Is On-line shopping killing the High Street?

[Parafox]

The High Street needs to evolve into somewhere you go for entertainment, food, fun, culture AND shopping for things where you need to see them and try them. The retail cost structure of rents, rates and other overheads is not aligned with realisable profits, and landlords and councils will have to recognise this sooner rather than later.

In the case of Leicester, I don't think it yet has the right quality of the things you mention. Tarting up the market and St Nick's isn't going to give it added attraction, really.

Talking of St. Nicks, what became of Richard III's burial site?

[MooseBreath]

How so? The business structure would remain the same and the companies would still be competing with each other, there would just be higher amounts of automation in the product/service manufacturing process.

You're asking them to continue paying employees the same for less work. Usually if a private business has an opportunity to reduce costs they will take it, so that they can reduce the price of the products and thus have an edge over the competition. You're asking them to ignore opportunites to become more competitive, which would obviously have to be enforced somehow, so you'd be putting in place legislation which effectively helps to remove competition from the market.

[SOCCERROO FOX]

I work in finance for a company that owns and manages shopping centres. So deal with retail companys all the time and on-line shopping and the state of the economy is killing businesses. Sterotypically speaking sales figures haven't nessecarly dropped off over the last 3-4 years but they haen't increased either and more so with smaller retailers there profit margins are so skinny with the costs of goods, wages, rent etc is going up killing profits.

Before i started there you would barely get any national or reasonably retail companies go in to administration a few a year at most looking at the stats. Now there is virtually one every week, this includes companies that have been around 20-30 years and at least one every couple of days seeking rental or marketing assistance or trying to negotiate payment terms. Payment dates are getting later and later. Mum and Dad tenants who just have the one shop are the worst effected, some of which i see open and close within 6 months.

On-line shopping is killing off retailers but in the same instance a lot of companies are thriving, there is also still alot of chains and retail stores that are mixing it up out there as well as on-line also having a shop in a shopping centre or busy shopping strip in order to keep there name out there.

[SOCCERROO FOX]

The High Street needs to evolve into somewhere you go for entertainment, food, fun, culture AND shopping for things where you need to see them and try them. The retail cost structure of rents, rates and other overheads is not aligned with realisable profits, and landlords and councils will have to recognise this sooner rather than later.

This is a big thing, you will hear alot of shopping centres and retailers talk about "the shopping experience". There trying to turn it in to a friendly welcoming experience and trying to entice people by turning it in to an entertaing fun enviroment.....especially for blokes.

[leicsmac]

So you're producing more goods at the same price. What happens if demand does not rise by the same amount?

Another good point. You're making me work for this one.

Obviously the cost of installing the automation is the only big stumbling block here. If there was a way to cover that cost, the business could run with the same output as was discussed before. There are a couple of possible solutions I can think of:

Source the money from an source outside the company? (Subsidised?)

Negotiate with workers for a lower wage for a certain period of time to cover the cost? (Might cause unrest but when complete reduction in hours for same wage will be worth it)

Any other ideas?

And of course, this only becomes a problem if (and only if) demand goes down. Normally most businesses with lowering demand would wither and die (or be forced to diversify) at the present time anyway, so no change there.

You're asking them to continue paying employees the same for less work. Usually if a private business has an opportunity to reduce costs they will take it, so that they can reduce the price of the products and thus have an edge over the competition. You're asking them to ignore opportunites to become more competitive, which would obviously have to be enforced somehow, so you'd be putting in place legislation which effectively helps to remove competition from the market.

Private companies (in most mainstream consumer product/service industries) hardly ever reduce the prices of their products these days IMO, except when they're going for a loss leader approach on a new product. Instead if costs go down they just keep prices at the same level and make a higher profit. I'm trying to think of an example where a company has in fact reduced the price of a newly manufactured product permanently, even when their business was booming. But perhaps I'm just not looking in the right places.

I think many big businesses are only competitive at a token level now anyway...there may be small price wars, but by and large they co-operate to keep prices at about the same level (in line with inflation) and reduce costs.

The approach I mentioned would maintain the status quo while giving people more leisure time.

[Parafox]

The approach I mentioned would maintain the status quo while giving people more leisure time.

How would they use this leisure time? The shops are closing, costs are rising and the service industry is amongst the biggest areas of job losses.

[leicsmac]

How would they use this leisure time? The shops are closing, costs are rising and the service industry is amongst the biggest areas of job losses.

Sport, hobbies, spending time with family...generally not worrying about having to work all the time to justify where they are in life.

The Protestant Work Ethic has got this country by the testicles and will continue to do so, I guess...but wouldn't it be nice to have more time to do what you want to do, rather than work to justify your place in the social strata?

Note that I'm not saying we should all stop working entirely - just that I can't see having less time working for the same wage is a bad idea.

