– Removing burdensome red tape could provide relief to battle-weary High Street retailers –
– Lack of quality data makes measuring success of recommendations tough –
– Impossible to stop long-term evolution of retail sector, but transition can be made less painful –
– The High Street needs to play a broader role in the community –
Following the release of the Portas Review on the future of high streets in the UK late last year, the KPMG/Ipsos Retail Think Tank (RTT) has warned that it is virtually impossible to halt the natural evolution of the retail sector, despite welcoming many of the report’s recommendations.
Of all of Mary Portas’s 28 recommendations, it was those that suggested the removal of regulatory and red tape burdens, such as is making it easier for people to become market traders by removing unnecessary regulations, that the RTT felt would have the greatest impact.
“Such proposals are likely to be better received by retailers, be more effective and cost less than proposals to stimulate the high street by imposing additional rules and regulations,” said Vicky Redwood of Capital Economics.
Another recommendation centres around the creation of ‘Town Teams’ to create “visionary, strategic and strong operational management” for high streets. However, managing the various needs of all the stakeholders involved is no easy matter, argues KPMG’s Helen Dickinson.
“Ms Portas rightly recognises that the challenges our High Streets face are complex, diverse and involve many different stakeholders. These stakeholders are indeed diverse, and often with conflicting objectives and priorities. In order to determine the success of any action arising as a result of the Review, surely we should have greater clarity over who these stakeholders are, where the potential conflicts may arise and how success should be measured. Without this, how will we know what success should look like and whether it has been achieved?”
Dickinson also points out a fundamental issue with the recommendations – how to measure if they are successful.
“Back in 2008, in one of its previous White Papers, the RTT pointed out that the lack of accurate, comprehensive data on local retail performance in the UK has a knock-on effect in the planning and provision of retail space. Space requirements in the retail sector would be better planned if consistent, publicly available information on local sales and floorspace was available. Without evidence-based analysis, it will be impossible to determine the success or otherwise of the implementation recommendations, as a result of the Review.”
The evolution of retail
The RTT believes the proposals can offer some short-term fixes to the current problems that High Street retailers face, but it may be much more difficult to change their longer-term prospects.
“Long-term social changes in shopping and leisure activity underpin many evolutionary aspects of the form and function of the High Street and these need to be distinguished from short-term changes at a local level that often differ from place to place,” said John Dawson of the Universities of Edinburgh and Stirling. “Whilst short-term fixes sometimes can be of value, managing the long-term changes is more difficult, with the processes of change often being very complex.”
“The underlying shift in consumer behaviour towards shopping online and in out-of-town malls and supermarkets will be hard to reverse without imposing financial penalties,” saidNick Bubb. “And it would probably be unfair to discriminate in favour of the High Street by taxing shopping online or taxing out-of-town parking.”
Bubb argues that there is still much that can be done to improve the experience of the High Street shopper, including a campaign to improve the quality of charity shops and encourage the community to be proud of them
The rise of online shopping is one of the major causes in High Street decline, but rather than being seen purely as a threat, Conlumino’s Neil Saunders believes it can also provide an opportunity.
“Shopping today is about multichannel, about allowing the consumer to consume across multiple locations, both real and virtual,” he said. “In that respect, things like click and collect, price checking with mobiles while out on the high street, and stock checking before setting out on a trip, can all actually help drive footfall onto the high street.”
The changing face of the High Street
In order to survive the changing nature of retail, the High Street itself must inevitably change, adjusting the role it has played in the nation’s consciousness for the past several decades.
The report notes that we have sacrificed community for convenience. That may well be true, but given that consumers today are busy and juggle many competing demands it is hardly surprising,” says Saunders. “If high streets want to compete they need to offer value for time as well as value for money. That can either be about offering more of an experience which makes a trip into town worthwhile, or by simplifying factors such as parking or access.”
High Street evolution is impossible to hold back, believes the RTT. However changes to regulations by the government could make the process somewhat less painful.
