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Online Shopping and Rising Business Rates Risk Destroying UK Retail Sector, Professor Says

© Photo : PixabayOnline shopping
Online shopping - Sputnik International, 1920, 02.02.2021
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Despite ASOS’s £295m buy-out of four well known Arcadia fashion brands, big questions still remain for thousands of retail workers, and the future of Britain’s highstreets.

The Topshop, Topman, and Miss Selfridge brands were all saved by the online fashion retailer ASOS, but more than 70 stores and approximately 2,500 jobs are expected to be axed, in yet another blow for the UK’s struggling retail sector.

Lisa Jack, a Professor of Accounting at the University of Portsmouth, looks what the future holds for the great British high street.

Sputnik: How would you describe the condition of Britain’s high streets, over the last 5 years or so, before the pandemic?

Lisa Jack: I think we can safely say that conditions have been deteriorating. Stores have been closing down, independent stores as well as well-known chains, it's become a slightly bleaker place to visit in many towns, and maybe some of the social aspect that was there has disappeared. So, I think there is a real cause for concern, and obviously, that's been really brought to bear in the last week or so as we find out that Debenhams and all the Arcadia shops are going to be disappearing from our high streets to be replaced by online shopping.
 
Sputnik: What are the main reasons for this huge retail decline across the country?

Lisa Jack: I think one of the reasons has to be the growth of online shopping. We're all shopping online more, so we buy less in the stores, and therefore it's much more difficult for the bricks and mortar stores to cover their costs. However, the work that we've done has shown that for those that do have online retail, there are additional costs there. It's not necessarily a much more profitable outlet for those big stores, but it is where the customer is going, and I think the other main reason is the business rates question. I think this is quite well accepted. Our bricks and mortar stores, the shops on the high street, contribute around £7.2 billion to local economies across the UK, but the online businesses really only work from warehouses outside the city centres, the town centres, they're only contributing £457 million, that's a fraction of the business rates, and as the business rates go up it makes it more and more difficult for stores to keep going. Now there are some release from that for very small stores but I think again, the main problem is the combination of the ease with which you can do online sales and the rising business rates. I think they're probably the two biggest factors that have contributed to the decline.
 
Sputnik: Looking to the future, what should be done with Britain's high streets? What other purposes could they serve going forwards?

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Lisa Jack: We certainly have examples of high streets that have been rejuvenated as social spaces. So, more eating places, yes more coffee shops, but these are things combined with encouraging smaller local businesses or in one case down here in Portsmouth, one of the big department stores is now a marketplace for local creative businesses. I think it's recreating that sense of fun, or sense of spectacle if you like, going into the centre. I think there's also quite an interesting thing from the research we've done because one of the biggest problems the stores that are going completely online will face, is that there is a huge amount of returns from online shopping. So, almost a third of goods bought online are likely to be returned, and as you know, that's not always so easy. Retailers online are trying to make it as easy as possible but I could see something happening where some of those spaces get taken over to click and collect and returns hubs, but with some sort of social or local link that makes it an enjoyable process because let's face it at the moment, returning goods you bought online, isn't necessarily fun. So, I think there could be something around that. I think the best example we've found is a very well-known area in Sweden called Eskilstuna, it's a mall called ReTuna, where they only sell upcycled and recycled goods. So, the whole town has become known for its green approaches rejuvenating quite a good economy with this particular approach, and it's gone into their high street, gone into their malls, and created a place where people want to go. So, I think it's that sort of imagination that combines if you like the necessary infrastructure behind the online shopping, but also looks to create a social space to go that has shops, coffee shops, just somewhere to meet and to browse, which is what we mean by going shopping.  

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