Now we're moving into 'meaning-of-life' conversation territory which a.) requires alcohol to function correctly and b.) is wildly off-topic for this thread, so I apologise for that.

[Parafox]

We should have a deathlist thread for retailers/business that we predict will go under this year.

[Rincewind]

There is vast improvement in the process of manufacturing goods but they do not last so long so more will be needed. When stuff was hand made it was done with love and care. Take furniture for instance. Things like dressing tables were carved and had all sorts of patterns carved on them. Now it is a few cut to size bits of wood that the customer assembles from instructions.. After less than a year a new one is needed.

Personally I like the old stuff.

[Trav Le Bleu]

In reply to shrapnel. People don't want to work less though. It's easy for you to say when you're on £500 per day because you could comfortably afford to drop your hours. Not everyone is in that position. Most people, if it came down to it, would rather work more, earn more to secure their financial future and afford a few luxuries.

Which they never have time to use as they're working so much.

Quod erat demonstrandum.

[whoareyaaa]

Of course it is killing the high-street along with advancement in technology, within 20 years the high street will be more of a social experience more than a shopping one.

Clothes shops will always remain, along with furniture shops and other necessity items but I think they will be moved into retail parks or just one big shopping center.

not only that, the internet allows company's more room on profit margins and can cut staff costs considerably along with general costs. and a lot of people find it much easier to order online than travel all the way into town and pay an extra 10/20%+.

As the internet continues to grow the high street shops will continue to fall, eventually we will see a re-map.

If you think logically about it a company on the high street will be paying huge rental costs £20,000-£300,000+ depending on size, and that's just in one city with a very limited market. They could spend £20,000 on a website and it gives them maximum exposure worldwide at a fraction of the cost. if you then also consider staff costs for each store compared to one or two sorting warehouses again your talking hundreds of thousands.

It makes sense to the company's.

[MooseBreath]

Which they never have time to use as they're working so much.

Quod erat demonstrandum.

Hardly. A 50 hour week with 25 days holiday allows plenty of free time.

[leicsmac]

Hardly. A 50 hour week with 25 days holiday allows plenty of free time.

That's entirely subjective, but it's your opinion so fair enough.

[MooseBreath]

That's entirely subjective, but it's your opinion so fair enough.

Well it's a lot more free time than the majority of humanity has ever had throughout our entire history.

[leicsmac]

Well it's a lot more free time than the majority of humanity has ever had throughout our entire history.

Agreed. And I hope it is a continuing trend. Progress is good.

[Jon the Hat]

I work in finance for a company that owns and manages shopping centres. So deal with retail companys all the time and on-line shopping and the state of the economy is killing businesses. Sterotypically speaking sales figures haven't nessecarly dropped off over the last 3-4 years but they haen't increased either and more so with smaller retailers there profit margins are so skinny with the costs of goods, wages, rent etc is going up killing profits.

Before i started there you would barely get any national or reasonably retail companies go in to administration a few a year at most looking at the stats. Now there is virtually one every week, this includes companies that have been around 20-30 years and at least one every couple of days seeking rental or marketing assistance or trying to negotiate payment terms. Payment dates are getting later and later. Mum and Dad tenants who just have the one shop are the worst effected, some of which i see open and close within 6 months.

On-line shopping is killing off retailers but in the same instance a lot of companies are thriving, there is also still alot of chains and retail stores that are mixing it up out there as well as on-line also having a shop in a shopping centre or busy shopping strip in order to keep there name out there.

Did you ever think you are massively over invested in a retail concept which will only see huge deterioration in margins in the next decade? I am always amazed at the huge Capex investment in shopping centres when the rental can only go down (says my non retail based Finance brain anyway).

[SOCCERROO FOX]

Did you ever think you are massively over invested in a retail concept which will only see huge deterioration in margins in the next decade? I am always amazed at the huge Capex investment in shopping centres when the rental can only go down (says my non retail based Finance brain anyway).

The capitial expendure is huge, every time a new tenant opens a shop we may contribute up to a $500k just to get them to open. The profits are definetly there and we try to make money on everything, just last month for 32 days we had advertisement on our office window as it over looks a major road. They charged the company $40k plus the cost of instilation etc. An advertisement billboard over looking a car park is outsourered for $200k p.a. (got knows what the advertising company on charges it for). Plus the rents are huge you have a shopping centre with say 300 tenants all paying approx $20k a month plus bills.

We're also slighly different as we own and manage many office buildings and have many subsidaries across the globe for shopping centres and office buildings. We are also just one arm of a major Super fund and owned by one of the major banks.

Also you will see alot of the major shopping centres now have entertainment precincts that have bars, restaurants, cinemas etc and this concept is growing and growing.

[Captain...]

Some interesting points raised.

