The High Street

navrig2

Given this post:

viewtopic.php?f=40013&t=13100733 and the Mercian Blog which is well written and the potential speculation about Ronde in Edinburgh I wonder if we are about to hit a crossroads for the British High Street.

Mr Sports Direct gave frank views and evidence to MPs yesterday in which he said the High Street is dead, not dying, is dead.

Last week I went to a well established, large, city centre, LBS (not a chain as far as I know). I bought a 9spd chain and a tube of well known chamois cream. They were £20 and £15.99 respectively. I bought from the LBS because I wanted to fit the chain at the weekend. The cream was an impulse buy because I am almost out of the stuff. I wanted to have the chain in time for weekend repairs and servicing. As it turned out I didn't get near any bikes this weekend.

I could have bought the chain for about £10 online and the cream for £12. I could probably have had them delivered in time for the weekend as most shops deliver next day or the day after that.

I suspect that Mike Ashley is right and that our High Streets are about to become a line of coffee shops, (locally made) gift shops and experience shops. Retail has gone.

Unless there is a means of balancing the difference - tighter tax control or, as MS suggests, an online tax for each sale I cannot see a High Street recovery.

I am as guilty as anyone having bought loads of stuff online so no moral high ground here.

thistle_

Navrig2 wrote:

Mr Sports Direct gave frank views and evidence to MPs yesterday in which he said the High Street is dead, not dying, is dead.

That's interesting, because rumour locally is that they are about to open a large store in the middle of town. They already have two, both at edge of town retail parks with tons of parking (maybe one of the other stores will close).

shirley_basso

Business rates crippling owners.
Rents (although these come and go)
Cheaper like for like sales online from non bricks and mortar shops (wiggle)
Tax breaks for other online vendors (Amazon)
Poor parking provision for shoppers.
Improved online shopping experience.

Ultimately, high street real estate is not infinite. Freeholders will have to reduce rents if all their tenants keep going under, but the council does have a responsibility to keep high streets thriving, through rates, parking or park and ride services.

The shopping experience will evolve, because in spite of people being hammered for becoming social media obsessed drones, they like trying on clothes, browsing shops, meeting friends, getting out and about and shopping can be a fairly enjoyable, sociable experience.

Retailers need to adapt and evolve, but quickly, and it's not being made easy for them by local and central gov't. It needs to be a better experience than than buying online.

A random theory which may be wrong is about free returns which may come back to bite online only retailers before long - people will buy lots of items to try on for size and return a load, initially skewing demand causing retailers to order more which ultimately isn't sold, then reduced, devaluing brands.

navrig2

I didn't hear all of what he said but picked up on a couple of things:

Councils are not killing the High Street (implying that it was not a Council Rates issue) online sales are.

He is talking about the "average" High Street in the "average" town. The likes of Oxford Street don't com under this sweeping generalisation.

I guess there are certain streets in certain cities which are more likely to survive if not thrive irrespective of other markets.

bompington

I am shocked, shocked I tell you, to hear that a successful legacy businessman has suggested that the solution to newer and better ways of doing things is to tax his competitors out of business.

navrig2

Shirley Basso wrote:

Retailers need to adapt and evolve, but quickly, and it's not being made easy for them by local and central gov't. It needs to be a better experience than than buying online.

You may be right but I suspect we may be too late. 2 years ago I bought a sort of high end watch. Typically you can't get them online and you have to go through registered dealers - I suspect to protect from fakes.

The process of buying the watch was personal. They took their time, let me try loads of different watches, use gloves when handling the watches and offered us some Champagne.

Was it a better experience?

Maybe but the offer of Champagne just made me think they are charging too much and,hence, making too much profit from me. Maybe I am just a cynic.

Would I do the same if I wanted another expensive watch?

Yes but only because they are generally not available discounted online.

QED?

slowmart

It’s too simplistic to say that there’s a silver bullet which has decimated the high street but rather a blend of individual factors, commercial competitor pressures, changing spending habits of customers, fixed costs which become increasingly painful as margins reduce, salary increases, increased stock to combat online sales, less appetite from lenders to lend and insurers to cover suppliers exposure. It’s also clear that the tax landscape has to be revisited as the lack of corporation tax paid by some online entities is not sustainable

ugo.santalucia

BTW... you don't need the chamois creme. SInce I gave up on it, my groin area is a lot better... and I have done 200 and 300 km rides since...

navrig2

ugo.santalucia wrote:

BTW... you don't need the chamois creme. SInce I gave up on it, my groin area is a lot better... and I have done 200 and 300 km rides since...

