If you’ve been like me this Christmas you’ve bought most of your presents online this holiday season and have done so for a number of years now. I’ll even bet with an educated bet you’ve bought most of your presents from Amazon. Listening to the local radio or watching the news, you’re scum like I for doing so – contributing to the death of the high street!

Well. Not really, there’s a good reason we buy online. It’s fairly simple even when the prices are similar to what’s in the high street ( though that’s not often ) and the big word is convenience. There’s a reason Amazon has grew to be a global superpower and it’s based on its business model of fast, efficient delivery and brilliant customer service.

Shopping experience of online vs the high stree

Online

You can get most of your shopping done in half an hour with smartly laid out sales categorially picked for all of your family members. If you’ve decided to avoid Amazon and go with a local online company, a quick google will find you what you need almost just as quickly.

You can shop on your mobile, tablet or desktop seamlessly or even with your voice. Amazon has said the number of voice activated sales tripled during the 2018 holiday season.

Shopping online you can easily check if you’re getting the best price and share the link with friends to get their instant feedback or, if you have family like mine – confirm this is the right colour of top they asked you to buy them for Christmas.

You can order literally anything online it seems

How long did it take?

You’ve now ordered for the entire family and even got a couple of gifts on the cheap for friends for a nice surprise and it’s taken you about an hour tops.

You’ve got a clear idea of when your presents will arrive and your courier will even text you the time they’ll arrive on the day, Time to chill out with a well-deserved cuppa and wait on your *already gift wrapped* presents to arrive.

High Street

Compare this to the aged method of driving into the city, of which many have been pedestrianised so finding car parking within a reasonable distance becomes even harder. If you’re going to avoid the car and take public transport instead you have to figure out the timetable plans and of course take into consideration holiday timetables, sit in an overcrowded bus / train and often, walk even further to your destination. So before we’ve even started shopping we’ve probably wasted an hour.

You finally get into the city and you’re surrounded by advertisements for generic sales very little of which actually are about what you’ve had in mind for your gifts.

The 50% off prices look more like the price of the items been hiked up for the sales ( spoiler – that’s how sales work ). You now have to go from shop to shop trying to find gifts for the numerous family members who all have very different tastes, all whilst walking through a zombie minefield of other customers stressed out of their heads trying to get the best ‘deal’ – bonus points here for suffering if you have any form of social anxiety.

You’re probably talking another hour or 2 here, probably 3-4 if you’re with someone else or if you’ve inevitably stopped at a coffee shop for a breather / bite to eat.

You finally get everything and now you’re sat at the checkout tills for 15 minutes or so but it feels like a few hours. The staff are usually understaffed, overworked and underpaid and exhausted by the time you see them so probably won’t get your best experience – combine that with the 20-100 divas they’ve probably had to deal with today and being forced to undergo the torture of listening to that same Christmas CD on repeat for weeks now. The result, you’ll probably not get their best day serving you either. (So go easy on them)

The Crowds of the high street

Of course, now you have to make your way back to the car through the zombie crowd and have to drive back through the Christmas gridlock or to the train/bus which you’ll inevitably need a lift from the other stop anyway.

How long did it take?

Pretty much the full stress filled day around 5-6 hours, you’re now exhausted and now it’s time to do that awkward – hide the presents in the car or run it past your other half / family so you can immediately gift wrap them or more likely* shove them in the back of the cupboard.

The price difference of High Street vs Online Shopping

Lets examine the different factors which play a role in why online can undercut the high street. Most of it is fairly obvious but you might learn something.

High Street

The High Street is usually more expensive and there’s good reasons why it can’t compete with online. Let’s examine these in a bit more detail

  1. Taxes – VAT ( 20% ) is added to pretty much everything you buy locally and online. Companies that have over £85,000 in turnover, have to add VAT to help support the Government and local councils. The hindsight here is that you can’t afford a high street placement without that kind of turnover yearly so essentially paying for VAT is almost guaranteed on high street ( unless the goods are VAT excluded)
Spors direct owner wants high street on equal field with online

2. Buying the property or renting it – in a prime area like the high street you’re talking in the hundreds of thousands to millions of £ depending on the city.

3. Business Rates (also known as National Non-Domestic Rates) are a tax on business properties. The tax is set by the government and business rates collected by local authorities are the way that those who occupy non-domestic property contribute towards the cost of local services. Under the business rates retention arrangements, authorities keep a proportion of the business rates paid locally.

