higher rents and were prepared to pay that to go in prime spots. We’d just had the Olympics and the Jubilee… the atmosphere was buzzy.
5 years, is also traditionally rent review times or lease renewals times. So 5 years on from the recession, rents were being negotiated at higher £/sq ft. Retailers, confident of where things were heading, were prepared to pay these elevated rents (I know this first hand, being a lease advisory surveyor and negotiating on these deals for Landlords, I could see the sharp upturn in rents).
However, around this time, internet shopping was on the rise. Online shopping was becoming far more secure. Delivery times were being exceptionally fast. Retailers who couldn’t afford the increased rents were turning to leasing cheap warehouses in the sticks and selling their stock online at cheap prices. Amazon, Etsy, Ebay ect. Was offering a service where they would handle this for retailers, all the retailers had to do was work on their marketing and customer interaction which is simple through social media.
Twin this with shoppers who didn’t have the time to get to the shops. With work and social demands hotting up, they couldn’t make the shops before closing time and there was no time to get anywhere on their lunch break. Online shopping became convenient and cheap.
Footfall began to fall on the high street and traffic increased online. Meaning retailers who didn’t have an online platform started to struggle and turn towards solely being online and started handing their stores back.
Empty high streets = terrible places to shop because there is no atmosphere.
Which leads us to 2018. Where the high street is still trying to command high rents. Yet, retailers can’t afford it anymore and are changing business structures to move to cheaper online platforms.
I get it. I do that too… I don’t have an office, because I have Facebook, LinkedIn, Twitter, Instagram, Pinterest and Skype. I closed my office within 2 months of opening as it was an expense I just didn’t need.
I also see, that an empty high street reduces property values for landlords and investors. If you can’t let it, then what’s the market rent valued at? It will have to reduce drastically to promote take up. Which is turn will reduce the value of a property. Which will then worry any lender who will demand part of the mortgage is paid up front. Which will mean that Landlords will have to sell off other stock quickly to pay for it. Which will mean that values of the other properties will come down so that they can be sold quickly. Which ultimately could mean a housing market crash…
There’s a cycle to these things, and right now it just doesn’t look great!
Rather than leaving the High Street empty, there must be a solution to get people shopping again. It’s about looking at how online shopping can be brought to the high street… not running your mouth about how much Amazon pays in tax (although it’s important and I agree they should pay their fair share; it’s not going to get people flocking to the high street in droves).
Here’s my solution to improving the Great British High Street:
- Store opening hours must be flexible to make sure people can shop at times outside of working hours – 7am-11am and 4pm-Midnight for example, with hot sales on payday.
- Retailers should look at peak times that people are shopping on their online stores and look at adjusting their store opening times accordingly (Yes local councils and landlords you are going to have to look at your trading hour licenses!)
- Tenant mix is vital, retailers with restaurants and leisure to promote happy shopping is a must – it’s got to be an awesome experience otherwise no one is coming
- Shopping must be accessible – When I was in Oklahoma City, I could phone a free bus to come and pick me up to take me to the mall (Thanks OKC Outlets, I’ll be back!). They also took me back to where I was staying… (yes we spent hundreds of dollars there because it was easy) what can you do to retailers to make it easy to get to you?
- Rents must be valued fairly, with trading in mind. Turnover rents should become more popular so that retailers are paying a fair proportion of what they earn (however, this is going to have to be a transparent system… I appreciate it’s not yet perfect!)
- Make your shop an exciting place to be. Think about something that would draw people in. Magnum Pleasure Stores have it right… I would travel through cities to get one of those incredible treats!
These are a start, but it’s important to start thinking about how the high street can become consumer friendly. Technology is changing the world; how can we use that to change the High Street?
I’d now love to hear how you would save the High Street? What ideas do you have? My list is a start and you may disagree, but it’s definitely a conversation starter!
Natasha
