307 - No2 High Street

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In Essay 248 I looked at this topic but that was before we had the coronavirus pandemic. The consequences of the wave(s) of disease and dis-ease serve to accelerate the move to change. I do little here but wonder how the emphasis of change will occur. In so doing I give a marker for subsequent editing on this topic.

The previous essay pointed to several fairly obvious matters:

• Online business runs on the cheap.

Business rates are a disincentive to having premises, but people running online-only businesses are not charged an equivalent. This needs to change, or business rates need a radical rethink. Much the same applies to other charges (taxes, etc), where the online businesses are not paying out at anything like the volume of other businesses. Again, this needs to change and/or we need to see a radical rethink of how the state (national and local) collects necessary dues.

• The high street could change quite dramatically.

I previously suggested a reversion of shops to housing, where we have a known shortage; it seems obvious that buildings could be repurposed with relative ease. We are over-supplied with retail space and under-supplied with housing; this is a no-brainer, surely. ²  I suspect that the issue here is that the landowners are accustomed to dramatically high rents. The collapse of, for example Intu (who own many of our larger shopping Centres, such as in Derby, Gateshead and Trafford) suggests that the business model has collapsed and presumably several of the assumptions for profit have disappeared.

• There is a division between the businesses that can run online and those that cannot.

Unless we succeed in ridding ourselves of Covid-19 completely, we will not return to normal. We will return to a very reduced form of 'normal' until eradication is the case and this means that many service-providers (shops, cafés, gyms, etc) are going to need a far higher throughput to accommodate the reduction in customer density at any moment. Putting that another way, given that few places have the space to accommodate people at two metre spacing or at 'one-plus' spacing, then in order to return to the sort of turnover that made the business viable customers must be in-store in a productive way, which will reduce to shorter (more expensive per time unit) visits. If we add to that mix an assumption that masks will be de rigeur for months and perhaps very much longer, that divides businesses into two classes; those where masks are okay (think 'shops') and those where they are not (think cafés or hospitality, but everywhere where open face contact is wanted, even if not absolutely necessary). ¹ We might as well think of these as simply with and without masks, but that might turn into the labels of retail and hospitality.

Those businesses that can move at least partially online will have understood this rapidly. For them, the issue reduces to 'Do I need premises?', which might reduce to discovering exactly what premises are required — a storage space, an office space, some packing space—but none of these demand that customers be able to visit and so this business could move (could have moved) into a domestic residence. So this question reduces to discovering exactly what circumstances require face to face interchange. For example, Screwfix has a successful business where the customer basically does click and collect. What is missing—that which one gains at somewhere like B&Q—is the opportunistic sale, the unnecessary or unintended purchase that occurs because it is seen on display. This brings us to the nudge discussed in essay 302, such as the 'other customers who bought this also bought...'

Those businesses that need masks to be absent, collectively thought of by me as hospitality and health, have an entirely different problem. Or for which the problem is far more difficult to see solutions.  All those places where one goes for a drink or a meal base their income pattern on customers per hour, 'covers' or its equivalent. In some cases the very crowding is one of the attractions of the site. This is surely gone. That means that sit-in customers have to be given a lot more space and that has dramatic cost consequences, perhaps enough to keep customers away. The use of external space offers possibilities, but British weather is going to work against any new trend. That is a problem which can be solved with invention. The equivalent to internet sales is take-away, which adds its own issues, principally takeaway to where? If eating occurs nearby this is al fresco dining and one way or another space must be provided. Envisage McDonald's but eating in the car in the carpark (as one already does on the motorway). Indeed, it needs to be clear before entering premises what the understanding of the site of consumption is —my space, your space, other (public, communal) space. We have already seen that the problems of queueing for takeaway means that online ordering is far preferred. 

I think we are going to see growth of the drive-through model. There is patently a demand for a personal space device, where we currently think 'car', but could change to something defined by any other sort of bubble definition, which might even be a proximity measure provided by a wearable device (think phone for now). In Britain we need something with weather protection. The American term mall, which applies so well, does in general not lend itself to al fresco eating because the space requirements don't match the rental model. So that has to change; either we accept a dramatic jump in the cost of eating socially, or rents change or we do this at home.


