Features

Local Rules: The death (and re-birth) of retail

June 7, 2011

Are digital technologies really the death knell of retail, or could they counter-intuitively help revive our high streets and local communities? By Dan Hill.

In late-1999, I think, I bought a Nike fleece top from then-internet shopping sensation Boo.com. It didn’t fit. I sent it back.

Boo.com was perhaps the most famous victim of the ‘dot-com bubble’ of the late-1990s. The Swedish founders and London-based team burnt around US$190 million of venture capital in just six months, during which time Boo.com spectacularly careered from much-hyped launch in 1999 to much-analysed receivership in 2000. The site featured Miss Boo, an interactive sales assistant avatar (think Microsoft’s ‘Clippy’ played by Natalie Portman), and 3D rotating views of its designer sportswear.

The site didn’t fit the internet culture (and the available bandwidth) of its time any more than the Nike fleece fitted me, and along with the other dot-com detritus from that first boom, it probably set back the idea of shopping online by several years.

Now, however, surveying the rapidly fragmenting retail landscape in Australia, we perhaps should’ve been looking more closely at another event from 2000: the rather quieter birth of a similar operation, Net-A-Porter.com, now hugely successful and recently sold to luxury conglomerate Richemont, for around US$500 million.

If this seems like idle tittle-tattle from the high end of the retail market, the ramifications are actually at the core of how our cities function, for various internet-based technologies may be about to completely re-orientate the way that Australians consume. This could potentially help rebuild local economies, increase social capital and reduce carbon footprints, radically altering patterns of settlement and occupation.

Commerce and exchange remain at the heart of cities, and so at the heart of civilisation itself. After all, the marketplace has traditionally been the key node within urban networks, providing a centre for exchange and interaction, a public space in which the city’s output and interests became legible, tangible; a place of theatre, innovation, negotiation and delight. Peter Ackroyd described London’s markets as “a Niagara of voices”, within “a city devoted to consumption in all of its forms”.

We would recognise the great Asian cities in the same terms, but this feels a long way from the homogenous, controlled malls and high streets of the contemporary Australian city.

But looking across that landscape and taking stock of the last few months, we have witnessed the demise of the Borders and Angus & Robertson book chains, as well as an extraordinarily ill-judged campaign, essentially against internet shopping, spearheaded by Gerry Harvey (boss of consumer electronics giant Harvey Norman). The latter only served to highlight both the often-enormous savings that customers could make online, as well as the comparatively prehistoric approach to online retail taken by many of the major chains in Australia.

For most retail environments in Australia perform poorly in comparison to alternatives worldwide, either in terms of quality of service and experience, or simply price. Many of Australia’s chain stores represent an odd combination of low quality and high prices – pile it high but don’t sell it cheap. Shopping here is often a car-dependent activity, with all that entails (the spread of Walmart supercentres, for example, has been directly linked to obesity in the US). And this is before the terrible twins of peak oil and climate change really start hitting supply chains and price points. The reasons for this are multiple, with the presence of only a handful of chains across each sector, combined with the traditional but increasingly erroneous claims about ‘Australia being a small market’ and ‘the tyranny of distance’ both preventing innovation in service.

If the wider strategic question is what form of retail is good for the city, few can argue that the current incumbents on Australia’s high streets and malls are doing a good job.

Online, the situation is just as bad. Simply compare the online stores of a theoretically high-end retailer like David Jones with its UK equivalent John Lewis. One is good, one is bad – you can tell which is which within a few seconds. And where is the online food delivery service to match Ocado? Look at the smart Net-A-Porter iPad app, and their exemplary customer service, and then pause to consider Richemont’s stated intention to move into the South East Asian market, and you can almost feel the shiver running up Frank Lowy’s spine.

But it’s not all bad. In terms of small independent stores, Australia performs well, and many are thriving. These stores seem to implicitly understand their local community of interest, as well as issues of provenance, craft, identity and service, in ways that national chains simply cannot. Yet when the dreaded word ‘disintermediation’ is rolled out, the local stores are placed just as much in the firing line as the likes of Gerry Harvey. As with many utterances and activities from this increasingly anachronistic generation of retailers, they’re increasingly out of step with the 21st century.

