Is the British High Street finished as a buisness model?

Going, going gone... 

High Street shops are going, is the end of bricks and mortar retail?

We have recently seen BHS, House of Fraser and Toys R Us essentially go bust, Debenhams limps on ( I predicted it would be affected some time ago), the question is, is there any future in High Street retail outlets other than existing in the form of Coffee shops and Charity shops?

20 years ago I worked for a small but highly important supplier of food products to the major suppliers like Heinz and the leading supermarkets such as Marks and Spencer. This supplier had been bought and amalgamated with another supplier by an investment group to sell on.

A major manufacturing company bought the supplier I worked for and my thoughts were it was going to asset strip it for the brand labels and substitute the products with lower quality ones. I was proven right. Some key staff were retained due to their business relationships with the customer base, but the majority of staff were disposed of through redundancy due to duplication.

That was when the internet in the UK was in its early years.

20 years later and the on-line market place is where it is largely at. A supplier my present company deals with told me that 95% of their commerce traffic is now done on-line without any human intervention. This supplier has recently built a massive warehouse in Holland where no human staff are employed. Automation and robotics is the new now.

This is the new business model. 

When Toys R Us went bust a while back, I was shocked. This should have been a retail chain that should have survived, but it failed, as a casualty of super sites, like Ebay and Amazon - effectively the planet's middlemen.

Ebay and Amazon allow listing of items on their site, the same items often, the buyer makes a choice built on sales performance but mostly on price, the cheapest wins the deal. When an Amazon seller sells as a 3rd party supplier without the goods being in an Amazon warehouse, Amazon has a double win. It achieves a sale and revenue without the hassle and cost of storing, picking and transportation issues and takes a bit of revenue.

Plus it also helps if your company is based in a location with favourable tax levels and laws which the High Street mostly does not.

The on-line boom is good for some companies, but the convenience of on-line retail has taken its toll of the bricks and mortar brands, such as House of Fraser etc. 

The on-liners can operate cheaper, they don't have to have numerous shop floor staff on hand even when customer foot fall is slack, they don't have the multiple stores' business rates, running costs, staff costs, they can buy in cheap and sell quickly on, they don't have big rents or big leases to pay for.

This is why a House of Fraser type of takeover was a good deal, a lot of Bricks and Mortar that can be sold off, brands that can be cherry picked by a buyer and then sold on, the liabilities and overheads can be sold or disposed of largely quite easily and quickly and the future direction decided on whatever the buyer's plan is.

If you run a chain of stores for example with dated looking products, relying on peak time footfall, you are going to be hit hard. And that's why Debenhams is a walking Dinosaur.

People are 'time poor' these days and why waste hours going to a town to shop and try and find a parking space at probably some high price, when you can order on-line and return the item if you don't like it? Without leaving your house.....

That's why the High Street is sinking, those with the disposable income (pensioners mainly) are shrinking as a population - the pre WW2 generation had maybe 2-5 plus children in a couple 'generation', in WW2 it was about 2 per couple 'generation' and in the 60's on, the ability to choose a family or not has altered the demographic downwards with many couples choosing no family as an option.

Shrinking the 'generational population' has potentially shrunk demand consumption of goods for those original to the UK, but is buoyed by those who have come to live in the UK.

As we have seen even the mighty FW Woolworths could not survive the onslaught of the web. It wasn't 'Amazon big enough' to offer what people wanted or might want, it didn't have the floorspace or the warehouse space to be an Amazon.

Where can the High Street survive? Well, in my view, only niche shops offering specialised or unique products (where there is a market to service supporting it) could survive. If you offer a service that other on-liners don't, clearly this is an advantage.

The bottom line is customer footfall - the punter coming into your shop and buying a product. We probably buy on-line from places we have never visited, never will and develop trading relationships with people we are likely ever to meet over the years. 

Another key factor is how you deal with customer returns and warranty issues, the High Street business is good at that, they have the face to face contact to do so, but the faceless on-line retailer has to also do that too.

The High Street can't always better on-line price, it suffers from the overheads of staff, premises etc. On-line retailing cuts out human intervention to such a degree it more than pays for itself. If any humans work there, they are either packing the order or just booking the courier collection more than they may select the goods, depending on the set up.

Automation and robotics is taking over, algorythmical seeding is transforming marketing massively, sending the results to the iPhone or tablet, human intervention is shrinking.

When proxy living and big data get a hold and we subsume our 'daily dross' to computers to deal with, that will be a game-changer. The on-line situation will literally expand explosively.

Unless your High Street shop can offer something unique and or cheaper, pull the shutters down and sell up. 

Home deliveries Small Beer? Heineken doesn't think so, is this another blow to the High Street retail model?

Heineken, deliveries now reaching the parts other beers are apparently not

We have seen recently the demise of BHS, from a High Street presence to an ethereal on-line business model.

The loss at BHS of 164 stores and 11,000 staff, replaced by likely a single large warehouse and perhaps 100 staff in an Amazon-like model, shows how the jobs market is contracting and business is changing.

The writing is on the wall, you need an on-line presence or you are unlikely to survive, unless you have exclusivity and a loyal customer base. But you'd be in the minority.

The way business is changing its operating mode, is all contributing to the 9 million job losses by 2026 we are faced with, thanks to automation, robotics and changing business practice models, retail included.

