Has The Internet Killed Our High Streets?
In 1993 I visited County Hall in Durham with my family to take part in a science exhibition. I have always been interested in computing and remember being fascinated by an enthusiastic postgraduate student who demonstrated that he could connect his computer to a machine in Moscow and download data. How right he was. In the future, I was told, thousands if not millions of computers would be connected on a worldwide network and would exchange data freely across the world. We were informed that everyday tasks like banking, shopping and communication could and would be transacted through your home computer. It all seemed a bit far-fetched as only wealthy families even owned a computer at the time.
Fast forward to just after the millennium and these predictions proved to be a conservative estimate of how computing technology developed. The world had been permanently changed with infinite opportunities being made possible by the Internet. Royal Mail panicked over the use of email and Napster revolutionised music forever. Microsoft had seized the moment and tapped into the insatiable demand for home computers and families were quickly buying computers to get hooked up to the internet. Everyone wanted a piece of the action and it was only a short time until the multi-computer family became the norm rather than the exception. The revolution continued.
Moving to the present and the pace of change on the Internet shows no sign of abating. Facebook, YouTube and Twitter are now such a fundamental part of online culture that we can scarcely imagine a world without them. All television adverts now come with details of the Facebook page, complete with blue 'F' logo and website details. Not to do so would look silly. Internet users want more interactive ways of communicating and interacting online and we are at the precipice of the next major development online with the development of 24/7 mobile computing. Either through a tablet computer, mobile phone or even the new product Google Glass the internet can be with us wherever we go.
The world of ecommerce drove development online and it is this globalisation of business that is a contributing factor to what I believe is a permanent change in the composition of our high streets. Customers can now shop from home for everything they need, accessing the full market to find the best deal. Those who do venture into the high street can download a free app for their iPhone which scans the bar code of a product and immediately offers price comparisons to the deals available for the same product online. As the use of such technology widens businesses must face the reality that there competitors are potentially every seller of their product in the world, rather than just their town or region. Margins that were already tight, particularly in these tough economic times customers want the best value for money.
One of the many benefits of the Internet is that it empowers the customer to find the best deal. The mass supply has seen prices move towards a wholesale prices than retail prices we find in shops. The cartel of the high street has been broken as we have access to almost infinite choices. A business in a small rural town now has to ensure they are competitive compared to their entire industry niche. Some would say that this ensures ethical pricing, others would say it places small to medium sized businesses (SME's) in a very difficult position to survive in today's business environment. When I was a child I remember my mother was keen on knitting clothes. In our small rural village of Lanchester in County Durham, there was a wool shop which was well-used and valued by the local residents. This business closed many years ago through retirement of the owner, however, I doubt that such a business would be viable on our high street today.
Bricks and mortar businesses must still pay wages, insurance, utilities and the biggest drain of all for an offline business, commercial unit rent and business rates whilst the online enterprise exists with no overheads which allow their pricing to reflect their reduced costs. Shop frontage does remain desirable and gives you footfall to turn into customers on the high street but it comes at a price. There is a strong argument that investing in a branded website, integrated ecommerce facilities and a search engine optimisation program is more useful in today's business world, but spare a thought for the empty shop units that are becoming a relic to a bygone era where people browsed the high street rather than Amazon or Google to shop.
In your own town you will notice there are increasing numbers of empty shop units which show the battered remains of a once proud business. Empty shop units constantly appear and at present they can sit empty for years. I always take note of the empty unit, complete with broken shop sign and the "Come to the Circus" poster that seems almost obligatory and I am reminded of a once ambitious business that the owner invested many hours, months and emotion into growing. Unfortunately many businesses fail and I do not envy the ambitious and proud business owner having to tell a loyal worker who earns a small wage in the hope of a better tomorrow that unfortunately the realities of the balance sheet means the business has failed. Small to medium sized enterprises could be the biggest casualty of the Internet. Now look at your large buying history on Amazon or eBay, do you feel guilty yet?
Business owners do not expect any sympathy and I would get short shrift if I attempted to lament their plight with colleagues of mine who are self-employed. Lord Sugar would be the first to say that business owners must adapt to the world around them rather than lament that in different conditions they would succeed. However, I would argue that having a healthy number of SME's remaining viable businesses on our high street is vital to resisting the financial redistribution to the wealthiest in society. If SME's leave the high street we get more empty units and only the largest companies offer the goods we can buy. We never see that money again. For business owners there is the incentive of social mobility for the upwardly mobile wealth creators. Unfortunately a by-product of the Internet and the tough economic times we are enduring is that small businesses like shoe shops, sandwich shops, family butchers, wool shops, electrical shops find it almost impossible to exist in today's market, even if they utilise online sales to help their revenue.
Taking advantage of the void are large companies who have began to set up business on our high streets, offering loss leaders to compete for customers. This retail behaviour prices out smaller businesses that cannot compete. In tough economic times, customers are forced to buy food and important life items as cheaply as they can. Years ago smaller retailers like Spar, Presto, and Co-op were the high street food outlets but now large companies like Tesco are a common sight with their Extra stores which can be no larger than your corner shop or newsagents. This increases the amount of revenue generated by the huge retailers like Tesco, hitting the black hole of their bank accounts and only paid in dividends to already very successful and wealthy directors.
The ongoing evolution of our high street presents different and equally worrying problems for society, namely the increase in the number of bookmakers and cash converter businesses that have popped up everywhere in recent years. Unfortunately whether we like it or not these industries are massive growth industries, but they offer society an easy route to very bad decisions. Within a two minute walk from my place of work, there are two cash converter businesses, four bookmakers and a product rental outlet that offers goods on a rental basis targeted at capturing benefit claimants who cannot buy the goods outright. Reinforcing a previous point I made, even the bookies in the town used to be owned locally, but they were bought by a national brand who knows that it is money in the bank.
Whatever our feelings towards these companies if they were not there then we would have empty shop units. I'd rather have the shops filled by someone, just not by businesses that either give people a bad deal or sell opportunities that are not really opportunities. It is tough enough for the consumer as it is. Larger retailers are doing very well from the changing face of our high street and our government must address the farce that is corporation tax and ensure that these companies pay the correct amount of tax. Labour can make great strides to economic credibility by demonstrating and following through on a tough line to combat tax evasion. Voters will remain disillusioned as they are continue to pay lots of money for petrol, food and even bedrooms whilst the wealthiest companies manage to evade paying anything with the political system apparently complicit in this evasion, whilst talking a tough game. The current system is not fit for purpose and needs urgent attention and the HMRC, albeit overseen by government, must share the blame for this debacle.
This article should not be read as a technophobe rant on the Internet. I would happily join whatever petition or campaign you liked if there was an attempt to save the high street by taking my Internet away. But I will pledge to try and spend at least a little of my money in local businesses rather than falling for the seductive comfort of online shopping and home delivery. I hope you will do the same. Business people don't need your sympathy, you should only buy from good companies that offer a good service and competitive prices. However, keep in mind that great companies exist that might not necessary have the modern flash websites and one-click purchasing options, they might have a till and, god forbid, shelves and items. The development of mobile technologies may break the shackles of the consumer to the home computer allowing even the most hardened Internet addict to leave their home and explore the many businesses that are worthy of your consumer support and at least a cursory glance into their shop.
They will be pleased to see you.