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The success of traditional retailers proves the ‘death of the high street’ is a myth
For more than a decade, we have been having angst-ridden debates about the demise of traditional shopping centres.
If Woolworths/Top Shop/Laura Ashley had a tenner for every report on the “death of the high street” perhaps they would still be in business.
On Monday, however, M&S announced plans to open 20 new shops, and create more than 3,000 new jobs. Meanwhile, the likes of Next, Boots, and JD Sports announced booming Christmas results. Ikea is moving into the high street. Even brands such as HMV, once written off for dead, has reported soaring revenue growth.
With the likes of Amazon cutting jobs, the arrogant tech moguls who assumed traditional retailing was gone forever are about to be exposed as over-optimistic gamblers.
Every industry hits rock bottom eventually, and starts to turn around – and M&S’s bold move to start expanding again is a signal that the high street has reached that point.
M&S has been written off so many times it is surprising that there is much life left in the company at all. It has drafted in chief executive after chief executive, launched dozens of rescue plans and been through more reorganisations than most of us can remember, without ever quite managing to get itself back on track.
And yet, yesterday’s announcement was genuinely surprising. Its plans include reviving many old Debenhams sites, space that only a year ago was seen as so hopeless it would have to be turned into offices or apartments or perhaps even torn down. Now it will be filled with aisles, shelves and cash registers again.
In part, that is a testament to smart management that has rebooted the chain, with strong figures showing some of its best sales in years for both clothing and food. And yet, it reflects something else as well.
The high street is finally turning around. There are signs of that everywhere. Next had an excellent Christmas (although we might discount that since it always does well), and so did JD Sports, B&M and Boots. Ikea, perhaps the best-run retailer in the world, started moving into the high street last year with the opening of its first local store in Hammersmith, west London.
Screwfix may not be the most glamorous retailer, but it is opening 80 new stores, often in small, more local locations. The number of independent bookshops climbed last year to a 10-year high, reclaiming market share from Amazon.
Even HMV returned to profit this year for the first time since it was bought out of administration in 2019 on the back of booming sales of Taylor Swift and Harry Styles on vinyl.
The contrast with online is becoming stronger all the time. Amazon is cutting staff and closing warehouses including sites in Hemel Hempstead and Doncaster.
Asos, until recently the most successful of the UK retailers, has reduced staff costs, is closing warehouses and is removing unprofitable brands as it restructures its operations. Its shares are down by more than 60pc over the last year.
Overall, online retail sales fell by 10pc in 2022, reversing years of record-breaking growth, and in December alone they were down by 12pc year-on-year.
Indeed, 2022 was the first year during which internet retail failed to grow since measurement began. Even Black Friday didn’t tempt us back to our phones and laptops: the week was as flat as the rest of the year.
The glib predictions of the e-commerce experts who forecast the High Street was finished forever have turned out to be completely mis-guided. And the massive bet by the tech overlords who assumed the shift to home shopping during the pandemic was permanent, and started hiring staff and buying delivery vans accordingly, have turned out to have had more than a touch of hubris to them.
It is not hard to work out what is going on. In reality, industries get disrupted all the time, they shrink, change, and then start to settle down into a new normal.
There is no question the internet has changed the way we shop and done so permanently. The retailers who failed to adapt to that were always going to fail and deserved to do so. And yet, every shrinking industry eventually reaches a plateau, starts to stabilise, and the well-run companies figure out their place in a changed marketplace, and start to make money and grow again.
Sometimes it will be with hybrid on-and-offline operations, as most of the supermarket chains have now discovered.
Sometimes it will be with convenience, a niche which the growing chains of local stores have exploited.
Sometimes it will be by offering expertise and experiences, as chains such as HMV have found. The right mix will be slightly different in each case. But physical retail has stopped shrinking, and can now start to grow again, at least modestly.
It would help if the Government stopped hammering the industry. Business rates are still a crazy way to raise money for local services.
Parking fines should exist only to punish the most flagrant breaches of the rules and not as a stealth tax that deters people from going shopping.
Perhaps most of all it could stop raising taxes so we all had a little more money to spend on ourselves. Even so, physical retailing looks to have settled down at about 75pc of the entire market.
The tech companies that bet on its disappearing completely have turned out to be completely wrong and will pay a high price for over-expanding. The death of the high street has been cancelled. We may soon even be able to watch it start growing again.