Underlying this are assumptions that iTunes kills off record shops, that the Kindle kills bookshops, that social media kills newspapers. But previous patterns don’t indicate this. Most older forms of almost everything meaningful still survive, and experiences and services are rarely purely digital or physical, but increasingly hybrid. The human race is additive rather than subtractive, for better or worse. What does happen is that superceded forms become smaller, more distributed, localised, both physical and digital. This is what will probably happen to newspapers, for instance, but what would it mean for retail?

A huge opportunity, that’s what. The local independent store is far more useful, from our point-of-view as urbanists, than the national chain.

Research from the US indicates that between 54 and 58 cents of every dollar spent at a locally owned retailer stays in that local environment, as they tend to employ a local accountant, a local delivery service, local web designer, local graphic designer, advertise in the local paper, and so on. A national store contributes only 15 cents to the local environment for every dollar spent, as they tend to centralise those same functions in order to induce greater efficiency. Similarly, recent research reported by the Institute for Local Self-Reliance (a kind of think tank/ lobbyist for local economies) in its New Rules Project indicates that areas with ‘buy-local’ campaigns have outperformed those without for the last four years running. So local independents contribute disproportionately to local economies.

This is not to say that national chains have no place; simply that they must take on and understand those qualities of provenance, innovation, craft and embeddedness of the local store, and work within, rather than against, local networks.

An example: Thornton’s Budgens is a local North London branch of a national chain of UK supermarkets, where Budgens is the chain and ‘Thornton’ is the name of the manager of that store, Andrew Thornton. This might seem a cutesy nod back to locally owned stores, yet Thornton does own the store and thus has significant control over how his store works, to the extent that he has brokered deals with other independent stores in the neighbourhood, such as the baker directly opposite, and sells their bread in his store with a clear marker indicating that it’s from over the road. This is good for the baker – who has quite effectively increased the real estate in which their bread can be sold, without losing their own store – as well as for Budgens and Thornton. The rest of their store is labelled up accordingly: fish from 30 kilometres away, from this fleet, beef from 25 kilometres, from this farmer, and so on.

The economics of the New Rules Project research suggests that the baker’s bread sold at Budgens may not contribute the same proportion of return to the local economy as that sold at the baker, but agglomeration theory suggests that both stores can co-exist happily, even supportively, producing a greater overall sum. And this embedded local identity means that the area’s DNA is also reinforced with every purchase.

Thornton’s Budgens is now moving into urban agriculture, growing vegetables on its roof, which are sold downstairs every Friday, engaging 20 local volunteers, as well as the heat from the supermarket in a form of lo-fi symbiosis. Compared to the previous model, this is a major step forward, and a slow dissolve of the chain model either way. The Architecture Association’s Lawrence Barth uses Thornton’s Budgens specifically, as an example of contemporary local innovation economies.

In comparison to this locally reinforcing model, recent natural disasters in Australia and Japan have vividly demonstrated how brittle the supermarket-based food supply system is, with stores losing all produce within hours, with little chance of predictable re-supply. So we need to find a way of sustainably re- localising production and distribution, given the likely increase of these events. Rediscovering a cultural memory for growing food locally is one thing; distributing and buying locally is just as important. The pattern can be drawn from the argot of the internet: ‘small pieces loosely joined’ – distributed, localised if not locally owned, and carrying their DNA with them.

The reality is that the alternative offer from the existing ‘retail kingpins’ is incredibly poor by comparison.

Put simply, physical experience had better be bloody good if it is to withstand the force of the internet. It now has to have a reason to exist, over and above simply being there by default. Books and magazines have had to re-capture what is good about their physical incarnation (and newspapers have yet to figure this out) as the internet meant they were no longer the default way of shipping editorial or narrative. Successful ones have done so; others are now simply carried online. This pattern will apply to retail just as much as it does to media.

Fortunately, the smaller independent retailers are those who find this easiest, being innately resourceful, and in it for the love of it as much as anything. Though we should recognise high-value flagships, like the exemplary Apple Stores or OMA’s store for Prada in Manhattan, it is to local independents that we tend to look for experience, difference, quality and innovation.

