The bosses of some of the UK\’s biggest high-street chains have warned the Treasury urgent action is needed to prevent a double-dip recession and the possible closure of thousands of shops.
Well, yes. Consumption taxes are rising, food and petrol are rising in price, squeezing the disposable incomes available for other items, we are if not technically in a recession we\’re at least not in the sunny uplands of an economic boom.
And yet there\’s also something else going on. We\’ve a structural change happening in retail. It\’s this here internet thing.
The basic infrastructure of the country has sufficient retail space to supply everyone with everything just as it did 10, 15 years ago. Population hasn\’t changed all that much in the interim. Yet internet sales now account for getting on for 10% of all retail sales.
If everything else had remained equal (which of course it hasn\’t but bear with me) this would mean that the country is now 10% oversupplied with retail space.
Population hasn\’t remained static, some things are much more viable as internet sales than others, we\’re richer (just!) than we were a decade, 15 years ago, so there\’s perhaps more disposable income in total etc.
But that doesn\’t change the fact that we\’ve two entirely different things going on here. The cyclical stuff of recessions and tax changes, yes, but also the structural changes of that retail space simply no longer being needed because we\’ve a change in technology going on.
And any policy response to all of this has to understand that there are these two things going on. Atempting to preserve the current retail estate in the face of such technological change simply doesn\’t make sense: whatever the correct reaction to the cyclical problems.