_ABANDONED a perspective on the modern high street and ecommerce
_PRECURSOR WORDS BY THOMAS SQUIRE
_ABANDONED
The following publication is an in depth look at the relationship between high street and the growth of e-commerce in this digital in which we now live. Throughout the publication the impacts each have had on each other will be explored from both a positive and negative perspective. Since the early 1990’s shopping through the internet has been possible however it was never largely accepted by the general public until the late 1990’s and early 2000’s, now with the growth the internet enabled devices and our need to be constantly connected online shopping has become a norm and is here to stay, but as a result of this is, it has had detrimental effects to the high street. This has resulted in the failure of many small and large corporate businesses and companies, which have left with no choice but to abandon the high street, some in light of bankruptcy and others in the sight of pursuing an online channel within the business in a ever growing competitive digital market place.
This new digital marketplace is a hub of choice and value for money which places the consumer at the centre of there buying and gives them the control. Similarly with growth of mobile devices such as the iPad and iPhones consumer now have access to the internet whenever and wherever they are, which for digital companies allows them to sell 24 hours a day and 7 days even but leaves the high street behind with every dwindling sales and profits and desperation to attract the custom of the general public. This insight will provide a perspective on the current state of our high streets and how the internet will continue to change our shopping habits.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
Four in ten high street stores will close over the next five years
ÂŁ1 in every ÂŁ10 spent in a UK retail transaction is spent online
ECOMMERCE, WHAT THE F***? WORDS BY DAVE ROOS
_ABANDONED
_WHAT IS ECOMMERCE?
Over the past 12 years, the Internet has changed the way we buy and sell goods and services. Do you remember buying airline tickets before the Internet? Can you imagine buying a new computer or car without doing hours of Web research? And Christmas shopping? You actually had to step foot in the mall…ugh. By definition, e-commerce means the buying or selling of goods and services over the Internet. According to the Pew Internet & American Life Project, 66 percent of the adults online have purchased something over the Internet, whether it’s books, shoes or a Caribbean cruise.
Even with a slumping global economy, online retail sales continue to rise. According to recent forecasts by Forrester Research, online retail sales will increase 17 percent in 2008 to reach an annual total of $204 billion, with the biggest sellers being clothing, computers and cars. E-commerce’s history is short but fascinating. Over the course of a few decades, networking and computing technology have improved at exponential rates. Powerful personal computers linked to global information networks have powered a whole new world of intellectual, social and financial interactions. And this is only the beginning.
But if you extend e-commerce’s definition to include researching products and services online without buying anything, or bidding on an online auction but not winning, then the number of adults who participate in e-commerce jumps to 93 percent. That’s just about all of us.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
YOU COULD SHOP ONLINE IN THE 90’S? WORDS BY DAVE ROOS
_ABANDONED
_HOW DID IT START?
As far back as the 1960s, businesses were using primitive computer networks to conduct electronic transactions. Using something called Electronic Data Interchange, a company’s computer system could share business documents -- invoices, order forms, shipping confirmation with another company’s computer. In the beginning, each company had its own standards for formatting these documents. But in 1979, the American National Standards Institute came up with something called ASC X12, a universal standard for sharing business documents over electronic networks. Prior to that, in the late 1960s, the military developed ARPAnet to ensure that crucial communications were circulated in the event of a nuclear attack. The original ARPAnet connected four large U.S. research universities and relied on huge, unwieldy computers. In 1971, researchers developed the Terminal Interface Processor for dialing into the ARPAnet from an individual computer terminal [source: ARPAnet]. But the greatest networking evolution came in 1982, when ARPAnet switched over to Transmission Control Protocol and Internet Protocol, the same packet-switched technology that powers the modern Internet. By the early 1980s, individual computer users still mostly at major research universities were sending e-mails, participating in listservs and newsgroups, and sharing documents over networks like BITNET and USENET.
