The Changing Landscape For High Street And Town Centre Businesses
A notable question facing business corporations seeking to operate transnationally is that of how to cope with variances in how their operations may be regulated. For retail firms with a physical presence in the form of shops, the position may further be complicated where the host nation has a history of regulating over where a store may be permitted to locate.
A conflict of expectations is most likely to arise where a corporation that is not used to such restraints seeks to operate in a country where land use controls have become the norm. This eventuality has been discussed recently in Hallsworth, A G and Coca-Stefaniak, A. 2018, ‘Government policy for high street retail and town centres at a crossroads in England and Wales‘ Cities. https://doi.org/10.1016/j.cities.2018.03.002
The authors noted that for eighty years, UK government policy relating to urban sprawl, town centers, and high streets (Main Streets) in England and Wales was dominated by planning/land-use controls. Indeed, across Europe — and notably where damage from wartime bombing was especially evident — countries invested major finances on rebuilding towns and cities. Understandably, that investment was often protected by land use regulation or “planning.” However, down the intervening years, the willingness of successive British governments to exert meaningful influence through planning rules has ebbed and flowed, leaving town centers at a potential crossroads.
The study addressed how the interface between corporations and locational regulations has changed. Evidence that this trend is a more general one came also from the Netherlands — a country with an even higher population density and one where collective action over scarce (and often reclaimed) land goes back to their constant fight against the sea. As long ago as 2002, prominent Dutch planner David Evers saw their longstanding planning ideology weakening in the face of free-market competition.
Arguably the drive for such free-market competition originated in the USA, where planning controls are few compared with England or the Netherlands. However, the retail trade in England and Wales has long been buffeted by winds of financial and associated social change. This is true despite the economic and social significance of its turnover of £350 billion per annum and around 2.8 million employees. It is worth noting that in England and Wales — until the booming mid-1960s — there was, effectively, no out-of-town retailing at all. Today, after a decade of post-sub-prime economic underperformance and social change the study considers whether or not this trend will, or can, can continue. It also considers the driving forces of change have varied through time with the Internet, sub-prime-driven austerity, Brexit and the rise of China currently prominent.
From a retail research perspective, one of the most prominent transnational players has been WalMart. This organization highlights the complexity of overseas trading since it has entered, and subsequently left, a number of countries in Europe and elsewhere. What benefited WalMart in its homeland USA was the neo-liberal post-Reagan economic climate with its huge decline in anti-trust prosecutions. WalMart then used its financial power to move into Canada via the purchase of Woolco stores. WalMart also bought the UK’s ASDA – but not before, as Sparks revealed in 2008, they had lobbied the then-Prime Minister, Tony Blair, for a relaxation of those pesky planning rules.
Such moves are far removed from any locality-based mindset that blandly assumes that goods and services are locally supplied in line with local demand – rather like utilities. In the real world, highly competitive corporations jostle for power. From the 1960s in England, prominent retailers wanted to move to locations and larger formats that town and city planners did not regard as suitable. With the concentration of retail power into ever-fewer hands – as evidenced by Serpkenci and Tigert in 2010, would planners anywhere retain the power to resist?
A further weakness, again evidenced in many countries, is that regulatory policies may be set by one level of Government (in England by its national parliament in a way that would seem alien to the Federal/State powers in the USA) but enacted at a lower, weaker, tier of Government. In England, it was soon evident that some local politicians and officials wished to permit new large stores for the promise of “new” jobs for local people. An ongoing reduction in the role, importance, and financial power of localities has left towns potentially vulnerable to any promise of such a windfall.
Similar scenarios have played out in many countries – including France. Few now remember that dominant French retailer Carrefour ventured into England and Wales in 1972. They did not last long – but may their fate have differed had they waited until the election of the neo-liberal Thatcher government in 1979? During the ensuing 1980s laissez-faire period, there were several attempts to build not just retail “supercenters” — labeled superstores — but mega-scale US-style shopping malls. However, with the recession that accompanied Thatcher’s election, many such projects were abandoned or delayed, yet by the mid-1990s Britain had permitted roughly 1,000 superstores and they were taking over half of the grocery sales by value. This sat alongside a vast reduction in choice when measured by choice of retail store chains of which some 60 were taken over or closed down from 1945 onwards. Widespread fears of competitive impact were also a huge incentive for town center management (TCM) schemes. Despite these, in 2018, after a decade of post-sub-prime slow growth, struggling High Street/ Main Street retailers were reported to be begging their landlords for rent decreases. Furthermore, a number of longstanding retail firms abruptly ceased trading (England has no direct equivalent of Chapter11).
Despite rising shop vacancy rates, British governments have long claimed to hold to a Town Centres First policy but, depending on how one defines a Town Centre, the floorspace figures rarely support this claim. Again, this decline comes despite wider efforts from pro-community businesses to support established town centers through place management initiatives such as (TCM) and Business Improvement Districts (BIDs). Though the number of pro-community TCM schemes in the UK stands at an all-time high of over 600, their actual contribution to the vitality and resilience of town centers remains under-researched.
The concept of community may be appealing, but very different keywords (typically: productivity, efficiency, and competitiveness) are even more appealing to British governments and its Treasury, in particular. After 2008, it reverted to being a corporate decision if a powerful retailer chose to enter a market where there might be insufficient local expenditure to support another store that would inevitably take trade from incumbent rivals on and off the High Street. In clear competition with planning for power and influence, a policy arena of rising significance is that of business regulation in all its forms.