“We believe that in the future some high streets will be less synonymous with retailing per se,” said Ipsos Retail Performance’s Tim Denison. “Some are already perceived as tertiary shopping towns. For these locations, any move to salvage the high street may be too late. A shake out of poor quality retail property can have a positive change, but it will require a new stance from local government to enable ‘change of use’ legislation and allow a mix of retail, social, office and housing space to move in to such high streets.
For instance, Denison suggests that small units that currently have limited scope for future occupancy could be developed as incubation hubs for fledgling retail entrepreneurs, offering artisan appeal and variety to the shopping public.
“High streets are part of the retail scene today and will continue to be in the future, of that we are certain. However, we have to accept that their composition evolves over time.”
Date Published: 1/10/2013 4:50 PM
Note to Editors:
The RTT panellists rely on their depth of personal experience, sector knowledge and review an exhaustive bank of industry and government datasets including the following:
Members of the RTT are:
- Nick Bubb – Independent Retail Analyst
- Dr. Tim Denison – Ipsos Retail Performance
- Jonathan De Mello – Harper Dennis Hobbs
- Martin Hayward – Hayward Strategy and Futures
- Maureen Hinton – Conlumino
- James Knightley – ING
- Richard Lowe – Barclays Retail & Wholesale Sectors
- David McCorquodale – KPMG
- Martin Newman – Practicology
- Mike Watkins – Nielsen
The intellectual property within the RTT is jointly owned by KPMG (www.kpmg.co.uk) and Ipsos Retail Performance (www.ipsos-retailperformance.com).
First mentions of the Retail Think Tank should be as follows: the KPMG/Ipsos Retail Think Tank. The abbreviations Retail Think Tank and RTT are acceptable thereafter.
The RTT was founded in February 2006. It now meets quarterly to provide authoritative ‘thought leadership’ on matters affecting the retail industry. All outputs are consensual and arrived at by simple majority vote and moderated discussion. Quotes are individually credited. The Retail Think Tank has been created because it is widely accepted that there are so many mixed messages from different data sources that it is difficult to establish with any certainty the true health and status of the sector. The aim of the RTT is to provide the authoritative, credible and most trusted window on what is really happening in retail and to develop thought leadership on the key areas influencing the future of retailing in the UK. Its executive members have been rigorously selected from non-aligned disciplines to highlight issues, propose solutions, learn from the past, signpost the road ahead and put retail into its rightful context within the British social/economic matrix.
Definitions: The RTT assesses the state of health of the UK retail sector by considering the factors which influence its three key drivers.
- Demand – Demand for retail goods and services. From a retro-perspective, retail sales, volumes and prices are the primary indicators. When considering future prospects, economic factors such as interest rates, employment levels and house prices as well as others such as consumer confidence, footfall and preferences are used
- Margin (Gross) – Sales less cost of sales; the buying margin less markdowns and shrinkage. Cost of sales include product purchase costs, associated costs of indirect taxes and duty and discounts
- Costs – All other costs associated with the retail operations, including freight and logistics, marketing, property and people
The Retail Health Index – how is it assessed?
Every quarter each member of the RTT makes quantitative assessments of the impact on retail health of demand, margins and costs for the quarter just completed and a forecast of the quarter ahead. These scores are submitted individually, collated and aggregated in time for the RTT’s quarterly meeting. The individual judgements on what to score are ultimately a combination of objective and subjective ones, drawing upon a wide range of hard datasets and softer qualitative material available to each member. The framework follows the example of The Bank of England Agents’ scoring system on economic intelligence provided to the Monetary Policy Committee.
The aggregate scores are combined to form the Retail Health Index (‘RHI’) which is reviewed at that meeting and occasionally revised after debate if members feel it appropriate. The RHI tracks quarter on quarter changes in the health of the UK retail sector and as such provides a useful and unique measured indicator of retail health. The index ‘base’ of 100 was set on 1 April 2006. Each quarter, it assesses whether the state of health has improved or deteriorated since the previous quarter. An improvement will lead to a higher RHI score than that recorded in the previous quarter, and with a deterioration leading to a lower score. The larger the index movement, the more marked the shift in the state of health.
The RHI has two main benefits. Firstly, it aims to quantify the knowledge of the RTT members in a systematic way. Secondly, it assesses the overall state of health of the UK retail sector for which there is no official data.
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