Initially I didn't use it but once I started to ride more than about 70 miles I found I needed something to help keep the skin "healthy".

TBH I have tried a few things including Sudocream and menthol versions of chamois cream. The cheapest and still effective stuff is Emulsifying Ointment which costs about £5 from boots for 500g. It lasts for ages but comes in a big pot which is not so packable. Needs decanting.

chippyk

Navrig2 wrote:

ugo.santalucia wrote:

BTW... you don't need the chamois creme. SInce I gave up on it, my groin area is a lot better... and I have done 200 and 300 km rides since...

Initially I didn't use it but once I started to ride more than about 70 miles I found I needed something to help keep the skin "healthy".

TBH I have tried a few things including Sudocream and menthol versions of chamois cream. The cheapest and still effective stuff is Emulsifying Ointment which costs about £5 from boots for 500g. It lasts for ages but comes in a big pot which is not so packable. Needs decanting.

Emperor’s new clothes in my opinion. File chamois cream in the long list of cycling solutions looking for a problem.

flanners1

Navrig2 wrote:

I didn't hear all of what he said but picked up on a couple of things:

Councils are not killing the High Street (implying that it was not a Council Rates issue) online sales are.

He is talking about the "average" High Street in the "average" town. The likes of Oxford Street don't com under this sweeping generalisation.

I guess there are certain streets in certain cities which are more likely to survive if not thrive irrespective of other markets.

I think Councils are not solely to blame but they are a significant factor in the demise of the 'High Street'. Extortionate parking charges, congestion, badly maintained roads and public spaces, lack of amenities, draconian parking restrictions and enforcement, spiralling Business Rates etc. Who wants to sit in 30min tail backs to pay £3 ph to park their car to visit a run down dump of a Town?

Tunbridge Wells used to be a great place to shop and visit but thanks to the out of touch corrupt old Tory soaks on the Council the place is now a dump with premium retailers leaving in their droves. The Council's response use (borrrow) £80m to build itself some new Council Offices and a Theatre that are not needed and nobody wants. Bunch of.

cycleclinic

I have never used cream even for a 24hr it back to back long rides. Ride enough and your arse turns to leather.

The playing field has to be leveled. That means the distribution chain too. That involves brands too. A broad based internet tax would cripple small companies too. An internet tax mean wiggle move to Ireland and do does chain reaction. If the tax is EU wide then fine but wait were leaving.

Helping shoppers to park more cheaply is the wrong solution. With car parking everyone pays when it subsidised. Subsidies are generally distorting.

However our government is preoccupied. By the time they release all the shops have closed it will be too late.

chippyk

Flanners1 wrote:

Navrig2 wrote:

I didn't hear all of what he said but picked up on a couple of things:

Councils are not killing the High Street (implying that it was not a Council Rates issue) online sales are.

He is talking about the "average" High Street in the "average" town. The likes of Oxford Street don't com under this sweeping generalisation.

I guess there are certain streets in certain cities which are more likely to survive if not thrive irrespective of other markets.

I think Councils are not solely to blame but they are a significant factor in the demise of the 'High Street'. Extortionate parking charges, congestion, badly maintained roads and public spaces, lack of amenities, draconian parking restrictions and enforcement, spiralling Business Rates etc. Who wants to sit in 30min tail backs to pay £3 ph to park their car to visit a run down dump of a Town?

Tunbridge Wells used to be a great place to shop and visit but thanks to the out of touch corrupt old Tory soaks on the Council the place is now a dump with premium retailers leaving in their droves. The Council's response use (borrrow) £80m to build itself some new Council Offices and a Theatre that are not needed and nobody wants. Bunch of.

Is the irony of grumbling about congestion and draconian parking restrictions lost on you?

cycleclinic

Towns and Cities will thrive when when put other ways of getting about in place. I am increasingly convinced if you do a full cost benefit analysis the car as we use it is a drag on economic growth. Even if parking is free I am not tempted to drive somewhere. I only do because there is no choice. Last weekend I took my daughter to the cinema in bury still Edmunds. I had to drive, if there was a train I would have used it.