And these experiences are increasingly digital/physical hybrids. In a world where more objects are connected to the internet than people, physical experience is becoming more meaningful, and this applies to the torrents of innovation in retail as much as anywhere. Perhaps ironically, the impact of the ‘internet of things’ might usher in an entirely new emphasis on sensory design and spatial intelligence.

You visit the physical store for physical experiences – to squeeze the kiwi fruit or poke the beef, to get sympathetic advice on which of six pairs of jeans fits best, to see a band play live or hear an author speak, to run your fingers over the embossed cover of a Marian Bantjes book. Unless you are of a particular persuasion, you don’t need to squeeze the toilet rolls, or thrust a new Chux towel to your nose and breathe in… Much of ‘the weekly shop’ can be handled far better online, meaning it largely ceases to exist. You shop physically for enjoyment, or for quality, on an as-needs basis, and the rest is essentially automated.

Indeed, with delivery via bike or electric vehicle, the impact of displacing this unnecessary time and movement could be enormous – in terms of carbon and oil, road accidents and congestion, air quality, health and time sovereignty, you name it. Local markets and retail strips can offer smart local delivery services, enabling citizens to travel by public transport, walk or ride, select their produce, and have the goods delivered to their home at their convenience.

More profoundly again, fabrication technologies might completely derail existing carbon-hungry and expensive distribution models altogether. If each house has a small fabricator in it, everyday household objects like homewares are produced in-situ, on-demand, side-stepping retail altogether. If each street has a larger fabricator, in the local newsagent, say, products like bike parts, simple furniture or components for white goods and consumer electronics can be manufactured in-situ. Ship the ‘recipe’ – the digital file – source the materials locally, and distribution is only over the last few hundred metres. The impact of ‘local fabbing’ could close the loop first hinted at by the internet’s emphasis on participation, re-distribution and networks. Supported by a popular re-emergence of craft, for those things that fabrication cannot reproduce, there is potential to reintegrate ‘making’ into suburban streets, including work-above-the-shop studios and cleaner forms of light, advanced manufacturing, embedding production alongside at-hand repair cultures, and individual agency, social capital and the meaning inherent to making things are all woven into consumption.

How will Gerry Harvey sleep when he hears about all that?

Still, the small, resourceful local store persists. What a purely digital experience can’t do, rather obviously, is physical. And again, cities are about physical exchange as well as digital exchange, and always will be. Facebook has increased and reinforced physical social ties, rather than replacing them. The reality is that the internet is used as a dashboard for physical activities – for real life – as much as anything. What it does is re-allocate patterns of activities, with what author and thinker Doug Rushkoff calls an inherent “bias”, rather than replace them.

So for lazily undifferentiated chains, the tide is only going one way. Let’s not shed a tear for that. For independent stores with a genuinely distinctive or local offering, the internet offers an extension of their brand, or their footprint, or their experience. Let’s give a cheer for that. For wider strategic concerns, new patterns of local production and distribution may produce resilient, low-carbon, distributed economies. Let’s get behind that in particular.

The journey from Boo.com to Net-A-Porter.com has taken just over a decade. In that time, Facebook has emerged to lure at least one-third of all Australians into using it, and iTunes alone is responsible for around 25 percent of all music sales in the US – that’s all music sales – in less than seven years. These are transformative forces, far more disruptive than the existing Australian retail industrial complex actually realises, and easily capable of overcoming their intransigence, hegemonic power and lobby groups. The challenge is not to shore up that installed base, but to instead reinforce and direct the potentially positive patterns within internet retail, to work with the grain of this new culture, such that it produces resilient local economies and communities, richer patterns of production and consumption, and, as a side-effect, better spatial experience.

Dan Hill is a design lead at the Strategic Design Unit at Sitra, the Finnish Innovation Fund. Previously, he was Arup’s Foresight + Innovation leader for Australasia. He writes about architecture, urbanism and design at cityofsound.com

  • Irma August 1st, 2014 11:42 pm

    Tremendous things here. I am very happy to see your post. Thank you a lot and I’m looking forward to contact you. Will you please drop me a mail?


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