4. Employees, this one is pretty easy to understand. Every person you meet in the store regardless of their customer service ability or paycheck, has to be paid and that money essentially, comes from you.

5. Marketing / Sales – All those printed advertisements have to come from somewhere and often these are outsourced to other companies but some have inhouse workers. Either way it’s paid for somehow.

6. Big Bosses / CEO’s / Shareholders etc. – These guys take the biggest slice of the pie and will make sure they’re getting a healthy profit.

7. The actual goods they’re then selling on. They might have a factory in the same country or more likely in another country or just as likely, they buy from their own suppliers and rebrand.

Online

  1. Taxes – Services = If the company is based in the UK they have to include and pay VAT if they are over the VAT threshold of £85,000 and their goods are included on the VAT list. If the customer the business is selling to is outside the UK, they don’t have to pay VAT but may have other charges depending on customs. So online companies actually do pay their fair share of tax and being smaller businesses are often hunted down and bullied more by HMRC than the large corporations that have extensive accounting and tax dodging practices in place.
  2. Website / Service to sell from. If the user is using their own website to sell from – they only have to factor in the cost of their domain and hosting / any external card handling fees. If they use a rental service they are paying for the domain and on-going monthly service fees and any extra transaction processing fees.
  3. Storage – Most online companies use a just in time method such as dropshipping or producing to order. So they don’t have to worry about paying for extra premises to handle the goods. Though if they did, warehouses and small storage spaces are generally a lot cheaper to rent than to own or rent a shop on high street.
  4. Unless the eCommerce store makes the user pay for delivery ( which isn’t a great method to use as it usually loses more money through customers put off ordering than it does save money. Most companies factor the delivery costs into the items pricing and generally, this works very well.

In Summary it doesn’t take a genius to figure out it’s much easier and more profitable to start an online business than a brick & mortar business.

Why the move away from High Street?

Convenience is a word I’ll keep coming back to but essentially it’s why the high street grew then faded.

Before the internet the high street was convenient as you could get everything without having to travel too far. Now that idea is fairly outdated as you can get everything without even having to go to the high street.

Also a small shoutout to the buy local crowd as that’s another movement that’s taking away from these large chain stores. The effort to back small family owned businesses over these large corporate superpowers might not be the largest portion of the chunk being taken from these stores but it plays a small role.

Finally but most importantly there’s another very important reason for the decline and it’s linked to greed but not perhaps in the way you might think.

The customer at the end of the day is the one with the disposable income keeping these companies afloat as and as the wealth gap between the worlds elite and the everyday Joe / Jane continues to widen, the everyday consumer needs to find ways to make their money go further. So online is often the way to go.

In Summary

Let’s be honest the high street worked because it put everything you needed in one place. Greed has priced most of the general public from it since then and the internet just offers a better alternative.

I’m not for people losing jobs but I am for society evolving and it does so naturally. Those who have chosen to move with the times have done well and those who stand firm against the sea of change will be wiped away and that’s just how the world works.

I don’t see the high street completely dying off there’s too much money involved for that to happen but there have been signs of this happening for years and more of it comes back to greed than it does to online sales stealing customers. I’ve been writing on my other blog on my company website for a couple of years now hinting that this was going to come and companies should embrace the internet but old attitudes die hard.

How to evolve with the times as a brick and mortar business

Maybe just maybe, unless you have a definitive plan as to why your customer would come to the high street to see you, relying on the old ‘ traffic footfall ‘ should no longer be considered a valid strategy as the main source of income.

Maybe your business doesn’t need to be located in the high street with its incredibly high business rates and cost of premises. Maybe offering smaller premises with a hybrid business plan of online and local user experience spread across the country might just be a better alternative?

How about offering a seamless online / in store experience and most importantly convenience.

Look at what the companies that are succeeding are doing like Tescos. You can do your shopping online easily and have the ease of delivery or do self checkout in store / scanning your own items. Old business models shouldn’t be treated as the ‘how to’ in modern times.

Amazon is beginning to open up stores across the US and will be opening one’s in the UK soon enough with no checkout tills only security/customer service and stockists. The benefit of this is no waiting around at the tills or overcrowded stores. Again understanding the benefits of convenience

Small and large, companies shouldn’t have to suffer for evolving and not being dragged down by those unable to understand or unwilling to adapt to the shift in customer behaviour.

If the Government really wants to help the high street they can cut down on the sometimes insane business rate costs levied on the high street.