@moosey: you are right some people won't want to work less, but some people will, it is the same now, the difference at the moment is that there isn't really any choice, the standard working week is Monday to Friday 40 hours, and if you can't do that then you won't find a full time job, ok not necessarily true in retail, but my point remains that whether you want to work more or less is irrelevant to the needs of the business, cutting the average hours worked but increasing the number of people in employment is a must for me, and increasing flexibility, you have a larger pool of employees working less hours then you have a lot more cover for sick days, holidays, maternity leave etc, the current model is one person is off so everyone has to work harder.

@leicsmac: this could only work if retailers and manufacturers passed on savings to the consumer, cutting costs should mean lowering price, I do not support paying people the same for less work, what I do want with technology is to see it help slash prices and then the impact of people working less and earning less overall would be lessened by lower prices.

Re: more leisure time, means more time to spend money, to go round the shops, instead of buying stuff on the internet in your lunch hour, it means more expenditure on hobbies and past times, so this would be a benefit to the economy.

Finally rent prices, again as retail units close down and renting retail space becomes prohibitively expensive the rental prices need to drop, but they are being kept artificially high, and this again is killing the high street.

This is essentially the problem in retail at the moment, the industry is not allowing the market to lead things like costs and prices, they are being manipulated on all sides to increase profits and all at the expense of the consumer, in this time of crisis all prices should be dropping, that would be the natural, logical response of the market, but the opposite has happened and everything is getting more expensive, that is why the high street is fvcked not the internet.

[Bellend Sebastian]

Sky News reporting that HMV involved in urgent talks about its future with an administrator lined up.

Wearily inevitable

[leicsmac]

Some interesting points raised.

@moosey: you are right some people won't want to work less, but some people will, it is the same now, the difference at the moment is that there isn't really any choice, the standard working week is Monday to Friday 40 hours, and if you can't do that then you won't find a full time job, ok not necessarily true in retail, but my point remains that whether you want to work more or less is irrelevant to the needs of the business, cutting the average hours worked but increasing the number of people in employment is a must for me, and increasing flexibility, you have a larger pool of employees working less hours then you have a lot more cover for sick days, holidays, maternity leave etc, the current model is one person is off so everyone has to work harder.

@leicsmac: this could only work if retailers and manufacturers passed on savings to the consumer, cutting costs should mean lowering price, I do not support paying people the same for less work, what I do want with technology is to see it help slash prices and then the impact of people working less and earning less overall would be lessened by lower prices.

Re: more leisure time, means more time to spend money, to go round the shops, instead of buying stuff on the internet in your lunch hour, it means more expenditure on hobbies and past times, so this would be a benefit to the economy.

Finally rent prices, again as retail units close down and renting retail space becomes prohibitively expensive the rental prices need to drop, but they are being kept artificially high, and this again is killing the high street.

This is essentially the problem in retail at the moment, the industry is not allowing the market to lead things like costs and prices, they are being manipulated on all sides to increase profits and all at the expense of the consumer, in this time of crisis all prices should be dropping, that would be the natural, logical response of the market, but the opposite has happened and everything is getting more expensive, that is why the high street is fvcked not the internet.

I would be fine with this...would still fit the overall idea of less work and the money someone would make would still be worth the same in 'real' terms.

In fact the entire post is nail on head to me.

[Daggers]

I'm still upset that high street shops killed off the vendor with tray trade. Where can you get your knives sharpened now then? Where the bloody hell do I get sweet red roses, two blooms for a penny now? Nobloodywhere, that's where. Fvcking Top Shop.

[yorkie1999]

Sky News reporting that HMV involved in urgent talks about its future with an administrator lined up.

Wearily inevitable

Pc world will be next, which will be ironic in a strange sort of way..

[Fox92]

Yeah, just on the news that hmv is set for administration. Another giant of our streets going, sad really. Most probably have some decent sales on though.

[ozleicester]

I'm still upset that high street shops killed off the vendor with tray trade. Where can you get your knives sharpened now then? Where the bloody hell do I get sweet red roses, two blooms for a penny now? Nobloodywhere, that's where. Fvcking Top Shop.

I blame London Council... i used to be able to feed the birds, tuppence a bag. Now... no birds, no tuppence. This country

[Captain...]

Anyone with hmv vouchers is screwed.

Lesson to be learnt, in this troubling economic times don't buy vouchers.

Really sad to see hmv go...

...but it may be a boost for smaller independent record stores such as rockaboom.

Whilst digital music must take its share of the blame, you have to really look at the music industry, it didn't adapt so it is dying, a cd costs fvck all to make, so dropping the price somewhere down the chain, massive cut taken by record label, could have saved the cd trade, but at the moment buying a cd is prohibitively expensive when so many alternatives are free, youtube, spotify, pirate bay.

Pc world won't be far behind, already shut down its operations in Spain.

Is it time to reassess the minimum wage?