Last updated: January 18, 2013 7:37 pm

A welcome high-street revolution

UK retail is being reborn, says Brent Hoberman
©Jonathan McHugh

This week Blockbuster and HMV joined the grim list of British retailers killed by technology. The news, coming shortly after Jessops and Comet also announced closures, was appropriately met by wistful nostalgia and sympathy for those who lost their jobs. The fact that shops have been outcompeted by foreign, usually American, online companies, also plays to patriotic sentiment. It is easy to feel despair as creative destruction wields its mighty power. However, the apocalyptic reactions of those who see a bleak future for “going” shopping are misplaced. The high street is not dead. It is being reborn.

In 2011, in response to widespread shop closures, the UK government asked retail expert Mary Portas to conduct a review of the state of the high street. The report contains sensible ideas. But ultimately, the answers lie with retailers, not with politicians. Intelligent management will lead us to a retail era where the digital world is an ally rather than a rival. There will be “experiences” for the shopper. Locations will be smaller. Prime sites will matter more. It will be brighter in all senses of the word – smarter staff, glittering shops and bigger profits.

Retailers that can adapt will flourish. In 2008, Sir Terence Conran told me that soon, all his shops would be showrooms, physically displaying products and brands that would be later purchased online. This was no statement of surrender. It was an acknowledgment by a renowned professional that technology would change his approach and he was ready for it. Sir Terence was not the only one: the “brand cathedrals” of Apple, Burberry and Prada are testaments to how shops can be fun, entertaining and contemporary.

Delivery is improving dramatically. Ocado’s one-hour time slots jolted the grocery market. Shutl, a start-up delivery company, allows customers of Argos and other retailers to receive their orders in hours rather than days. ByBox lockers provide safe storage for deliveries – and flexibility for consumers. New business models and algorithms relentlessly cut out middlemen to give the consumer a cheaper deal.

“Augmented reality” means that one day we may never look at a cereal box without also pointing our phone at it and expecting a deal. Shazam, best known for its song-recognition app for smartphones, enables companies to put offers directly to viewers of their TV advertisements. Body scanners typically found in airports can now capture your measurements before you buy clothes on sites such as Net-a-Porter. Pictures of your home in 3D will ensure you never have to return a sofa because it does not fit or match the colour of the curtains.

As well as giving rise to exciting new companies, technology can also improve the fortunes of smaller retailers. Their supply chains, long a weakness compared with larger rivals, will tighten because of better tracking via radio-frequency identification and other innovations. “Vertically integrated” companies, such as Made.com, a furniture retailer, which control production and distribution of exclusive products, will do particularly well. The web has also enabled many more retailers to boost their exports by connecting them with overseas customers. Online marketplaces enable small offline boutiques such as Farfetch, Miinto, Shoptiques and mydeco, to thrive against global online players.

Retail on the high street will be more exciting and entertaining than it is now because it will have to be. Goods will be cheaper, rents will be lower, aesthetics will be beautiful. For those that want the best deals, their data will be shared with their favourite retailer and tailored offers provided. Shops will reward us for our presence. They will know what we looked at online, and how much we are willing to pay. They can close the deal via our mobile phones.

Retailers will employ fewer people but their staff will have better information than ever before and provide a much better service. Pop-up shops will continue to grow as retail space is viewed as more flexible and integral to marketing and advertising products. Touch-screen technology will enable these shops to display an almost limitless inventory and to move locations cheaply without stock. Fewer offline retailers will also mean lower rents.

There will be some losers. There always are when technological change accelerates. High streets will continue to have vacancies, some may even become retail vacuums, with social and economic consequences. But their fate is not as gloomy as some believe. As rents decline, other occupants will be able to move in to the space left by obsolete retailers. Schools, houses and community centres could return, thereby rebuilding social capital.

In 1995, during the early days of ecommerce, I studied how the internet was beginning to change retail. Even to an ingénue, the economics were compelling. Ecommerce is only in its late infancy – every category of retail will still dramatically increase its online sales. Those who deny the likely trends should remember the tour operators who in 1999 said online travel would never reach more than 10 per cent of the market. It now makes up the majority of travel booking in the UK. The deniers are no longer running businesses. I think that soon the majority of retail sales in every sector will be made online.

This forecast is a reason to be optimistic. Britain has an early advantage in online retail. Closures of historic and culturally important companies such as HMV are cause for reflection but not hesitation. Instead, we should celebrate how technology is creating new UK-based global companies such as Asos, the online fashion retailer. British creativity, design and technology will create more pioneers. We already have the most savvy online shoppers in the world. Now we need to become a nation of online retailers.

The writer is co-founder of Lastminute.com, Made.com and Mydeco.com, and is on the board of Shazam, among other companies

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