Tuesday 17 October 2017

The right moves: Lack of variety in high street shopping fuelling growth of online retail

Around the world, retailing is struggling to readjust to the shift to online purchasing. Stock Image
Around the world, retailing is struggling to readjust to the shift to online purchasing. Stock Image

Paul McNeive

Travelling in Canada and the US last week, I was struck again by one of the biggest reasons for the decline in city centres and retailing generally.

Retailing is all the same. You could be transported into a main street in most cities in the western world, and they all look alike. Every main street has the same brands, the same shop fronts and the same goods for sale. It's largely a result of globalisation, and the ever-growing strength of chain-stores and international brands. But should that trend be reversed - and how? Are there advantages to the homogenisation of 'Main Street'. And what are the effects for property markets?

Around the world, retailing is struggling to readjust to the shift to online purchasing. But surrendering 'Main Street' to the international chain stores is ultimately damaging for retailers, as it is giving away the main weapon against online, which should be, maximising the unique experience of shopping in a city centre.

It used to be more exciting. You moved around to visit lots of independent retailers and quirky shops, which you couldn't find anywhere else. You would meet people on the street and end up having lunch.

Another downside is a loss of local identity and that sense of community. Shopping is still described as a leisure activity but where is the fun in visiting a city centre where the retailers and restaurants are all the same as at home? OK, there may be cost savings in volume, but the high rents paid by chain stores force independent operators out of business, and that sense of variety, the shopping-mix, is lost.

This phenomenon is well-recognised, and some cities, including Dublin, have made efforts to reverse the trend, or at least to try and control what's happening to our cities, but with mixed results.

San Francisco adopted planning policies to ban chain stores which had more than 11 outlets anywhere in the world. But one effect of that was to attract in 'high-end' boutiques, selling expensive designer goods, driving rents up and ultimately disconnecting from the neighbourhoods in which they were located. That experience suggests that bans on chain stores should probably be restricted to main streets.

Many American cities have been hollowed out, with characterless centres surrounded by seemingly-endless, drab suburban malls. Planning controls on large-scale retailers are being considered, but too late. Some US cities have banned more chain stores from opening in the 'downtown' district, or limit the proportion of downtown space that can be occupied by these formula retailers.

In Ireland and the UK, restrictions on the size of supermarkets and retail parks have been tried, but too little too late, to save most town and city centres.

In Ireland the experience has been that once a shopping centre is built to its maximum size, a series of extensions will follow, rendering the original control pointless.

And these types of controls can backfire too. Limiting the size of supermarkets in Ireland and the UK soon saw retailers successfully build lots more smaller shops, such as Tesco Express, which spread like wildfire and drove up rents in city centres and suburbia.

Local authorities can, and should, employ planning controls. Temple Bar Properties tried banning big brands, but some changed their names to get in, and the area was then flooded with pubs. Certain uses like phone shops, chemists and sex shops are restricted on Grafton Street, O'Connell Street and part of Henry Street. The effect will be that retailers will develop large stores on the edges of the controlled areas.

Another homogenising factor is the move of the mega brands like Inditex (Zara, Stradivarius, Bershka, Massimo Dutti, etc.) and H&M into more and more 'sub-branding', where they are dominating globally through their suites of such brands.

In a shopping centre, with a single owner, it makes sense to create the best possible mix of retailers, even at the loss of short-term income. The few examples of city locations that can do that, are where there are estate ownerships, such as the Crown Estate in London, where the retailing mix is controlled in locations like Regent Street, Carnaby Street and Fitzrovia, to underpin the long-term value.

Back on 'Main Street', the highest rental offer wins, and the march of the global brands continues. City planners must keep up the fight, but I fear that the battle is already long lost.

Indo Business

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