Indirect consequences

In turn we need to re-evaluate what we have and have not been using our homes for. All those who have discovered the joys and miseries of working from home (WFH, I'm told) will have fairly definite thoughts about spaces in the house and how they are used (or fail somehow). Fundamentally, I expect people to want more house space in return for less office space. I'm sure many will have to settle for space having multiple uses. Many will have discovered that their houses are not fit for this new purposed list; those with school-age children suddenly have a need for a (quiet) desk area per person, adequate internet connection per person and so on. Those whose work requires them to be out—so many of whom are also at the low-pay end of the spectrum—have multiple issues with these assumptive models and we need whole-nation solutions, which imply vast spending programmes. I suspect that, as ever, the disadvantaged will be made more so, because politicians simply cannot afford to listen (afford the consequent cost of having listened), which simply defers the problem until disaster occurs. My observation of the UK under lockdown is that we see that, if we would tackle deprivation, expensive though that would appear to be, the end result would show that the spend would be very much worthwhile. The current form of Tory in power is so determined to push for US-style economic models that the disadvantaged must feel greatly discouraged.

We have numerous routes to some sort of repair. I've written this before, but it continues to strike me (like a wall banging my head) that the spend in rescuing the banks in 2008 is still far larger than what has been spent on the whole nation in forms of rescue package for Covid. That cannot be right. An opposite head-banger is that the excess deaths from 1950-1970 contain several years (nine, towards the foot of essay 303) where the excess is over 65,000, which is around where we're at.

We need clarity of thought, clarity of purpose, clarity of objectives. It would seem that the current government has returned to short-term thinking (and any long-term thinking I can discern is what I deem undesirable). It is not sufficiently accountable and I think we could see that our ideas of how to do democracy are also in need of significant revision.  While it is clear that gross upheaval such as covid has provided can bring about dramatic shifts, I see many signs that 'we', the nation politic, will do the least we can get away with, to make the fewest changes so that we return as much as possible to the situation we thought we had before. 

In my own case, this is so, but I feel that this household had already made many of the moves I perceive as what the situation now demands. The future as seen at the moment has little or no more eating out, of which we did a lot. We will do (obviously) a lot more of our own cooking, which will in turn reduce our total spend. We will do a lot less shopping, and much of what we will do will shift online. This means we will do far less travelling and we might go as far as losing a car entirely, but I think we will recognise it as a luxury we choose to keep, but perhaps also decide to run one of them to a greater age before considering replacement. We use little public transport and now we will use even less. Visits, days out, trips to hotels are all off and will stay so. When we can we will visit family (hotel replacement?) and we will experiment with longer day trips, probably to the countryside with an emphasis on empty spaces. We have found use for the garden but I am uncertain if we will run to growing food. This might be called a war-footing, but it is nowhere near that state.


DJS 20200702

Though I may delay this to the 4th, a date one suspects that the gov't intends to be celebrated in the future as 'pubs open day', but which I fear will become a second wave instigator.   Top pic from forbes.com via Google



[1] https://www.intugroup.co.uk/en/our-centres/      https://www.retailgazette.co.uk/blog/2020/07/intu-what-went-wrong/

1  Beautification businesses include nail parlours, all sorts of massage, barbers & hairdressers, but also gyms, dentists, opticians 

2  Evidence? Is it sufficient that we have empty retail premises and a known demand for housing? Does this really need to be quantified for both of these? If we need transfer between building sectors, let's get on with it. More useful, surely to look at the consequences of doing this, which I think brings us back to commercial rent, council income and so on.  

I think the underlying problem is rent. There are (largely undisclosed) bodies extracting significant and reliable rent from commercial property. The business model is broken by the pandemic and if landlords demand rent the business will simply fold and the rent won't be paid in a different way from 'can't pay it'. So ther presumption that everything will somehow continue as normal must apply to places where such consideration of assumptions is rarely if ever applied; this may have knock-on effects on unlikely connected matters such as pension funds – waht have been assumed to be low risk investments suddenly become obviously risky.le future, not to what was before Covid.

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