Non-planning regulation is, however, no newcomer: as in some US States, controls still exist on the hours when some types of products (notably, alcohol) can be sold. Resale Price Maintenance (RPM) was a regulation from 1896 that was removed from Britain in January 1965. It had restrained volume discounters and its removal gave retailers power over manufacturers and spurred the move to out of town retail. This reinforces the importance of non-planning regulations such as the 2011 European Court of Justice ruling that forbade Catalonia to resist the rise of large stores.
Britain once had a Monopolies and Mergers Commission to monitor business mergers that might not be in the wider public (indeed, national) interest. In 1999 it became the Competition Commission (CC) – with a remit to disregard any national interest and drive “competition.” Indeed, the idea of a national interest per se was removed by the Enterprise Act of 2002 – modeled on EU legislation. Official concern that some pro-monopolistic mergers might be harmful has declined to the extent that the regulatory body is now the Competition and Markets Authority. Britain’s EU-influenced Enterprise Act was enforced in 2002 and changed the mindset of Competition Law – again in the direction that market-dominant mega-corporations formed from merger activity were not a problem. This sits in contrast to the longstanding counter viewpoint — voiced in the USA, for example, by the Open Markets Institute — that small businesses are important.
The latter is found, too, in Germany, with its inherent support for the Mittelstand. Back in Britain, ongoing changes in Competition Law facilitated ever-increasing market concentration. This left mega-firms with the power to abuse weaker rivals and suppliers. In recent times, up to 75% of UK grocery retail shelf space has been controlled by four big retailers (in 2017 this subsided to 69.3%). Hundreds of suppliers have to gain access to millions of consumers via those shelves. Control, therefore, resembles an hourglass, with dominant retailers controlling the shelves – the crucial “pinch point” in the middle.
The planning – competition stand-off came to a head with the 2006-8 Groceries Inquiry (CC, 2006-8) after the Association of Convenience Stores (ACS) lobbied for another investigation. The Inquiry included two issues that ACS did not raise: the holding of land banks by major retailers and the possible role of Land Use Planning as a factor “distorting competition.” (Planners would argue that, of course, it is a distortion – but one that applies equally – and thus fairly – to all). However, under the now-dominant Chicago School competition mindset, consumer welfare no longer needed to involve real consumers. All that mattered was to have structures in place that should in theory (if not in practice) be competitive. This prioritized Competition matters over Planning concerns and the CC even sought to superimpose its own Competition Test to control store location. This still-dormant “Test” would restrain any one of the Big Four from further building in a local area where it already holds a dominant position.
The world, however, moved on faster than new store developers anticipated: including the internet, where Amazon are now active in the grocery supply market. Where did that leave Britain’s Big 3 supercenter developers – Tesco, Sainsbury, and ASDA? More of Sainsbury and ASDA later, but Tesco, in 2013 and five years after sub-prime, made a £804m write-down in its value of British property holdings: undermining future prospects for building new superstores — 176 sites would no longer be developed. Meanwhile, post-sub-prime, British shoppers began flooding to the low prices offered by Aldi, Lidl and “pound stores” (Dollar Stores).
The smaller price-focused stores of Aldi and Lidl do not conflict with retail planning restraints. However, with so much floor space already out of town and still impacting much of the UK’s town centers, High Street decline research continues to thrive. However, it seem probable that the days of high-cost and visually-intrusive new retail formats may be over. Indeed, in a Brexit-dominated country, it is not yet clear where finance, and the confidence to spend it building palaces of consumption, will be found. The internet has utterly undermines the notion that goods and services are locally supplied in line with local demand. But are all the troubles of the High Street are caused by the Internet? Hardly so. The dominant food retailers fled out-of-town only to be undercut by “hard discount” formats. However, the vacancy levels on High Streets serve to drive agendas that do not see retail as the only important player.
One trend, much as Britain’s traditional local “pubs” are being converted to convenience stores, is that unprofitable retail units are being redeveloped as profitable housing: a logical commercial decision. Even more recent proposals include plans to build residences above any future superstores. And the update on Sainsbury and ASDA? They have plans to merge. The attractive outcome is to be lower prices: a marked contrast to decades of promising town Councils more jobs (jobs will be lost).
Arguably this was all presaged by Evers, who observed the uneven struggle between planning just one (of many) possible nationally-regulated policy instruments and neo-liberalism: the dominant economic ideology. Influenced by the latter, British society is far more socially and economically diverse and divided than when Land Use planning was in its heyday. Presently, increasingly powerful retailers interface with decreasingly powerful planners. Wider changes in economic outlook and the privileging of the market and individualism as a result of Thatcherism/ neo-liberalism both link to the sub-prime banking crisis that has also affected the profits of retailers.
Increasingly, though retail planning regulations are still about the use to which land is put, the influence of planning itself has waned. Research reveals how — and why — the willingness of governments to exert meaningful influence on development via planning rules has ebbed and flowed.
These findings are described in the article entitled National high street retail and town centre policy at a cross roads in England and Wales, recently published in the journal Cities. This work was conducted by Alan G. Hallsworth from the University of Portsmouth and J. Andres Coca-Stefaniak from the University of Greenwich.