The retail disaster

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.

6 thoughts on “The retail disaster”

  1. So we have an oversupply of retail space and a shortage of housing. I wonder if the answer will turn out to be 5.

  2. So retail is going to become like farming or coal-mining – heaps of government subsidies then?

  3. Yet another instance of the curse of the computer which has polished off the recorded music industry with people downloading instead of particpating in a collectors’ market ;ditto the market in books, quality journalism etc the obsolescence of thousands of harmless ,paper -shuffling jobs, in banks especially- all to create a market which is not a market ,a form of virtual communism but supporting Gothic laissez-faire.
    (That’s one way of looking at it: rest of the time ,its nice to read books on the Net that used to require a trip to the British Museeum Library previously.)
    A good shot of Retail Price Maintenance (re-legalised by the American Supreme Court)across the bows of the retail industry would bring a bit of order .

  4. I would be happy with internet shopping, were it not for one thing. Is there anyone else plagued by delivery vans dropping off food for lazy internet shopping feckers getting their groceries from Asda Tesco Morrisons Sainsbury and Waitrose in their area at night? We get all of these shops and the vans are really noisy – we live in a densely populated city centre street lined by tenements on both sides – with crashing of shutters and dropping of crates of food.

    I suppose it will get worse when Lidl start to do it in a clapped out old diesel rust-bucket.

    A Nimby

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