Outlook: High street gets its wake-up call

THE DISMAL December retail sales figures bear a message about the economy and a message about retailing itself. They confirm - as if confirmation were needed - that the economy is slowing. Consumers, the driving force behind two-thirds of GDP, have become a great deal more cautious.

However, the broader outlook is not as bleak as prospects for retailing itself. The monthly consumer confidence survey by GfK, the polling company, revealed a modest improvement in consumer confidence this month, and all along has shown people to be far more upbeat about their personal finances than about the economy as a whole. This is consistent with a gentle downturn like the one in the mid-Eighties rather than a severe one like the early Nineties.

Yesterday's figures showed a slowdown in the growth of sales by value to the weakest since 1987, when the current records began. It reflected both weak volumes and lack of pricing power. There is no doubt that it is the latter, the disappearance of traditionally healthy margins, that is causing most anguish to retailers.

The British high street has to face up to a future as a low-growth or even declining industry. Part of its problem here is the over-expansion of floor space, a cyclical phenomenon that will eventually be corrected. More seriously, traditional shopping is accounting for a shrinking share of our spending. As the average consumer grows wealthier, more and more of the pound in his or her pocket is being spent on leisure activities such as eating out, cinema-going and the gym, and on services, from haircuts to gardening.

On top of that, from out of the blue has come the threat from non-traditional forms of shopping for traditional goods. Now that so many people have bought PCs and modems, on-line shopping is likely to grow at an explosive rate. Perhaps book-buying is the model: customers can still be persuaded out to a store. They don't all buy through Amazon.com yet. But they now expect the experience of a cafe - armchairs and amenable surroundings.

The strategies that have brought success to retailers in the past will work less well in these changing circumstances. The downturn will just hasten the pain. No wonder retailers have joined manufacturers as the most vociferous lobbyists for more interest-rate cuts.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Training Coordinator - Financial Services

£32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor