Is the High Street finished?
The Institute of Grocery Distribution (IGD), was founded over 100 years ago and is a charity strongly supported by the grocery sector – in effect it’s their industry body. I recently came across their latest forecast of future growth:
As you can see, the market is forecast to grow by 15% and all bar the smallest outlets are expected to increase sales. And whilst the traditional supermarkets and convenience stores are shown to have comparatively modest improvement, probably all market driven, the discounters and online are predicted to grow by over a 1/3 and 1/2 respectively.
Armed with this I went searching for insight from other sectors and this is what I found.
According to a report commissioned by Trustpilot, by 2020 £1.5billion of car sales will be online. I dug deeper and found that according to CEBR, (Centre for Economics and Business Research), one in five new and used cars will be bought online by 2027 resulting in 250 dealerships closing as a consequence of losing c.£4billion per annum revenue. Clearly not wanting to miss out, Ford has confirmed it’s planning to introduce online sales directly as both Hyundai and Peugeot/Citroen have done – should make for some interesting conversations with their dealer network!
Turning to a third sector, travel, where online has significantly grown each and every year for a decade, 350 travel agencies shut up shop in 2017 and only 32 new ones opened highlighting just how far the market has tipped in favour of the web. Indeed, taking the high street as a whole, a survey carried out by Local Data Company across 500 town centres confirmed that last year there were 5,855 closures with just 4,083 new openings.
Perhaps the most significant statistic I found is from the Office for National Statistics (ONS), in 2013 one pound in ten was spent online whereas now it’s one pound in five.
The growth in both online and discounted models is substantial and cannot be ignored. But hang on a second. In 10 years time, four out of five cars will still be bought from dealers. In 2023, ten times more groceries will be bought in physical locations compared with online. Four out of every five pounds currently spent are still going to the high street.
Twenty years ago certainly, probably just ten, maybe even five, if I was setting up a new estate agency my first thought would be the location of the office. I’d then have built the business around that focal point. Not now though, if I was starting from scratch then it would most likely be a hybrid model of some kind. But if I already have the branches, the database of customers, the established local brand then it’s a different story altogether. The key for the traditional agent is to maximise their assets. Make the branch a go-to destination and have clients visit. Work the database with daily call out sessions and develop the customer relationships. Market the brand to remind locals of your presence.
I’m seeing far too much attention diverted to the competition rather than to the customer. Yes, keep an eye on the online and discount models but don’t make it your obsession. Instead, invest your time and energy on delivering an exceptional customer service. Done well, and the high street model will not only exist in 10 years time but can still be very successful.
It was three years ago that the infamous funeral procession announcing the end of the traditional agent took place in central London. As wrong as it was on every level then, it still is now. The High Street is still very much alive – with the best estate agents at the centre of it – and will be for years to come – but note I said the best, for the also-rans I’m afraid their days are numbered.
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