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Industry Report INDUSTRY REPORT 2030: THE DEATH OF THE HIGH STREET WHY THE RISE IN E-COMMERCE MEANS BRITAIN’S TOWN CENTRES WILL BE UNRECOGNISABLE WITHIN 15 YEARS AUTHOR: DAVID JINKS MILT HEAD OF CONSUMER RESEARCH EMAIL: [email protected] WEB: PARCELHERO.COM/HIGHSTREETREPORT THE HIGH STREET APPEARS UNCHANGING; BUT IN FACT IT IS AN ENVIRONMENT THAT IS UNDER THREAT. IN 1950 THERE WERE NEARLY 600,000 STORES IN THE UK; BUT, BY 1971, THE ARRIVAL OF THE SUPERMARKET REDUCED THE AMOUNT TO WELL UNDER 400,000. BY 2012 THERE WERE ONLY 290,000 SHOPS LEFT; AND BY 2030 JUST 130,000 ARE LIKELY TO SURVIVE BECAUSE OF THE IMPACT OF E-COMMERCE. NOTE THE BANK LOGO. BANK FASHION FAILED IN 2015 IN THE TEETH OF INTERNET COMPETITION. EXECUTIVE SUMMARY The death of the High Street as we know it may be far nearer than people think. By 2030, just 13 years’ time, the impact of e-commerce and home deliveries will mean the town centre as we know it today, with all its familiar names, will be a memory. 1. Vanishing stores: Between 2020 and 2030 half of the UK’s existing shop premises will have disappeared. In 1950 there were 600,000 stores in the UK, in 2012 there were 290,000 and just 220,000 will survive by 2020 says The Centre for Retail Research. With home deliveries increasing exponentially, the decade from 2020 to 2030 will see a further 100,000 stores close if this trend continues: leaving just 120,000 shops on our high street. 2. E-commerce conquers all: By 2030 e-commerce will account for around 40% of all UK retail sales. 3. From High Street to Memory Lane: Many large supermarkets, and the majority of high street department stores, building societies, book shops, fashion stores, newsagents, Post Offices and toy shops will be a thing of the past: losing out to the growth of e-commerce giants such as Amazon. Nail bars, charity shops, luxury flats and pop up 3D printing stores will occupy some of these empty buildings. www.parcelhero.com Death Of The High Street - 2/41 4. Tipping Point: Supermarket’s physical store sales will slump from 42% to 24% by 2030: and that’s not enough to remain viable. Superstores, department stores and other chains rely on volume because of their small margins. Many well know store brands will reach tipping point, and will vanish from the high street. 5. Crumbling Department Stores: Department stores have crumbled under the attack of e-commerce; Alders and BHS will not be the only failures. Of the surviving 200 large businesses, 48 business are already labelled in danger and 53 made a loss last year. How long can the sector continue? 6. Fashion victims: From Austin Reed - perhaps set for a miracle return in 2017 - to Viyella, clothing stores have rapidly disappeared from shop fronts, with Banana Republic set to slip from our High Streets next. In 2013 alone there was a net loss of 264 fashion stores from our High Street. The online fashion industry could reach £36.2bn by 2030: 63% of the market compared to today’s 21%. Online retailers are stripping the shirt from the back of high street clothing stores. 7. Bad News: Recent figures reveal more than one local newsagent has been closing every day. Entire chains such as John Menzies and Forbuoys have also disappeared. Retail analysts claim even WH Smith ‘cannot be saved by colouring books alone’. 8. No smoke without fire: Tobacconists sales are falling by 4.4% a year, just 1,695 survive: e-cigarettes alone won’t put out the fire. Less than 800 traditional tobacconists will survive in 2030. 9. Counter closed: Post Offices will be consigned to history: plans are underway to franchise around 60 Crown Post Offices; move another 16 into other stores such as WH Smith, and close four entirely. The General Secretary of the CWU, David Ward, says ‘The Post Office as we know it is on the brink of extinction.’ 10. Don’t bank on it: As we move to online banking around 9,000 bank and building society branches have been closed since 1989 – and more closures are planned. Names you’ll no longer see on the High Street frontages include the Midland, Abbey National, Bradford & Bingley, The Woolwich, and Alliance & Leicester (some brands survive as bank in-house mortgages). 11. The final chapter: Remember Borders, Booksetc, Dillons and Ottaker’s? The traditional high street book store industry is collapsing at 2.3% sales decline a year; with just 1,071 retail www.parcelhero.com Death Of The High Street - 3/41 businesses remaining. Though Waterstone’s is battling well, we could have reached many bookshops final chapter with just 535 left in our major towns and cities by 2030. 