Friday, January 18, 2013

HMV, Blockbuster, Comet - the property challenge

Another dismal chapter in Britain’s economic history. Another series of platitudes and posturing from politicians. It was depressing but predictable this week to see the reaction to the collapse of HMV and Jessops. Banks have been blamed, the lack of an industrial strategy for retail has been cited by Labour’s Chuka Umuna, while no-one seems willing to grasp the self-evident fact that the underlying weakness in retail is rooted in the distribution of land. Simply put there is far, far too much space being used for shops we don’t use any more.

We can all be nostalgic for the local record store – I know I am. We can cherish the experience of personal service. But as the staff at Jessops know to their painful cost, they were enthusiasts for their products and massively helpful, but deep down they knew that every other camera demonstration they performed resulted in someone buying online.

HMV and Blockbuster have been struggling for a while - poor decision making hasn’t helped, but they are businesses being disrupted by the onward march of online retail.

Certain products just aren’t bought in store anymore – music is one. Books may soon follow. In San Francisco last year I struggled to find a decent city centre bookstore to buy some thought leading titles. There was, depressingly, plenty of bad coffee and free wifi, loads of branded stores you could find in any western city (Gap, H&M, Urban Outfitters) – I found City Lights – which didn’t have a business section, but a tantalising range of anarchist poetry. But Barnes & Noble and Borders have long since fled.

The problem, put starkly, is the determination of landowners, and property portfolio managers and their agents, to flog this dead horse as if it could be wished back to life. It can’t be. But equally it would take real bravery to construct policy incentives that encouraged alternative land use in centres and a move away from retail. Free car parking might help, so too could more flexible view of planning.

I agreed with most of what Mary Portas said about how high streets can be animated and empty shops brought into different use. It’s actually so obvious it shouldn’t really need saying. But landlords won’t or can’t accept that their high yielding assets won’t continue to bring continued rent roll. In many ways they are reaping what they have sewn. Upward only rent reviews, poorly maintained estates, covenant protection, risk aversion, quarter days, regular yields. Game over guys, and the problems haven’t even begun to be addressed.

Looking around Greater Manchester some regional town centres are dying – Bury got its scheme away before the banking crash, Stockport didn’t. And the squabbling now over how their Portas pittance is distributed sounds horribly like the passengers on the Titanic putting their towels down on the best deckchairs (were Germans on the Titanic? Maybe not). No, the draw of a confident and colourful experiential Manchester city centre as a place to enjoy a day out is always going to outstrip the concrete wasteland of a regional town centre with arcades, pound stores, pie shops and the depressing long lines of charity outlets which all tell a tale of inexorable decline. Much as it baffles me, even the Trafford Centre is a preferred destination to that.

Before anyone pipes up with the example of Manchester’s Northern Quarter just bear in mind how microscopic it is on the overall map of the wider city region. Much as I love the likes of Oi Polloi, Piccadilly Records and Soup Kitchen, it’s a minority pursuit in a handful of streets in a city region of 2.5 million souls. There’s been talk of economic rebalancing in the air for the last five years. Urban land use is the hardest and most urgent one of all.


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6 comments:

Oliver Jones said...

Part of the problem that Landlords etc have is they are reluctant to grasp that we are seeing a massive shift in how are lives are lead now. Like it or not, we are in my opinion seeing seismic shifts in many aspects of life-The way we shop, the way we consume etc. Businesses are dropping like flies because of this, what we are going through now is like a smaller version of the industrial revolution. Things are changing for good (permanant, not "better") but people are hanging on to the habits of the past. Like an Industrial `Evolution`. Great piece as usual. Ozz

Oliver Jones said...

Part of the problem that Landlords etc have is they are reluctant to grasp that we are seeing a massive shift in how are lives are lead now. Like it or not, we are in my opinion seeing seismic shifts in many aspects of life-The way we shop, the way we consume etc. Businesses are dropping like flies because of this, what we are going through now is like a smaller version of the industrial revolution. Things are changing for good (permanant, not "better") but people are hanging on to the habits of the past. Like an Industrial `Evolution`. Great piece as usual. Ozz

Josh said...

You're missing the point completely, all these business relied on selling physical products which now can be bought at a fraction of the cost digitally.

This is technology moving forward. If HMV, Blockbuster or Comet wanted to stay in business their leaders should have closed all their stores themselves and invested in creating new and exciting online ways to sell their product. iTunes is an awful, badly designed horrible shopping experience and yet it has put these companies out of business.

I don't feel bad these companies no longer exist any more than I miss the fact that everyone used to get around in horse and buggy.

Michael Taylor said...

Thanks for repeating back to me one of the obvious pints I have already made. However, the longer term issue is what use land and buildings are put to when technology conquers all.

Oliver Jones said...

To be honest I've not had a computer long, and I'm way out of my depth getting involved in stuff like this . Sorry everyone. Ozz.

Michael Taylor said...

Thanks for your contribution Oliver. I was replying to the other commenter. Please don't be put off.