Modern retail redrawn: The future shock hits the high street

The rise of digital has hit traditional retailers hard - so how should the co-op sector adapt?

On 11 August 1994 Phil Brandenberger of Philadelphia made history: he made the very first secure online purchase using a credit card.
The item bought? Sting’s fourth studio album, Ten Summoner’s Tales.

A quarter of a century later, almost anything you can imagine can be bought online, from cars and clothes to bacon flavoured dental floss and Justin Bieber’s right shoe. But this colossal rise of e-commerce has posed unique problems for bricks-and-mortar retailers. How on earth can you compete with the scale, pricing and convenience of online shopping, when you have rents, rates and staff to pay?

A survey published in January 2019 by the British Retail Consortium (BRC) revealed that the total number of people employed in retail in the last quarter of 2018 was down 2.2% on the same period for 2017 – the equivalent of 70,000 jobs lost – while nearly a third of retail businesses plan to shed staff in the coming months. Of those jobs that remain, the number of hours worked was also down 2.8% on a year ago.

Another report – this time from real estate adviser Altus Group – predicts a further 175,000 jobs will be lost from struggling UK high streets in 2019 and more than 23,000 shops will close as the boom in online shopping and rise of giants such as Amazon continue to take their toll.

Related: The rise of digital is changing the way our food is grown – farm co-ops told to innovate

Debenhams and Marks & Spencer both reported falling sales over the crucial Christmas period and have already announced closures, while John Lewis Partnership has warned profits would be substantially lower in 2019 and is considering suspending this year’s partner bonus.

“The retail industry is undergoing a profound change and the latest employment data underpins those trends,” said Helen Dickinson OBE, BRC chief executive. “Technology is changing the way consumers shop, and also the types of jobs that exist in retail. While we expect the number of frontline staff to fall over the next decade, there will many new jobs created in areas such as digital marketing and AI.”

However she acknowledges that this transformation comes at a cost for retailers “who are already weighed down by the increasing costs of public policy, from sky-high business rates to a rising minimum wage”.

A co-operative advantage?

This shift has obviously had a profound effect on town centres, through the loss of trade from high street retailers and disillusion with ‘clone towns’. At the same time, there have been signs of a revived localism, drawing people away from city centres to band together – to co-operate – in suburban areas with a distinctive character.

This rise in localism could be, in part, the manifestation of a longing for a missing sense of community in UK towns and cities which has followed decades of internal and external migration, demographic and economic changes, and a rise in individualism. At its worst this has fed into the social divisions laid bare by Brexit.

But there has also been a reaction against consumerism – in terms of environmental awareness, with the campaign against plastic; and with people having less money to spend. Young people have shown more interest in buying experiences – such as live performance, escape rooms, and gaming events – than possessions; and there has also been a growth in sharing sites and upcyling. So where does is leave retail? And co-operative retail in particular?

Some societies – namely Chelmsford Star, Tamworth and the Channel Islands – still operate department stores. Radstock Co-operative is redeveloping its town centre Radco superstore which includes a food hall and non-food departments (electrical, clothing, shoes and homeware). But others have gone.

Related: Social media, new networks – ways to start a new wave of co-ops

In September 2015, Heart of England Co-operative announced the phased closure of all its non-food retail offerings over the following 12 months, across Nuneaton, Bedworth, Atherstone, Hinckley, Rugby and Leamington Spa.

“I knew the non-food business would be struggling because of online,” said Heart of England chief executive, Ali Kurji. “We could not compete with online because we were simply not large enough. It was a bitter pill to swallow but it had to be swallowed, otherwise the society could have been in difficulty going forward. Non-food is going to be challenging for everyone, particularly on the high street because the growth of online is phenomenal.”

Since then, Heart of England has moved its head office to Coventry and approved a multi-million pound investment programme to refurbish its food stores. And like other societies – including Chelmsford Star, Lincolnshire and Central England – reported a positive performance during the 2018 Christmas and New Year period.

But the retail experience must now reach beyond simple transactions, as Altus Group managing director, Guillaume Fiastre, noted: “The most successful retailers – the survivors – are learning to draw in their customers with the promise of a personalised experience. Technology makes that all possible but it still needs a strong human element.”

This human element is where co-operatives, with their roots in membership and community, already have an advantage. The Co-op Group’s Member Pioneer scheme and Central England’s member activities, for example, add a personal element to member experiences beyond traditional corporate social responsibility and charity partnerships.

This week, we’ve been posting online stories on how retailers and consumers are addressing some of these challenges in different ways. We’ve previewed next month’s Co-operative Retail Conference, and interviewed keynote speaker Steve Gill, of shopping tech specialists VME Co-op. There are case studies looking at ways forward for co-op retail – from innovations at the UK Co-op Group, and overseas at Coop Italia and Switzerland’s Coop, to the achievements in grassroots food democracy at Japanese consumer network Seikatsu and the Pioneers Pantry, a store in Rochdale which serves people in food poverty. 

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