High streets are suffering a decade-long decline brought about by two major influences on shopping. One is that much of the British public are poorer than they were. The other is that the British public can now shop online.
Coronavirus accelerates both trends but also shows that the NHS is the cure.
People Getting Poorer
Official high employment levels and moderate GDP growth are real. Sadly though, this macroeconomic data is proving to be detatched from consumer activity in an economy where an increasing share of wealth is owned by a decreasing share of the people.
If you aren’t sure how this manifests in the real world, take a look at home ownership. It has been in decline for decades because typical British jobs used to pay well enough to buy a home in the 1980s or 1990s but don’t anymore. That means millions are poorer in real world outcomes – too poor to own their own home. We also see the same with things like funerals where reduced wealth manifests in higher demand for low cost cremations.
It is these real world wealth outcomes that cripple high streets because high streets depend on everyone having some money to spend.
Covid Will Accelerate This
When furlough ends after lockdown, millions will be added to the ranks of the unemployed or underemployed. For now they avoid the worst because a firm would be particularly cruel to get people off the wagebill while government is paying it. With contractors cutting back to save themselves, however, many have no wage waiting for them when lockdown ends.
Lockdown loans will also be called in by banks. This will send many small businesses over the edge. Aviation and tourism is sadly shot to pieces for what will likely be years, big events won’t open to the public for a long time and newly proven work-from-home options will see companies cut their town centre office needs – saving on rent but removing vital lunchtime shoppers from high streets.
So Covid is a disaster for incomes and high streets.
Much talk about retail pretends that young people spend less because of a radical generational culture change – as though two generations are a cross between hippies and communist zealots. In truth, young people are doing what poorer people have always done. They buy less stuff because they have less money.
One generational change that is real, however, is online shopping. From out of town shopping centres to supermarkets, competitors to high streets have been around a long time. The opening of places like Lakeside in the 1980s saw high streets like Chelmsford pedestrianised to fight back. That fightback usally worked well and high streets have often proven more flexible than shopping malls. Unfortunately the internet is different in a big way.
Out of town shopping centres had to pay their taxes just like high street stores. Global distributors like Amazon move money across borders and thus avoid tax. There’s also big convenience in having things delivered so you can stay home and watch Hunter instead of battling busy roads and limited parking.
Covid Accelerates This
As with falling wealth, Covid likely accelerates internet shopping too. Millions of people, especially older people (who hold most of a society’s wealth), had never quite taken to online shopping.
Lockdown has given many of these older consumers a crash course in how easy online shopping is. It’s likely a lot of these shoppers will now stay online.
Is There A Solution?
In many ways this is basic economics. Supply is higher than demand, so supply needs to come down or demand needs to rise.
Let’s not waste much time on reducing supply as a solution. Just imagine telling people in Braintree that their high street will close so that they have to go to Chelmsford’s (mentioned earlier) to help it thrive.
The longer distance for thousands of people would be bad for infrastructure, bad for the environment and bad social exclusion among the young, elderly and disabled. Besides, it’s hard to think of a faster way to lose votes than to quit on your own community for the sake of someone else’s. So politically it’s a non-starter.
Yes, we meant it when we said ‘literally’ about hospitalisation of high streets. There are things that people can only do in person, that falling wealth does not prevent us doing, and that staff can’t do from home. One of them is hospital appointments. So we can use this to boost high street footfall.
Amazingly, Tottenham High Road has done exactly this because of Covid. The Tottenham Stadium has been turned into a maternity out-patient ward for a while. This was done so that expectant mums need not fear visiting hospitals where a deadly disease might be prevalent.
If a football stadium can be retrofitted at short notice to serve outpatients, then it is hard to see why a closed-down department store building can’t be converted long-term. Indeed your erstwhile editor has a lifelong condition, the treatment for which involves just sitting on a comfy chair with a drip in his arm for two hours six times a year. Why do we send people out of town to massive hospital complexes for such things when all the busses go into town anyway?
Not Just Hospitals
Hospitals are only one example. Colleges and other public facilities might be sensibly relocated too. Making high streets a centre for a community this way could save high street retail.
There’s a lot of benefits to this. It would secure footfall and thus boost high streets. Town centres are hubs for transport so can be easily reached by most people. Short appointments might even fit in with lunch breaks, helping workers out for convenience or avoiding costly time off work.
Frankly, it feels a little odd having written this that it hasn’t been done already.