It's not all over for high streets

By Alex Brummer, December 22, 2012

The shape of retailing on Britain's high streets, in the shopping malls and in local neighbourhoods, is changing rapidly. The advance of the internet has been catastrophic for some retailers. The electronics and entertainment sector has been among the worst hit, with Comet recently joining Woolworth, Zavi, Game Group, newcomers Best Buy and HMV (still clinging on by its fingertips) on the list of casualties.

With each failure there is a temporary uplift for competitors. So those companies remaining in the business, including catalogue retailer Argos and Dixons (the owner of Currys and PC World), cannot take anything for granted.

Argos is seeking to lift its downmarket image with a refurbishment of stores and the replacement of its ubiquitous catalogue with tablet shopping.

Dixons aims to keep ahead through store refurbishment and a focus on customer service. It is now impossible to enter a PC World branch without being faced by a swarm of customer advisers. Like so many other retailers, including the supermarkets, Dixons also has embraced the "click-and-collect" model that allows customers to pick up the goods they want, at their own convenience in their local store.

This is especially important now that the big grocery chains, having covered the country in out-of-town mega-stores and supermarkets are moving back into neighbourhoods. It is now possible, for instance, to follow through on John Lewis's "never knowingly undersold" pricing promise and pick up the goods from the nearest branch of its grocery offshoot Waitrose.

The supermarkets are leading the return to the high street and neighbourhood revolution. As so often has been the case over the past couple of decades, it was Tesco that first saw the opportunity. Under the leadership of its previous chief executive, the legendary Sir Terry Leahy, it embarked on an ambitious localism programme and now has an estimated 1,500 local shops nationwide.

J Sainsbury, the fastest growing of the big supermarkets at present, is playing catch-up. So far it has opened some 500 Sainsbury locals and it is continuing the expansion at a rate of one or two per week. The goal, senior Sainsbury executives say, is to reach 1,000. They also believe that Sainsbury local stores can also be helpful to customers as collection centres for non-food items closer to people's homes and neighbourhoods.

The food chain with the most local and neighbourhood stores, but somewhat downmarket of most of its rivals, is the Co-op with an estimated 2,500 outlets. As the only substantial business in Britain to have given into the demands of the anti-Zionist boycott of fresh produce from the Palestinian territories (even if it is produced by the Palestinians themselves), the Co-op foods shops and the expanding Co-op bank should be given the widest of berths.

The race to catch-up with the biggest players recently has been joined by Bradford-based Wm Morrison that has so far opened an estimated eight local stores. Waitrose has developed 20 so far and is still counting.

Marks & Spencer, with the most up-market offering through its 'Simply Food' range operates 90-100 neighbourhood stores.

In much the same way as the arrival of the supermarkets was seen as damaging to the high street there is now a view that their return is hurting the neighbourhood shop many of them operated by Asian-owners. Sainsbury among others disputes this. It believes that in some towns, the return of high-quality food chains has brought back footfall, which has been a real benefit to the traditional butchers, greengrocers and other merchants.

As for the independent stores they offer far longer opening hours, that are not matched by the supermarket chains, and a range of other services from Oyster travel cards, to newspaper delivery and the lottery that are now part of the grocery chain offerings.

None of this means that the crisis in the high street or the shopping centres are over. The long drawn out downturn in the economy has created ghost towns of some badly placed early shopping centres and destroyed the high streets in some less well-off neighbourhoods, particularly in Northern England.

It is too easy to blame the big supermarket groups and the out-of-town shopping centres for this. But there is growing evidence that with fuel prices rising along with public transport costs customers are returning to the neighbourhood especially for their secondary, rather than main weekly shop. Moreover, the return generally has lifted standards because the established chains, like Sainsbury and M&S, set great store standards with freshness and cleanliness.

One of the changes being made by the current Tesco boss Philip Clarke is to improve the shabby appearances and service at many of its local and high street shops, that have been under-invested in recent years as the company focused on its bigger outlets, developing a working bank and expanding overseas. Forget the negativism and an unacceptably high number of closed shops.

New investment by the grocery chains means it is not all over for neighbourhood shopping just yet.

Alex Brummer is City Editor

of the Daily Mail

    Last updated: 2:14pm, December 22 2012