Comment: Online sales will save, not destroy, high street

FIRST reports from the high-street battleground are fairly positive, but a two-tier sector is now emerging.

FIRST reports from the high-street battleground are fairly positive, but a two-tier sector is now emerging.

We have already been warned in a pre-Christmas study that 140 retailers are in a near-death condition and could fail some time this year. That would take thousands of jobs out of the industry and leave some gaping holes in our town centres.

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On the other hand, there are some clear winners: John Lewis and Next have been among the leaders all year and both have come out with decent figures this week to set the tone for the rest of the high street.

What is evident is that those which have the right balance of stores and online operations are able to cope with the current trading conditions. Retailers who have downsized their portfolios are not necessarily in trouble, just ensuring they do not find themselves with too much floorspace, which was one of the causes of JJB Sports’ failure. It also had the wrong merchandise so shoppers went elsewhere, and these days they can do so at the click of a mouse.

In the click-and-buy era, shoppers search the internet for what they want and use the stores to pick up their goods. It means ensuring good stock control and monitoring what is in ­demand. Some have processes to move stock rapidly from store to store to ensure customers are not ­disappointed. It is a seamless way of preserving the shops while giving shoppers the option of using browsing time to do something else.

Online sales are crucial and now account for a quarter of John Lewis’s turnover, which was up by 13 per cent on a like-for-like basis. Extended opening hours helped Waitrose, its supermarket chain, which yesterday reported that total sales in the final 12 days of the year broke the £300 million barrier for the first time.

Next was unable to match that performance but sales still nudged 3.9 per cent higher and its Next Directory home shopping business was up by a stronger-than-expected 11.2 per cent, which offset a mere 0.8 per cent rise in the stores.

Marks & Spencer and three of the big supermarket chains will update the market next week.

One worry is that cash-strapped shoppers took advantage of bargains in the run-up to Christmas and have little left over for the January sales. On Tuesday, new British Retail Consortium director general Helen Dickinson will disclose the December figures and should reveal whether Christmas was better or worse than last year.

Credit beginning to flow will help the recovery

NOBODY wants to return to the easy-money days that led to the credit crunch, but we do need money to start flowing to help boost the economy. New figures suggest there has been some improvement.

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The latest credit conditions survey suggests funds are getting to households and that both banks and building societies are increasing their loans in relation to values, which will be good news for home buyers.

With lenders generally expected to increase the flow of money to households and businesses there is a view developing that the Funding for Lending scheme, launched by the Bank of England and the Treasury last August, is having a positive impact, though it is larger firms which seem to be ­benefitting most.

With the weight of new jobs expectations resting on smaller firms, the authorities may need to consider some further tailored measures to help them.