12. The ABC of vanishing names: From Alders to Bejams to Chelsea Girl, and from Athena to Zavvi, an alphabet of famous names has disappeared from shop fronts recently. This decade alone has seen brands such as BHS, Jane Norman, Somerfield’s, Abbey National and Bradford & Bingley vanish from our shop fronts: many more will follow. 13. Cannibalising sales: John Lewis is one company pushing ahead online: 25% of its sales are now through the internet. Tesco’s revenue is £2.9bn online, second only to Amazon. E-commerce could save well-known brands: but these sales will be at the expense of companies’ own physical stores. 14. Back to the future: High streets are likely to return to a Victorian model. Shopping will become a more social experience again with local food deliveries increasing: based this time on Uber-style crowd source Apps, rather than the once infamous butcher’s boys of Victorian times! 15. Home Stores: Plans are underway to bring homes back to the High Street. Legislation is being changed; and architect Sir Richard Rogers argues if London’s 600 High Streets take 500 homes each, it would deliver seven years’ supply of housing. It would also mean town centres cease to become deserted after 6pm. www.parcelhero.com Death Of The High Street - 4/41 THE HIGH STREET COULD BECOME A GHOST TOWN BY 2030, WITH E-COMMERCE ACCOUNTING FOR 40% OF ALL RETAIL SALES AND SUCKING THE LIFE FROM MANY OF OUR TOWN CENTRES. BRACKNELL’S UNLOVED TOWN CENTRE, INCLUDING BROADWAY (PICTURED), WAS HIT HARD BY THE RISE OF E-COMMERCE. IT IS NOW BEING REPLACED BY A NEW £240 MILLION CENTRE INCLUDING RESTAURANTS AND HOMES IN A BID TO WIN SHOPPERS BACK TO THE HIGH STREET. INTRODUCTION Until recently, Britain’s High Streets had changed However, the first seeds of the death of the little since the last major shopping revolution, High Street as we know it were actually sown the rise of the supermarket, in the 1960s. over thirty years ago. In May 1984, in Gateshead (a town in Tyne & Wear, England) the world’s The arrival of town retail parks and superstores first recorded online home shopper, a 72-year- had an impact from the 1980s; but, nonetheless, old grandmother named Mrs Jane Snowball, nothing challenged the convenience of being purchased groceries from her local Tesco able to pop into your local C&A or Ethel Austin store in the world’s first ever online shopping for your bell bottoms or hot pants; Woolworths transaction from the home. [1] or Our Price for your Dexys Midnight Runners singles and Jean-Michel Jarre cassettes; and Her name proved prophetic as the new Safeway’s or FineFare for your Smash instant form of retail snowballed. From this humble potato, and Corona or Cresta pop. beginning, the internet has been encroaching www.parcelhero.com Death Of The High Street - 5/41 on the retail market, (ironically including Centre for Retail research. That might not sound Tesco’s supermarkets); and e-commerce is now a great deal; but this time last year it was just becoming so established and convenient that 13.5%. For 2016 that figure is expected to climb the familiar High Street could vanish far sooner to 16.8%. E-commerce’s slice of the retail pie is than anyone expects. growing exponentially. [2] At this rate of growth, the internet will account for 40% of all retail This report will reveal the reasons why - if the sales by 2030. current growth of the internet and decline in High Street stores continues as they are - the When we talk about the high street we’re High Street will have reached a tipping point referring to an industry that comprises some by 2030 when it is no longer sustainable as we 95,000 companies, employing £326bn of gross know it today. Half of the existing shops in our assets, borrowing £65bn and with a total net High Street will disappear between 2020 and worth of £135bn.[3] 2030 - just 13 years’ time - at the rate of attrition we are seeing currently. Why is the internet having such an impact on physical town centre stores? Perhaps that’s The era of the internet will have a massive best explained by Graham Ruddick, formerly impact on the High Street, with many brands, the Telegraph’s Retail Correspondent and now and even types of stores, disappearing by Senior Business Reporter at The Guardian, 2030. Home deliveries, or drop offs to handy writing in 2015 about the probable impact of collection points and lockers, will spell the end the arrival of Amazon’s Prime Now one-hour for many famous names on town centre shop service on brick and mortar stores [4]: fronts.
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