The death of the UK high street, the resurgence of the global music industry and the disappearing US shopping mall

I was asked to speak on a panel last week by an interesting company called Fluxx. The topic was the future of the High Street – here are the slides they put up as a preamble to the discussions

http://www.slideshare.net/FluxxStudios/fohs-hmv-presentationv420130322

Some interesting points came out of the session and I thought it might be worth sharing a few of them:

– the demise of HMV came up (which seems to have become my specialist subject); however, I thought the really interesting point was that the music industry finally seems to be getting its act together and fighting back against piracy and illegal downloading. Last year for the first time since 1999, global revenue music sales actually grew 0.3% and although physical CD sales are in drastic decline, this is being offset by digital revenues from iTunes, YouTube, Spotify and Pandora (not yet available in the UK).

– apparently Spotify will actually write a royalty cheque for $500m this year - that's as much as its total payments since its launch in 2008. Pandora, the radio internet service are saying they are seeing huge growth in people listening on mobile devices in the States. Apple have a planned radio service and Google are in talks with record companies to start a paid streaming service – although they are arguing how much they should pay in royalties. The number of people using a subscription service rose 44% to 20 million in 2012 – subscription music services are really hot and definitely one to watch.

– on the basis of, 'When America sneezes, the UK catches a cold', the state of retail in the States was discussed and the phenomenon of 'Ghost Malls', where the anchor stores of JC Penney and Sears are often being closed down leading to other retailers collapsing. In fact some US malls are now finding other uses, which range from medical centres with ample parking, to colleges and government offices. Overall the stats show there is drastic decline in US mall square footage.

– JC Penny's woes have not been able to be sorted by Ron Johnson - the retail guru from Apple - who was brought in to turn round the biggest department store chain in the world. He has failed to do so in spectacular fashion, which just goes to show you there are no easy answers to the challenges retailers are facing.

– Waterstones was discussed in the context of Barnes & Noble announcing last week they will close a third of all their stores in the US. James Daunt, the owner of the six strong eponymous book chain in London, is obviously struggling with the challenges of running the multiple retailer, Waterstones, compared with his boutique bookstores. He was brought in as CEO by the Russian billionaire oligarch and owner of Waterstones, Alexander Mamut and the chain will probably survive as long as his largesse holds out.

– the Office of National Statistics figures, which came out a couple of weeks ago, tells you all you need to know about why the High Street is struggling: in the last four years, the number of people who access the internet more than once a day has doubled to 33 million in the UK.  Over half of them now access via a mobile device – that figure has staggeringly doubled in two years and explains why there is the huge growth in 'showrooming'. And after emails, the most common use of the internet; yes you guessed it: buying goods.

– the discussion wasn't all doom and gloom, and the success of the Westfield Shopping Centres came up, which nearly wholly focus on food outlets and fashion brands and is now the new hang out place for young people (rather than HMV and the High Street) on a Saturday afternoon. The success of a brand like Zara, which has a huge presence in Westfied, also came up – owned by Inditex who globally have opened more than one store a day in the last twelve months and now have more that 6000 stores worldwide

The conclusion of the panel was that there are obviously 'tectonic plate' size shifts taking place in retail, driven by the growth of the internet and particularly smartphones, and that the sentiment of 'missing the High Street' is probably not going to be felt by a younger audience who simply won't have the emotional attachment to the High Street brands that we do. Retailers of mass market, commoditised products, like a JC Penny, which are often easily price comparable, are really going to be in the firing line, especially as consumers forge relationships with brand owners through social media and start buying directly from them.

We live in interesting times.....