Changing retailing

The changing face of retailing

Our world is changing, including the way that we shop. This means that one of the fastest changing human environments is our local High Street. So quick, in fact, that many of the things that would have been written in a geography text book ten years ago are now wrong.

Many local governments would say that planning for the future of our city centres is one of their biggest challenges. If they get it right the prize in terms of jobs and money is huge; if they get it wrong then job losses and social problems could cause havoc.

Just before Christmas last year Comet Electricals, a big name in UK retailing which employed 6,611 people in 236 stores, closed all of its shops. The UK government now has to support most of these newly unemployed workers and will also lose £26.2 million in unpaid taxes.

The money that is needed by the government to cover these bills comes from UK citizens through our taxes, so all of us are affected. But before you feel too sorry for yourself, just think about the children in the families of those 6,611 people who lost their incomes just before Christmas!

The changing face of retailing - Administration

When a larger company or business is in trouble with money it can apply to go into something called administration.

Administration doesn’t mean writing letters or filing paper - it means being protected from the people that it owes money to – its creditors. The law courts appoint a specialist company to run the failed one. They are called the administrators.

Administration in action - HMV

The changing face of retailing - Why have a High Street?

Young people today might easily ask this question. Why spend money on bus fares, train tickets, petrol and parking when it is quicker, easier and usually cheaper to go online and with a few clicks of a mouse you can have your shopping delivered to your door?

Recently, apart from comparative shopping, many of the reasons for High Street shopping have gone. 

The High Street used to be the place with the easiest access, often with different roads and other forms of transport coming together to form a transport node. These days, because of congestion, the High Street is often the hardest place to reach and even when you do there may no parking.

Because the High Street was the most accessible place in a town or city, it was also the location for other businesses with large office blocks. All of the employees and customers of these companies would provide a market for retailers, helping High Streets grow as shopping centres. More recently many of these offices have moved out of town to make them easier to reach by car.

More recently many of these businesses, as well as local government offices, that would have been in town centres have slowly moved away as access to town centres has become harder because of road congestion.

Let’s think about feet on the ground...

The total number of people in a town centre or High Street is called footfall. High Streets used to have the highest footfalls and therefore they attracted specialist retailers and services. These supply goods and services which are more expensive and are not needed very often by customers. We call them high order goods or services. These businesses needed a lot of potential customers in order to survive – a number that is called the threshold population.

Concept: Threshold population

Jessops, the photography retailer, provides a good example of a business with a high threshold population. Jessops went into administration in January 2013 and closed down, costing 1,534 jobs across 187 stores.

Jessops was a classic High Street retailer. The idea is that people don’t buy high order goods like cameras very often, so a specialist store like Jessops would need to be in the High Street of a big town or city with a large population in the surrounding area. The number of people needed in the area to support a business such as Jessops is its threshold population.

Although many more people now buy cameras, we tend to either buy online or in a mass retailer like a large supermarket which is more convenient than visiting the High Street. As the number of people visiting the high street who plan to buy a camera has got smaller, Jessops' threshold population grew too large and the stores had to close. 

The changing face of retailing - Moving with the times

Blockbuster is a chain of 521 UK stores with 4,190 employees that also went into administration in January 2013. Like Jessops and HMV it had failed to adapt to a changing business world.

Blockbuster’s main business was to rent out DVDs and video game discs. However, in recent years it found that many people didn’t want the hassle of going to a store to collect and return a disc. This is especially true since it is now possible to stream movies instantly or order online and have them delivered and returned by post.

However, the Blockbuster chain has many very well placed stores and could be a success if learns from takeaway/delivery food outlets like large pizza chains. Imagine ordering your pizza or other takeaway food online, as well as your movie or games rental. They are delivered together within the hour and after watching or playing them you simply drop them in the post to return them to the store. Perfect!