In 1990, a researcher named Tim Berners-Lee at the European Organization for Nuclear Research proposed a hypertext-based web of information that a user could navigate using a simple interface called a browser. He called it the “WorldWideWeb”. And in 1991, the National Science Foundation lifted a ban on commercial businesses operating over the Internet, paving the way for Web-based e-commerce. In 1993, Marc Andreesen at the National Centre for Supercomputing Applications introduced the first widely distributed Web browser called Mosaic. Netscape 1.0’s release in 1994 included an important security protocol called Secure Socket Layer that encrypted messages on both the sending and receiving side of an online transaction. SSL ensured that personal information like names, addresses and credit card numbers could be encrypted as they passed over the Internet. In 1994 and 1995, the first third-party services for processing online credit card sales began to appear. First Virtual and CyberCash were two of the most popular. Also in 1995, a company called Verisign began developing digital IDs, or certificates, that verified the identity of online businesses. Soon, Verisign switched its focus to certifying that a Web site’s e-commerce servers were properly encrypted and secure.
CompuServe was one of the first popular networking services for home PC users, providing tools like e-mail, message boards and chat rooms. In the mid-1980s, Compuserve added a service called the Electronic Mall, where users could purchase items directly from 110 online merchants. While the Electronic Mall wasn’t a huge success, it was one of the first examples of e-commerce as we know it today.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
IT ALL BEGAN WITH BOOKS WORDS BY DAVE ROOS
_ABANDONED
_THE FOUNDING FATHER’S OF ECOMMERCE
In July 1995, Jeff Bezos boxed up the first book ever sold on Amazon. com from his Seattle garage. Within its first 30 days of business, the self-proclaimed “Earth’s largest bookstore” sold books to online shoppers in all 50 U.S. states and 45 countries. With Amazon, Bezos tapped into a powerful new e-commerce market. Books, he had realized, were cheap to ship and easy to order directly from publishers. Publishers had already created vast digital archives of their titles on CD-ROM, something that could be uploaded to a Web site. Amazon.com set the standard for a customer-oriented e-commerce Web site. Users could search available titles by keyword, author or subject. They could browse books by category and even get personalized recommendations. They could also purchase books quickly and securely with the patented “one-click” checkout system. But the most popular Amazon.com feature has always been the reader review option. On Amazon, any registered member can write and publish a book review. And other users can rank each review, creating a hierarchy of top Amazon reviewers. Amazon’s online community feel - in addition to the steep discounts on many books - has contributed to the site’s popularity. Amazon went public in 1997, and as the dot-com boom reached its pinnacle in 1999, Bezos was named Time’s “Person of the Year.” Amazon has expanded its offerings beyond books. It currently offers music, movies, electronics, toys, home and garden equipment, clothing, jewelry, video games and digital downloads. Amazon runs seven different international Web sites, has distribution and customer service centers in seven countries and employs more than 17,000 people worldwide. Yet despite its growth, Amazon hasn’t always been a financial powerhouse: It didn’t
post its first quarterly profit until 2001 and its first annual profit until 2004. But in the first quarter of 2008, Amazon announced a profit increase of 33 percent over last year, an impressive achievement in tough economic times. Back in 1995, when Bezos was shipping books from his garage, Pierre Omidyar, a software programmer, started coding a simple Web site he called AuctionWeb. Omidyar was curious if people would use the Internet to bid on each other’s used items. Looking around for something to sell, Omidyar picked up a broken laser pointer. Within a day, it had sold for $14.83. Omidyar e-mailed the buyer to make sure the guy knew it was broken. The buyer’s response? “I’m a collector of broken laser pointers”. Welcome to eBay. eBay leveled the e-commerce playing field. You didn’t have to be a Web entrepreneur or an existing business to sell things online. All you had to do was raid your attic, post a listing, and there was a good chance that someone, somewhere, would pay money for your old junk. In 1996, with two full-time employees, eBay sold $7.2 million worth of goods. By 1997, with the help of a Beanie Babies frenzy, eBay sold $95 million in goods. In 2007, eBay sold $52.5 billion in auctions, had more than 220 million registered users and 13,000 employees. Both eBay and Amazon paved the way for today’s e-commerce merchant. Consumers can buy almost anything online, including shoes, home goods and even a real shark’s tooth. Just type “unusual items for sale” in a search engine, and see what comes up.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
The model of th is so outdated in the same wa the 1960s, but no longe
