Is eCommerce Killing The High Street?
There have been dire warnings over the state of the fabled British High Street for decades.
Impacted by changes in VAT, inflation, the struggle to reach a living wage for most and over the last 10 years, a huge increase in the number of people switching to internet retailing and more importantly, the big 3 (Amazon, eBay, Supermarkets).
There isn't a single reason that's killing off high street shops at a rate of nearly 6,000 between 2016 and 2017.
Shop owners are seeing their margins squeezed by increasing wholesale costs, twinned with the inability to increase prices, due to wages not matching the rise in inflation. The amount people have to spend is less overall, than it was a decade ago, so disposable income overall for everyday workers is considerably down when compared to the late 90's.
There's also a squeeze from local councils, with increasing business rates (although there are exemptions for small retail spaces) and increasing parking costs for customers in the most sought after shopping locations.
The high street is receiving very little help and external factors, outside of the control of the shop owners, are what is fuelling the high streets decline.
Add to this the temperamental UK weather, the drive toward smaller retailer units to avoid huge business rate costs and the increasing commercial costs simply for maintaining a retail shop, it makes it very difficult for a large percentage of retailers to survive, even without the rise of the internet monster...
The Rise Of The Internet Monster
On top of all of the issues above, perhaps the biggest change since the year 2000 has been the galloping pace of internet retail.
In 2017, online sales increased by a staggering 15% compared to in-store sales increasing by just 2.3%. So, while in the same period, the retail sector as a whole grew by 5%, this increase was not passed on to bricks and mortar stores and instead benefited online retailers the most, while they also bit a chunk out of high street retailers market share.
eBay was among the first of the global brands to land hammer blows on the shopping precincts of the UK but Amazon have perfected the art of affordability, deliver ability and after sales customer service. Sure, they may not be as hands on with guidance and advice while shopping but Amazon tick more boxes than even established multi-store retailers. The ability to have virtually any product, delivered to your home or work address, at your convenience.
Where eBay was the discount store or internet market, Amazon was the polished and pro-active arrival and quickly hoovered up market share from the likes of eBay, Play.com and a variety of high street retailers who simply couldn't compete with the ease of 1 click check-outs and the arrival of technology such as Alexa.
There's little point trying to compete with Amazon or eBay. There's talk of an internet tax but if you've ever sold your products through either of these channels, you'll know that any tax hikes may end up packaged up in your monthly fees, depending on how the tax would work in the real world. Taxes are rarely flexible and deal in absolutes...you owe VAT or you don't owe VAT, there is no middle ground.
To be successful in the modern retail world, it's important to have a presence in as many customer rich areas as possible. Develop your Facebook page and grow your Twitter and Instagram following. Ensure you have a dedicated website, that's up to date and heavily branded with lots of information for customers.
Maybe look at opening a shop on Amazon or Ebay yourself, if you can't beat them, join them?
But most of all, be unique and offer great customer service. Be clever with your promotions and discounting, be aware of your margins and try not to compete only on price, all of the time. It makes it difficult to build in enough margin to pay yourself, if you're constantly undercutting competitors!