The online retail world is barely a decade old but has changed drastically in that short time. In contrast, the High Street, which has evolved slowly over hundreds of years has barely changed, but, has in fact drastically over that same decade. What’s happening?

In my brief lifetime, the face of the High Street has changed drastically. The High Street was once where all retail took place. Before out-of-town retail parks and the ubiquitous hypermarket cities sprung up. Each shop specialised in its own fare; the baker, the butcher, the hardware store, the post office, the bank and the sweet shop. Shopping was conducted in a very traditional way, as it had been for generations.

These were the days when motherhood was a full-time occupation. Most women did the household shopping daily. For the housewife, cars were neither needed nor afforded. Heavy items like milk were delivered to the doorstep and bottled water was yet to be thought of. Slates and the never-never represented retail credit facilities. Loyalty cards were Green Shield stamps. Coupons and commercial advert breaks in the Soap Operas were the only real marketing campaigns to direct the shopper. Shopping for the housewife was a social occasion. Local shopkeepers knew everyone, and most likely everyone’s business.

Shops closed on Wednesday afternoons, and the only thing you could buy on a Sunday was a newspaper. Almost all shops were privately owned and were handed down from family to family for generations.

Until something changed.

During the great depression, Michael Kullen opened the very first supermarket (King Cullen) in New York in 1930. Self service, mass merchandising, innovation and shopping carts brought cheaper prices to impoverished nations. At the cost of those traditional shops that had been trading for generations, the supermarket phenomenon began and changed the face of the High Street forever.

The supermarket took off. It proved the concept profit making on selling volume rather than just price. Stack it high and sell it cheap worked and the supermarket flourished.

Since those early days, the supermarkets have slowly ebbed away more and more on the High Street, moving out of towns to larger locations where car-parking has become a prerequisite to success. Most mothers now work full-time, and the weekly shopping has become a chore, not the social necessity it once was. Not only has the supermarket stolen business from the High Street, but it is becoming more and more the High Street itself. Most of the larger stores now have their own in-house pharmacy, post-office, newsagent, key cutter, cobbler, florist, insurance company, bank even. Some are now even moving into real estate with the prospect of branded house-building! Where will it end? Perhaps in my lifetime, they will offer a truly cradle-to-grave service for the local community. A place where mothers can attend maternity classes whilst their shopping is bagged and trade loyalty points for off-the-shelf coffins for their own long-term exit planning.

So what has really happened?

The local village value-added shopkeeper lost his livelihood to big business with their economies of scale and global ambitions. Changing the High Street faster than any other time in our civilisation.

Supermarkets have evolved over the last 75 years. They’ve become the ultimate distributor for food manufacturers who now deal with far less suppliers than before. As a result, optimal supply chain and efficient pricing, bring benefits to the consumer. Manufacturers are clearly being squeezed by the sheer buying strength of those fewer (but larger and international) retailers.The efficiencies to their own commercial operations should not be underestimated though. It’s difficult to imagine companies like Heinz, Kellogs or Unilever deciding to start their own retail shops on the basis they’re too dependent on their few sales channels. Rather the opposite. Supermarket own branding hurts original branded products more so, and would almost certainly replace their sales completely if they withdrew their own branded products. Many manufacturers of course now supply own branded products directly to these stores. The challenge is on the original brand manufacturers to prove their extra value (and pricing) over own branded items.

The traffic to the supermarkets is also increasing as the range and variety of stock increases. Supermarkets now go way beyond groceries, selling clothing, financial products and services, garden equipment, furniture, holidays and restaurants.

The supermarket is now the High Street for 99% of consumers. It doesn’t matter which of the big 4 or 5 we refer to as they all operate in exactly the same way. They open up where the consumers are (delivering traffic to the manufacturer’s products), promote and market their products, process payments, deal with returns, manage the customer, set optimal pricing and manage optimal store product placement for maximum returns.

It would of course be ludicrous for a manufacturer to align themselves with a single supermarket company. No single supermarket chain has (or would realistically have) a monopoly, so manufacturers ensure they have maximum reach by supplying to the major players at the optimum prices.

Over the last 75 years or so, manufacturing and retail have streamlined. The retail landscape has changed, squeezing out the middlemen and smaller trader forever.

As in all human civilisations, things seem reasonably stable and then suddenly, seemingly out of the blue, a seed change happens, and the world changes. At what point did the supermarkets migrate away from the High Street to out-of-town locations? What suddenly caused all these ubiquitous but soulless retail parks to spring up? Did the traditional High Street shopkeepers see all this coming?

What can online retailers learn from this?

[To be Continued]
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