Shopping for solutions / Global
Retail therapy
In the wake of bank bail-outs and car industry rescue plans, retail giants could find themselves standing next in line with begging bowls in hand. But it’s a re-think that’s really needed to keep the high street healthy.
It makes sense for governments from local to national to focus on schemes to help their star employers first and worry about everyone else in the chorus later. Or does it? Banks get a lot of attention currently because they’ve bungled badly and countless millions still find them sensible places to park funds and buy off-the shelf financial solutions. Automotive companies grab headlines and receive hand-outs because they employ countless hundreds of thousands and the unraveling of the industry is not unlike witnessing a car crash. The aerospace industry is more or less the automotive industry with wings and soon many of its biggest names will be circulating their collection baskets to the appropriate ministries.
So what about retailers? Aren’t Europe’s biggest hypermarket operators entitled to some form of assistance too? If the biggest food merchants get something then does it not make sense for mom and pop operators to get more than just a cut in consumption tax?
In our retail survey (page 66), we take a global tour of major retail hubs and find it’s not state intervention that’s needed to get tills ringing again but a fresh set of ideas involving landlords, buyers, merchants and marketeers.
One of the first steps that must be taken is the creation of a new dialogue between property owners, shopkeepers and local governments in order to define the type of retail environments they want to build. For too long landlords have been getting away with charging rents that were extortionate during the boom period and the collapse of everything from banker bonuses through to dips in tourism traffic has left many with derelict spaces and empty shop-fronts as tenants have had to close overnight. Shop owners that can just manage to pay their rent and business rates have little left in the kitty for improvements to their interiors or staff training and this ultimately leads to a drop in traffic and at the same time revenue. As we send this issue to press some US analysts warn of thousands of shopping centres and strip malls facing closure over the coming year (several hundred wouldn’t be missed).
UK government agencies are concerned that shop closures will lead to a domino effect where whole streets and eventually entire town centres will be wiped out by the failure of a network of inter-dependent businesses. Given that plenty of UK towns looked bleak and battered while times were good, there’s a very real danger that many could become complete commercial and social failures. Spain, Canada, Germany, Austria and Ireland should all be concerned about the same forces also decimating their communities.
It might make sense to rush to the aid of the biggest employers and national icons but it’s the people on the street that we trade with daily who can save our communities. If you let your local parade of shops go under then you can immediately trim 30 per cent off the value of your house, find yourself looking over your shoulder more often than you used to as you walk home at night and you can wave goodbye to a lot of neighbours who don’t have the stamina to stick things out as long as you might.
Many are arguing that the global economic recovery will be a top-down rescue but Monocle believes the march forward starts on the street and that many corners of the retail sector are ready for a good dust down. Strong communities and vibrant neighbourhoods are bound together by dynamic entrepreneurs at their core (people who understand service, individuals who are creative, men and women who like to trade). Failed communities are usually lacking these essential personalities.
