Retail Blog
HIGH STREET vs. E-STREET; THE END OF AN ERA? By Adam Baldwin
Approximately 1 in 9 UK high street stores currently lies vacant. Why?
Perhaps the traditional concept of ‘shopping’ is dying a slow death. However, predictions aside, what the current trauma in the UK high street is providing us with is the latest case study of ‘Creative Destruction’, as we, the consumers, are increasingly favouring newer, alternative ways to shop.
Widely attributed to economist Joseph Schumpeter,
creative destruction describes the process whereby a newly created product or process replaces the need for it’s predecessors. Schumpeter described that the “process of creative destruction is the essential fact about capitalism”. In short it’s the free market’s way of delivering progress; out with the old, in with the new.
Yes - it’s sad to see some of our most recognised, loved shops failing. Yes - it’s sad to see employees having to find new jobs. But we, as consumers, have decided their fate ourselves. When was the last time you bought a physical CD? When did you last buy a book without checking
Amazon.com first? British consumers have become Europe’s keenest online shoppers. eBay has more visitors each month than Oxford Street.
But fear not. Luckily for the consumer, creative destruction teaches us not to mourn the old but rather to embrace the new. Yes - the hand-illustrating industry wasn’t too happy about the invention of the printing press, but the result was a revolution in the distribution of information across borders and marked the birth of the modern, knowledge-based economy. And I’m sure the transatlantic cruise-liners were livid when the jet engine was commercialised. Walkman? No thanks - I’ve got an iPod.
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The retail industry is no different to any other; people, companies and processes exist in a dynamic tension through both cooperation and competition within the defined framework. Change, or more specifically, the opportunity for change, has become an integral driver of any functioning economy.
And who is driving this change? Government? HMRC? The large global banks? Absolutely not. It’s us, ladies and gentlemen; the people. It’s the dormroom entrepreneurs like Zuckerberg, the college dropouts like Jobs, the PhD students like Dr Mike Lynch. It’s the entrepreneurs, be them in a university R&D lab, a corporate innovation department or just the Starbucks round the corner, who are the catalysts for change in the on-going digitalisation of our economy.
The rise of digital has fundamentally moved the goalposts in the retail industry, with the well-run retailers (e.g. John Lewis) that adapt and adopt new digital business models and revenue streams continuing to thrive whilst the poorly managed ones that are slow to adapt (HMV, Blockbuster, et. al) have, and will, continue to fail. Retail, just like every other industry, is changing in favour of the more dynamic, entrepreneurial company; only the strongest survive.
So has the e-commerce industry rendered the physical shopping model redundant? No - the meteoric rise of e-commerce shouldn’t be blamed for every high street failure. After all, we must remember that the notion of the ‘high street’ was the dream of our post war town planners. And to that extent, it’s been a spectacular success...until now.
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