Tuesday, 14 August 2018
Amazon didn't kill the high street and taxing online sales won't save it
We were on Gordon Terrace at Saltaire on Monday to pay a bill, have some lunch and do a little shopping. This street is as close as you'll get anywhere these days to that idea of a 'traditional' high street. Gordon Terrace has a greengrocer, a baker, a butcher and a grocer (OK it's a Co-op) those stalwarts of that high street of old plus a shoe shop, ladies' boutiques, a great menswear store and assorted delis. Even on a Monday lunchtime when rain is promised (and delivered in spades while we were in the greengrocer) the street is buzzing and busy. OK it's not perfect but there was just the one empty shop and a distinct lack of betting shops, tanning parlours, cheque cashing agencies and other such common features of today's high streets. It demonstrates that, given the right demographic and a benign parking regime (free short term on-street parking) the high street can succeed. Let's also note here that the busiest places were the cafes and restaurants - leisure an dpleasure rules the day on the high street. Saltaire is, however, pretty much the exception not the rule when it comes to high streets. And some folk seem to think we can make everywhere like this by the action of government - those folk are wrong.
The reasons for the decline of the traditional high street are many fold and date back a very long time. The first part of the decline came as a result of the success - based on choice, convenience and price - of the supermarket. Back in the days before supermarkets (Ken Morrison opened his first at Girlington in 1961 the year I was born - so that long ago) places like Cullingworth had a myriad of shops providing all the things those supermarkets came to provide, just not with the same range or the same low prices or indeed under one roof. The supermarket with its scale, distribution chains and efficiency resulted in tens of thousands of small grocers, fishmongers, greengrocers and corner shops closing down. They didn't all close suddenly overnight but gradually as folk retired, sold up, cashed in or, sadly, went bust.
At about the same time technology hammered another nail in the high street's coffin as the fridge freezer began to spread. This meant that women didn't have to shop nearly every day (something that helped make it easier for those women to go out to work, have a career) but could stock up for days ahead and, instead, spend their time on something more pleasant than dragging a heavy bag back from the high street. And those families also began to have cars too meaning they didn't have to use the shops in the nearest high street but could scoot down to Mr Morrison's grand store for what was now their weekly shop. The little shop in the village (or on that row of suburban shops at Bywood we used as kids in Shirley) couldn't compete with the car, the freezer and the supermarket so they slowly went from the high street.
By the 1980s the supermarket was joined by other stores in big sheds - category killers they were dubbed as they targeted hardware, gardening, toys, furniture and linen (in the USA books, cars and clothing were on this list too). Instead of going to that slightly intimidating store run by the man in a brown coat to buy some screws, paint or tools, people drove out-of-town to a sharper, cleaner, friendlier (and cheaper) store offering more choice but a bit less personal service. But if what you wanted was a hammer, personal service probably got outvoted by price and choice, so you went to B&Q. And the same went for bedding plants, toys for the kids at Christmas, settees and duvets - out-of-town offered more choice and a better price.
All of this decline, you might call it the decimation of the high street, took place before anyone except a few physicists had access to the Internet. For sure there was mail order but, unlike the USA where distance selling was a boon to remote places, the thing mail order companies offered that wasn't easily got in the British high street was credit - the liberalisation of finance in the 1980s bashed a huge hole in businesses based on the never-never. By the 1990s all the 'big book' mail order businesses were declining (the closing of mills and factories with female workforces didn't help as mail order relied on agents to sell through these places) while more nimble direct-to-customer mail order like Damart was thriving. But these latter weren't affecting the high street as their modus was selling niche products (thermals, outdoor clothing, plastic storage and so forth) - many of these business, Lakeland Plastics being a good example moved from mail order into high street retail.
By the time the Internet arrived most of the traditional local high streets with butcher, baker, greengrocer, grocer and hardware store had gone. Some survived by diversifying - butchers and bakers built businesses that depended as much on selling lunchtime sandwiches as on loaves of bread or gammon joints - but where this wasn't possible the businesses went. And they went most quickly in places where people benefited most from cheapness - poorer communities.
At the same time as all this, the out-of-town shopping centre arrived - Gateshead's Metro Centre, Meadowhall, the Trafford Centre, Lakeside, Bluewater. And these - again - offered a bigger range, more choice, a nicer environment and keener prices than the traditional town centre. The first to lose out here was comparison shopping on that traditional high street - ladies' wear, shoes, children's clothes all began to struggle as people found travelling to the mall more convivial, no less convenient and certainly cheaper.
All of this - and there's a lot more that could be said about how technology changed consumer behaviour, drove down prices and increased choice - is a long-winded way of explaining why Ruth Davidson and others who blame Amazon (and even more daftly, Amazon's tax bill) for the decline in high streets. In the simplest of terms high streets are dying because fewer consumers are frequenting those high streets. And, to make matters worse for small centres, the people who have deserted these high streets fastest have been the people with more money who have more ready access to transport and therefore take advantage of the bigger choice and better price offered by out-of-town shopping.
Unless the sales tax for online sales is so onerous as to force consumers to pay higher prices on the 'traditional' high street (assuming what they want to buy is available on that high street) the effect will be merely to make things a little bit more expensive for everybody without changing what consumers do in any notable way. It's good politics to talk about how it's not "fair" that Amazon doesn't pay high street rents and business rates but this is an argument for reforming business rates not an argument for taxing Amazon (I'm steering clear of the economists' point that business rates are a tax on the landlord not the tenant as it's contested and hard to explain to a retailer with a tax bill). It may also be true that we need to reform corporation taxes to make it harder for the likes of Amazon to use international trading to hide profit (again I'm staying off those pesky economist arguments about how corporation taxes fall on workers, customers and shareholders not the company itself).
Trying to blame a complicated social change like the decline of high street retail on one competitor (and a competitor that didn't even exist for most of the time the high street has been declining) is ridiculous. What we should be asking is why places like Gordon Terrace in Saltaire work so well while other places don't. Perhaps we need to think about which high streets need saving (or have the demographics and current range needed to survive) and which don't. There used to be at least 30 shops in Cullingworth covering everything you might need - there are now just twelve and three of those are hairdressers. Taxing online sales won't save the high street - asking what makes a high street work (the clue is in the second Grimsey Report where, in effect, he says the answer's leisure and pleasure not old-fashioned retail) is a much better question.
We have too many shops and probably too many high streets. I know this is a hard point to make and no comfort when we're talking about the centre of a Lincolnshire market town but it has to be said. There's a case for looking at reforming rents, at a business rates system that more directly falls on landlords, and at further changes to corporation taxes to reduce their burden on small business. There's no case for a tax on sales - over and above VAT - as this is just making things more expensive for us consumers. It may "hit" the bad boys of Amazon but it will also damage thousands of small businesses selling everything from gin and tonic marmalade to classic car parts through online methods. The result of this sales tax wouldn't be salvation for the high street but higher prices, closed businesses and another bundle of cash for government to squander on pet projects in town centres or subsidising failing businesses.