Dear government: Ecommerce isn’t killing the high street, rigid thinking is
To revitalise the high street, the government needs to stop thinking as ecommerce as the enemy, writes the Startup Coalition’s Jordan Sullivan
If you read the newspapers after this festive shopping season, you’ll see a common refrain: ‘British retail is dying’. Recent More in Common research found that just seven per cent of shoppers planned to do most of their Christmas shopping in department stores in 2024. But our data published just before Christmas tells a different story – it’s not dying, it’s changing. And as MPs convened yesterday for the latest in a regular drumbeat of debate on how to address the all-important and highly visible role that town centres play in communities, it’s worth understanding how they are changing to make them the best they can be.
The internet has opened up a world of choice for consumers, and e-commerce has exploded as a result. E-commerce sales were 16 times higher in 2024 than they were in 2006. But to view online shopping and bricks and mortar retail as adversarial is far too simplistic. For many high street shops, the online market is a vital source of diversification, enabled by the UK’s booming e-commerce startup sector.
How ecommerce supports the high street
Startup Coalition’s report on the next generation of retail found in 2023, £95.7bn passed through the e-commerce startups sector’s virtual storefront, employing over 464,000 people in the process. This sector includes small businesses selling directly to consumers and firms helping traditional retailers to sell their own goods through the web. This omnichannel transformation is being powered by UK startups like Sparkbox, which uses machine learning to optimise pricing and inventory, helping businesses compete globally.
On the other hand, the internet has also created a new generation of retailers, one that starts online before converting to the “in real life” retail experience. UK unicorn Gymshark is an archetype, having started solely online to now operate three stores in the UK and a pop-up store in New York City, which feature exclusive product lines and events. CEO Ben Francis recently explained that Gymshark “learned that the customer loves events, and they love to be able to touch and feel the product and try the product on”.
Many retailers have harnessed this technology revolution to their advantage, but our policymakers have failed to adapt. Instead, they have wrung their hands on the sidelines as the high street failed to keep pace with changing consumer demand.
Reimagining the high street beyond retail
Yesterday, MPs convened for the latest in a regular drumbeat of debate on government support for town centres, offering them the latest opportunity to actually listen to their constituents. Business rates reform, as the government is exploring, is part of the solution – but it doesn’t matter if shoppers just aren’t there. Revitalising the high street requires rethinking how urban spaces are used. Pop-up stores, hybrid retail spaces and physical spaces that support the comfort of gig workers should become commonplace.
According to the Federation of Small Businesses, 63 per cent of high street retailers now sell online, but this could be much higher. The government’s disaster-class Help to Grow: Digital, a programme launched in 2022 to try and support small businesses to digitise, was the right idea, executed dreadfully. A more effective approach would mirror Australia’s Small Business Technology Investment Boost, which offered tax incentives to encourage small businesses to sell online.
The high street is not dying, it has changed. Consumers know this, but this change has not been reflected in policy. The same More in Common research found that nine in 10 people wanted closed department stores to be “reimagined” including for purposes other than retail. Indeed, back in 2023, the government’s own High Streets Task Force found that retail was no longer the main driver of visits to urban centres. Instead, people went for leisure, for entertainment, to socialise and have fun. It’s high time that our policymakers changed their ambition for the high street – it should not become a relic of the past, but should develop into the bustling modern multidimensional hubs they have the potential to be.
Jordan Sullivan is the head of economic policy at the Startup Coalition