the High Street d, It is working ay that it did in t the 1960s are er here. MARY PORTAS MARY QUEEN OF SHOPS
A NEW PLAC
_ABANDONED
CE TO SHOP
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
M-COMMERCE 1, HIGH STREET 0 WORDS BY DAVID LLEWELYN-JONES
_ABANDONED
_M-COMMERCE PRESSURES THE HIGHSTREET
To click or to wander? Last month, Boston Consulting Group published findings stating that the UK has the largest internet economy of the G20. Mobile is an integral part of this. The joy of m-commerce - the freedom to purchase items from anywhere with a phone signal, allows you to shop around for the best deal without having to trudge around the high street. This preference is particularly acute in Britain, having gone from what, in 1776, Adam Smith called “a nation of shopkeepers”, to last year, when mobile shopping saw a 187% increase, according to analysis by IBM. Today, it’s not a case of one or the other though; online commerce (be it PC or mobile) is both helping and hindering the high street. The drift towards m-commerce, however beneficial and efficient for the customer, is one of myriad factors having a negative effect on the high street. Our quest for a bargain doesn’t help either, as detailed in the Financial Times recently: “Consumers and investors have never been so empowered. Yet these great deals come at the expense of our jobs and wages, and widening inequality.” The government reports that 183 retailers fell into administration last year and that one in three of the nation’s high streets are failing; the internet must shoulder some responsibility for this. Argos, Mothercare and Thorntons are said to be planning the closure of up to one third of their shops. Conversely, Experian Hitwise reported that Boxing Day last year was the biggest day ever for online retail in the UK.
While digital take-up is hurting the high street, it is also causing it to evolve. For example, US retailer Macy’s, with its staunch omnichannel approach, recently unveiled Beauty Spot at the National Retail Federation’s Convention, a digital mirror that suggests makeup for you to try on and then share your looks with friends. Kraft featured a vending machine with face-recognition technology, registering your ethnographic details and dispensing product samples based on that data. The possibilities for clothing are significant, too. At this year’s Consumer Electronics Show, Microsoft showcased a digital prototype for retailers. It uses Microsoft’s Kinect to let customers try on multiple items in front of a digital mirror before choosing which to ultimately buy. Last month, the e-tailer Gilt Groupe teamed up with GQ to create a men’s high-fashion retail experience in New York’s so-fashionable-it’llsoon-be-uncool Meatpacking District. Such movements are part of a burgeoning trend, blurring the boundaries between digital and bricks-and-mortar retail. Retailers must begin taking advantage of this immediately if their physical stores are to survive. Make the mobile and physical shopping experience seamless and admit the strategic problem: people find it easier to shop at home. High-end stores could lower inventory, highlighting ‘hero’ products and making the shop more of an experiential journey. Lower-end could offer special deals that are only available in-store, not online; currently the opposite is the case. Balancing the ease of m-commerce with the attraction of a physical retail space is a delicate one, but one which retailers must very quickly start considering, or risk facing a bleak outlook.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
45
million
briton’s
own a
mobile
phone
#sofa shopping
49% of users
mobile
have used there mobile phone
to purchase a product
in the last three months
80% of people said the
best prices _ABANDONED
are online
british shoppers spend more than
2.4 hours
a week
shopping online
40% of retailers are looking
to grow
sales
through
mobile commerce
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
REFUSAL T
_ABANDONED
TO ADAPT
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
A FAILURE TO THRIVE WORDS BY GIDEON SPANIER
_ABANDONED
_COMPETITION FROM DIGITAL RETAILERS
The traditional store is an increasingly rare breed in the age of internet shopping and online streaming. Beleaguered HMV, Britain’s biggest music chain, has already had to reduce its total number of stores – after selling off Waterstone’s earlier this year – as it struggles to keep afloat financially. WHSmith barely stocks DVDs, let alone CDs, any more. And once-familiar stalwarts such as Woolworth’s and Tower Records have long since closed down. HMV, which has been slow to embrace digital, is hurting. Earlier this week, it reported sales at its retail division slumped almost 20 per cent in the six months to October, prompting the debt-laden company to warn of “significant doubt” about its future. Three key trends have combined to put the squeeze on established entertainment retailers: the rise of the supermarkets; the growing popularity of mail-order companies such as Amazon and Play.com (which have been able to exploit offshore VAT loopholes to keep prices low); and the shift from physical formats to digital, as consumers flock to Apple’s iTunes and other sites.