If you want to reinvigorate towns pedestrianise, build a light rail system along side a roads connecting all towns with buses getting you around the town and to the villages. Cycle roads will help alot too. That way less road space is needed and less parking space.

That's is infrastructure that is needed. Then again I think "coding" as it's now called should be intergrated and in every part if the curriculum from age 5 to 18.
If we did that we probably would have an everyday economic miricle in 15 years if we started with 5 year olds today.

The death of the high street is not just down to the internet. Simplistic solutions like more free parking are just that simplistic.

Bad goverance us the problem. It requires big thinking to solve.

flanners1

ChippyK wrote:

Flanners1 wrote:

Navrig2 wrote:

I didn't hear all of what he said but picked up on a couple of things:

Councils are not killing the High Street (implying that it was not a Council Rates issue) online sales are.

He is talking about the "average" High Street in the "average" town. The likes of Oxford Street don't com under this sweeping generalisation.

I guess there are certain streets in certain cities which are more likely to survive if not thrive irrespective of other markets.

I think Councils are not solely to blame but they are a significant factor in the demise of the 'High Street'. Extortionate parking charges, congestion, badly maintained roads and public spaces, lack of amenities, draconian parking restrictions and enforcement, spiralling Business Rates etc. Who wants to sit in 30min tail backs to pay £3 ph to park their car to visit a run down dump of a Town?

Tunbridge Wells used to be a great place to shop and visit but thanks to the out of touch corrupt old Tory soaks on the Council the place is now a dump with premium retailers leaving in their droves. The Council's response use (borrrow) £80m to build itself some new Council Offices and a Theatre that are not needed and nobody wants. Bunch of.

Is the irony of grumbling about congestion and draconian parking restrictions lost on you?

No but your inane comment is.

cycleclinic

Free parking won't save the high street. It an old model that's dead. You can't uninvent the internet. Too many shops try and replicate what the web does.

How many internet retailers are profitable?

Wiggles last financial report shows assets of £180 million and libabilies of £156million.

It's not just the high street that's in trouble. It's all of retail.

shirley_basso

Assets: stock
Liabilities : Credit payable to suppliers, acquisition debt.

What would you expect? How is that showing a problem of trouble?

cgfw201

We used to go shopping and come home for a coffee.
Now we shop from home and go out for a coffee.

The world changes.

cycleclinic

If your liabilities are close to your assets then cash flow problems can result. It means they are running close to no profit or a loss. 7 million cash is what they have and that's small change.

shirley_basso

Not necessarily. It's timing of cash flows that matters. I think the £25m net asset position means they are ok. I imagine they have stock financing in place anyway.

slowbike

cgfw201 wrote:

We used to go shopping and come home for a coffee.
Now we shop from home and go out for a coffee.

The world changes.

exactly - shopping is mundane - we don't like "shopping" - we do like browsing for items that interest us - but generally, getting the necessities needs to be done quickly and cheaply. First went the butchers & the grocers - all amalgamated into supermarkets - even all our fuel garages have mini supermarkets for that convince shop (at a price).
Now going are the larger retailers - selling all the stuff we can see online - who has time to go to the high street now? By the time you've driven there, paid for parking and then walked miles to the shop - only to find they haven't got your size in the style you want ... nah - easier to do click and collect - or even just 24hr delivery.
Sure - the high streets are still quite busy - people looking for an experience, a bargain or just going for a wander when there's nothing better to do ... but where's the money? How many of those go to look - then buy online (or get the retailer to price match online prices) because it's cheaper.

Even experience events suffer - because they offer the same stuff as everywhere else - usually at a premium because of the cost of attending the event. Internet trading is slowly cutting out middlemen - the importer now sells direct to the public or offers dropship service for other retailers - everyone gradually undercutting everyone else in a slow and deadly spiral to be the cheapest.
So how can you survive? By offering a unique product and/or service that is enticing to the market whilst maintaining accessibility.

cycleclinic

Shirley basso my point is wiggle maybe alright but there margins are tight so all it takes is a unforseen like a recession next April and they suddenly have little wiggle room.

