Shopping in the internet economy

Over the last few weeks in the UK there have been a number of high profile high street shops closing their doors, or at the least having to open the back doors to the accountants who administrate failing companies.

Some of these have been predictable and others less so.  I don't think anyone who spends more than a few minutes thinking about these things would be too surprised to hear that the latest victim of the extended financial crises, Blockbuster, is in administration.  I think the biggest surprise is that it took until 2013.

Blockbuster was a breath of fresh air for most of its short life - it took video, then DVD rental out of the local amateur market and put it on a professional footing.  But in recent years there has been a number of challenges it seems to have ignored.  First off, there is the challenge from terrestrial and extra terrestrial TV - Sky have led the field in this and forced everyone else to raise their game.  However it was the slow burn of Lovefilm from about six years ago that will have put the nail in the coffin for Blockbuster, especially once it was bought out by Amazon.

Lovefilm gets the whole package right - no fees for keeping a film longer than agreed, you just  don't get a replacement until you return it and anyway, you're paying monthly whether or not you take a film or ten.  And add to that the increasing amount of content you can download without waiting for the postie and you have a compelling reason not to bother with Blockbuster.  Clearly Blockbuster didn't take this challenge seriously, otherwise they would have set up a competing service.

Other recent victims have included Comet, a major electronic goods retailer, and HMV, probably the only large scale music and DVD retailer in the UK these days.  Both companies tried to compete with the on-line onslaught and included internet stores of their own, but ultimately they are competing against some of the most cash-rich companies in the world, not all of whom are renowned for paying their corporation taxes.  I'm not suggesting that if the likes of Amazon didn't avoid taxes then Comet and HMV would've prospered but at least one part of the playing field would have been relatively level.  The other significant loss on recent days has been Jessops, the photographic chain.  They fell foul of being the go-to place to have cameras demonstrated before we all nipped back home to buy our preference on the internet.  For that abuse of their service and expertise we have lost a valued institution.

However Amazon didn't get it all its own way in recent months as other UK retailers did buck the trend and showed growth. Significantly some of the bigger UK supermarkets, which have incidentally elbowed into Comet and HMV territory in recent years, also did well, as did UK Argos group.  The glue that holds these together is the fact that they all have significant brick and mortar stores, internet presence  and critically they have merged these together.  The supermarkets have apps that let you shop on your iPad and they will deliver to your door - Asda, the UK subsidiary of Wal-Mart also allows the customer to pick their shopping up at the store after ordering it on-line and that is proving more flexible than waiting in for a two hour time slot.  Argos will deliver large items, but their biggest success has been around their click and reserve service. Find what you want on-line and they will tell you how many of each item you have chosen is available in your local stores and will let you reserve it for free and without commitment for up to forty eight hours.  Pop along to the store at a time that suits you, quote your reservation number, pay and leave.

So what is the future?  Well, the British high street has been changing for some time and the internet is only a part of that.  I believe that we will need to expect to see most high streets less populated by shops, more leisure orientated in the future.  The high street bulging with every shop under the sun is a relatively new concept - many high street shops were originally town houses that have been converted - some may revert to their former use.  We may start to see town and city centres with spaces to sit and surf, using free WiFi, or to read a book out of the rain.  The current trend to fill empty shops with charity shops and cheapie shops isn't sustainable or desirable - let's have less shops, but ones that sell stuff that's unique, different and perhaps a little too bespoke for the likes of Amazon to muscle in on.  Keep the general store if the economy supports it - the proximity of the local supermarkets will dictate that - and tidy up the spaces in-between.

For the rest of the traders, well it seems clear that you have to embrace the internet.  But don't discount a high street presence; like Asda and Argos you can have your brick and mortar stores and your on-line store co-exist nicely.  In fact I would suggest that is the way forward.

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