Those trends have continued in 2011 – despite some record-setting performances by Adele’s album 21, which has sold more than 10 million CDs worldwide, and The Inbetweeners movie, which has just notched up 1.2 million sales in a week. Industry estimates suggest UK sales of CD albums have tumbled a further 13 per cent this year and DVD sales 10 per cent. Digital has picked up some of the shortfall but those sales tend to generate far less revenue, not least because prices are lower, in a bid to combat internet piracy. In terms of UK music sales, digital has 58 per cent of volume – thanks largely to sales of singles rather than albums – but is worth just 21 per cent of expenditure. By comparison, HMV has 12 per cent of volume but 24 per cent of expenditure on music.
The biggest challenge is the transition to digital. Across the UK, CD album sales have plunged by more than a third from 151 million to 98.5 million between 2006 and 2010. DVD sales have also begun to slide from a peak of 345 million sales in 2007 to 287 million.
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
Border’s has 1,250 retail stores worldwide in 2002
2012 _ABANDONED
2002 1 Million Kindle’s sold everyweek in 2012
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
Tower Records has 2,000 retail locations worldwide in 2002
2012 _ABANDONED
2002 iTunes Store has 400 Millions active users, who have more than 16 billion songs
A PERSPECTIVE ON THE MODERN HIGH STREET AND ECOMMERCE
2008
808
Woolworths Group Zavvi Entertainment Group
130
2009
Borders Ltd
45
2010
Adams Childrenwear
260
Carpet Right Mothercare 2012
Cliton Cards Game Peacocks Past Times La Senza Jane Norman
38
s o l c 107
350
333
160
46
84
95
T J Hughes
42
Thorntons
180
‘The big boom years are over. We will never go back to those retail shops we had. The future is not more shopping. I am not going to be nostalgic about our high streets as they will never be what they were. We need to stop seeing our high streets as just shops. We now need to get people back into our high streets and that requires creating a place that is about enjoyment, creativity, learning, socialising, wellbeing, health.’
d e s The Portas Review criticised the rise of out-of-town supermarkets and the fact that too little had been done to protect high streets. As a result, out-of-town retail space had grown by 30 per cent over the past ten years, while falling by 14 per cent in towns and cities.
Miss Portas said she was worried the big supermarkets no longer sold only food, ‘but all manner of things that people used to buy on the high street’. She added: ‘My concern extends to the progressive sprawl of the supermarkets into needs-based services such as opticians and doctors’ surgeries, which were once the exclusive preserve of the high street. ‘These critical high street and town centre services must not be simply gobbled up by major supermarkets.’
WORDS BY SEAN POULTER
It is very early d retailers have a lo do to the potential their in-store bu mobile technology, to dawn on retail does not have to
days, but I think ot of waking up to that mobile offers usinesses. With , what is beginning lers is that there o be an either/or. THEO PAPHITIS RETAIL ENTREPRENEUR
_ABANDONED BY THOMAS SQUIRE