Pun intended and the whole reason for the post.

Those tight margins maybe fine for a bigger organisation but they don't work for a smaller retailer. Hence the playing field is not level. We can't have a scenario where the barrier to entry is so high that businesses can't start. Ashley's ask for a 20% tax on web sales though is not the way forward because people prefer online shopping. You should not be forcing people to shop in a store in a place they don't want to go.

Thinking back what was so great about shopping in town anyway. The only shops I ever liked visiting were record shops that stocked vinyl. My I could spend time and money in shops like that.

Vino'sGhost

Amazon pays virtually no tax in the UK, smaller business cannot compete because even though they could use the same tax ruses theyre inaccesible due to scale. It's a vicious circle and unless someone adresses it there will be a total strangle hold followed by cynical cost price reductions till all the stuff is either tatt or weak reflections of what it used to be.

Think of the DIY market. BandQ driving costs down on its suppliers who have to produce thinner lighter less durable products to meet the demands of more for less until its just less for less.

The only thing the High Street can now offer in many product areas is experience and service and in the bike industry a cheap 16 year old working on bikes or "advising" is really not any kind of positive experience or service.

Vino'sGhost

thecycleclinic wrote:

Shirley basso my point is wiggle maybe alright but there margins are tight so all it takes is a unforseen like a recession next April and they suddenly have little wiggle room.

Pun intended and the whole reason for the post.

Those tight margins maybe fine for a bigger organisation but they don't work for a smaller retailer. Hence the playing field is not level. We can't have a scenario where the barrier to entry is so high that businesses can't start. Ashley's ask for a 20% tax on web sales though is not the way forward because people prefer online shopping. You should not be forcing people to shop in a store in a place they don't want to go.

Thinking back what was so great about shopping in town anyway. The only shops I ever liked visiting were record shops that stocked vinyl. My I could spend time and money in shops like that.

good post.

cycleclinic

Of course it is customer demand that is reponsible for current business practices. We dont have to buy the cheapest. We do and moan about the short life span of products. My dear wife says she will never buy cheap paint again as it requires 5 coats to cover the wall properly. I would not know I got banned from painting years ago. Its a charmed life I assure you all.

giropaul

I suspect that the Evans takeover as a “ pre-pack” deal will have repercussions on the LBSs. Rumour has it that suppliers to Evans will have taken a very big financial hit. As they struggle to keep their heads above water they are likely to chase invoice payments from other customers as hard as they can, and severely reduce credit lines.

cycleclinic

Distributors will have insurance for this.

big_harv

thecycleclinic wrote:

Distributors will have insurance for this.

Indeed they will, or should. But they or the Insurers can sell these balances over to debt recovery scumbags who will be harassing LBS's. Not a pretty scenario.

norvernrob

I went Christmas shopping today. When I couldn’t find several of the things I wanted in stock at a local retail park and shopping centre, I ended up sat in the car park ordering them online on my phone instead. TK Maxx was the one shop worth going in. As it’s stock is so diverse I bought quite a few items including socks, an insulated travel mug, nice gift sets, unusual sweets etc.

It’s just easier and cheaper to buy things online when you know exactly what you want.

cycleclinic

I know. Without the web I would have no business. You simply can't uninvent the internet or tax it out if existence. Every internet company will suddenly headquarter in Ireland and post here. If a 20% tax got levied on my internet sales I'd be off to Ireland.

barongreenback

Big Harv wrote:

thecycleclinic wrote:

Distributors will have insurance for this.

Indeed they will, or should. But they or the Insurers can sell these balances over to debt recovery scumbags who will be harassing LBS's. Not a pretty scenario.

No. The credit insurers don’t tend to sell debt on pre-insolvency and will go through a standard recoveries process via the IP. And yes, all the major distributors insure and were covered for Evans.

Your earlier comment about assets and liabilities is misleading. Most retailers aim to operate with negative current liabilities as suppliers are the funding model (rather than overdraft for example). Longer payment terms from suppliers are cheaper than bank debt. Wiggle as an example is geared up as it’s a fairly standard private equity funding model. So long as they have the EBITDA to fund the ongoing interest costs (capital is usually repaid via financing or IPO) then they’ll be fine.