The recent, but not unexpected, demise of HMV, closely following a similar fate for Jessops, has rekindled (if it were not already live) the debate about the future of the high street. It has to be said that the first couple of weeks of January have historically been the time when retailers who were suffering, would call it a day, once they had some decent Christmas sales under their belts. But in present times, what we are seeing is not one or two isolated incidents but a continuing trend of failures brought about by:-
the general state of the world economy; and
the seismic change in consumer behaviour/shopping patterns caused by the growth of the Internet.
If you pursue the internet argument to its logical denouement, you would conclude that there will not be a need for any shops in the future and that we will all buy everything online. But is that really likely to happen? There are those that argue that we are in such a period of change that no one really knows where the balance between physical and virtual shopping lies. They suggest that whilst retail parks will continue to thrive, the high street will become populated by restaurants, coffee bars, niche retailers, convenience stores and those retailers who are able to ‘attract’ actual customers who not only browse but actually buy rather than going home to do that online. These changes are likely to continue to exert downward pressure on retail rents and therefore property values – those very values which underpin a good proportion of investment and pension funds performance.
Another possible trend arising from these developments could be that, where manufacturers and processors in the UK have until now distributed their product through wholesalers and retailers to the end consumer, they might use the Internet to ‘cut out the middle-man’. In other words, more pressure on retailers and less need for them and wholesalers as consumers buy from the factory door. All the factories need to do is to ensure they have the appropriate skill sets, distribution arrangements, etc.
And for those who think that trading on the Internet is easy, and the solution to all our ills, think again. Running a virtual business still depends on being able to sell the right products or services at the right price to the right customers. And this is why, based on our experience, many businesses will need even more the support of their professional advisers.
Keith Graham – Managing Partner
Westbury Accountants and Business Advisors is an accountancy practice based in London. Westbury have been providing Accounting and Tax solutions to small and medium sized businesses since 1936. Talk to the team at Westbury on 0207 253 7272 or visit http://www.westbury.co.uk.