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An Overview Of The Mary Portas Review - Sizing Up The Competition

Samuel Thompson - Monday, January 30, 2012

Chess —( ‘Chess’, with thanks to whodeenee )— This is the third part of my overview of The Portas Review. The first post regarding the report provided an introduction and the second post looked at the value of the highstreet and the issues and opportunities faced by business owners. This post takes a look at the the high street's principal sources of competition.

Out of town developments

For the large retailers it is easier, cheaper and more flexible to develop out of town, or on the edge of town, rather than on our high streets. And for shoppers out-of-town centres offer convenience, value and choice. So out-of-town retail has been growing at the expense of our high streets and in many instances has displaced our high streets.

Purposefully designed to cater to the consumer and usually with a central guiding strategy that determines its development, an out-of-town development tends to tick all of the boxes a shopper is looking for: a variety of stores and products on offer, big wide spaces and top quality amenities.

If a high street is found lacking – and often even if it isn’t – consumers flock to these new shopping centres. The increasing number of out-of-town developments puts the high street in an ever worsening position.

The supermarkets

As one has come to expect from any discussion of the high street, much attention in the report is devoted to the role of supermarkets and the overbearing influence of the so-called ‘big four’ – Tesco, Asda, Sainsbury’s and Morrison’s – on the consumer landscape.

Short-term convenience vs. long-term choice

I often get bashed for saying I don’t like the big chains but that’s not true. I believe we have some of the best retail chains in the world. The issue for me is choice and balance.

A big draw of a supermarket is that you can buy everything all in one place. However, this kind of convenience comes at a price: since so many consumers now spend so much of their money in supermarkets, many smaller businesses are being forced out of business.

Taking a glance at the statistics, the report notes that supermarkets now account for over 97% of total grocery sales. It seems unsurprising, therefore, that of the 565 large grocery stores opened between 2001 and 2006 (according to findings quoted from the Competition Commission), only one was independently owned.

Alongside this trend the report also notes the disappearance of already established traditional stores – bakers, butchers, tobacconists etc. – as consumers move away from the high street.

This sort of worrying shift promises serious long-term consequences. Thinking ahead from a consumer perspective, the extinction of small specialist stores in the face of big generalists will inevitably lead to a particularly disappointing choice range.

A finger in every pie

What really worries me is that the big supermarkets don’t just sell food anymore, but all manner of things that people used to buy on the high street. They’ve been expanding their reach into homewares, stationery, books, flowers – you name it.

As time goes on we’ve seen supermarkets extend their range to include new markets, meaning that the monopoly and competition problems that in the past impacted upon only a relatively small selection of store types now threaten all manner of businesses.

Bandying around statistics again, the report cites the finding that supermarkets now account for 14% of all non-food sales, a big increase from the 6% recorded in 2001.

And it isn’t just retail industries that are being affected; perhaps more worryingly key services are too. The advent of supermarket-brand opticians and even dentists popping up means that the consumer can now include their check-up in their once-a-week shop, further marginalising the high street.

E-commerce

Further eating into the highstreet’s customer share is that old chestnut, the Internet.

A booming business

Although internet sales currently account for less than 10% of all retail sales some estimates suggest that e-commerce accounted for nearly half of all retail sales growth in the UK between 2003 and 2010

While it can’t be denied that the web offers huge opportunities to all types of businesses, its growing influence on shopping habits spells bad news for high street footfall.

Armchair shopping is often more convenient and cheaper than a real-world shop, so it comes as no surprise that many consumers – themselves increasingly comfortable with the ever-present Internet – are abandoning ‘brick-and-mortar’ stores for their virtual equivalents.

Another space worth watching is the realm of m-commerce, which is coming on in leaps and bounds as smartphones and 3G find their way into people’s pockets.

Next up, we'll be having a look at some of the everyday issues that affect the high street, and a summary of some of the legal problems businesses face.

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