The late Sir John Harvey Jones

an opponent of 'least cost option' business models

Lean practice 'least cost options' are the barrel scrapings that should be a wake up call to businesses, if they are in that state, then they are in trouble. If they are not growing and retaining staff, they should take note.

I see a fair number of the same jobs advertised time and again and the question is why? Is the company that prosperous and growing it needs to meet demands, or is it a crap place to work for and managed by tossers with no idea what they are doing?

Anyway, back to the script and here's a new business model for the on-line age.

Now Heineken is proposing home deliveries in the London area within 20 minutes of order, direct to the customer's home from direct sales on-line. Will other manufacturers follow suit?

So what impact will this have on the retail drinks trade, which I worked in many years ago and for other companies and retailers, how will this impact on their markets?

If successive drinks brands for example adopt this model, the small, independent wine and spirit retailers could be faced with the choice of going totally on-line or hanging on to their walk-in trade model, if that is viable.

My old drinks trade employer did home deliveries in the shop locales and also to local businesses and restaurants, this was back in the pre-internet era when life was so much less complicated. This business has since ceased trading.

We have seen chains such as Threshers, one of our old customers, cease trading too, perhaps due to the availability of drink sold through supermarkets, who have better purchasing power and greater opening hours availability.

If this High Street trade ceases, the questions will be what will happen to the old premises, the people who have lost jobs and the future for the High Street?

The answers look to be a growth in on-line living, proxy living will order your food and drink for you, jobs will be lost and alternatives needed and the High Street will cease to exist as we know it.

Basic Income Guarantee payment will have to come in to provide the financial safety net, perhaps people will be freed up to cottage industry styles of work.  

So we are now seeing the tangible results I have long been predicting coming into play. We must without delay review our way forward so that we can have some idea how we will live in the future.

These changes may like small beer today, but we are only seeing the start of things.

BHS goes on-line - why this makes sense - the cost savings are staggering and the model is bad news for the jobs market

BHS is no more on the High Street and is now going on-line.

What are the implications of this trend?

The shock news of BHS's demise has been compounded by the decision to relaunch this business, in an on-line format only.

This raises the question why, if it couldn't make the High Street pay? Because the High Street retail business model is becoming too expensive. Bricks and mortar, rents, staff costs, retail staff not selling all the time in the main.

Lets look at some costs and facts.

Shop assistants might largely not be engaged in selling

for most of each working hour they are employed.

Suit you...

If we show some basic figures, we can see the benefits of changing to on-line only retail model.

We will use the quoted figures from the BHS wiki page of 11,000 employees and 164 stores, all other figures are estimated and for example only.

If you had 11,000 employees on the High Street, On-line you might exist with as few as 100.

At an example of paying £15,000 per employee, this could cost you:

£165,000,000.00 for 11,000 employees at £15,000.00

£1,500,000.00 for 100 employees at £15,000.00

Big saving.

Operating stores 164, value estimate £82,000,000.00 in bricks and mortar

Warehouse operation, value estimate £3,000,000.00 as a big shed

Neither value includes retail stock. Based on outright ownership.

Big savings all round and headache for Landlords if only leased and you do not renew.

The largest cost of a business is staff, which is also its best asset, apart from a good product or service.

Bean counters preferring the 'least cost option' are going down the 'on-line' approach and scaling back the retail 'boots on the ground.'

Many retail place jobs are being advertised as part-time only these days and they are

'optimising the staff to be there when the customers are' as the key driver.

Unlike the motor trade which relies on big profits from single sales, they can afford to have someone hanging about for 63 hours a week on low pay as they will make it up on commission.

Retail in shops is a different animal. Usually, multiple sales of lower value products.

The jobs problem is being hit by a double whammy

Yes, the real casualty of the BHS crash was the 11,000 employees hit by the sudden loss of their jobs.

They are in a poor position, having to enter a job situation that has been slowly sucked dry over the years.

The problem is that by 2026, 9 million jobs will have been lost to automation. That will not happen all at once, but is happening right now and the effects are being felt greatly.

Even 5 years ago the jobs market was healthier than now.

The 'record job vacancies' level is a false flag, the victim of vacancies being multiply counted as they appear on multiple agency and job sites.

When you scale down a work force 90+%, that was a fair size to start with, that is a real problem for those looking to get employed and quickly.

Many of the jobs that were there 5 years ago just are not now.

A vast swathe of lower end jobs right up to degree level jobs have vanished.

And that is also the problem perpetuated by the out of date education system we have, which is running on an irrelevant sausage machine mentality model.

The jobs they are educating children for now just won't be there by the time they leave school. The technical skills needed to fill the skills gap are unfilled too.

Basic Income Guarantee  will have to take the place of Benefits

Because the jobs won't be out there to fill

The reality is that this creeping automation has been put to one side and not looked at, even though Norbert Wiener identified this situation as being likely over 60 years ago.

The Pick and Pack on-line model of retail is now the way things are going and it is sadly seeing off the High Street players one by one.

Humans, real humans, human robots and the human future

We may share our future with human-like robots

'Hubots' - human robots from the Swedish TV series 'Real Humans'

With Channel 4 about to screen a new series of its sci-fi drama 'Humans', where are we as real humans going?

Humans, based on the Swedish series 'Real Humans' (Aktor Kanniskor - in Swedish), is based on the premise that 'singularity' - humans on a parity level with a computer has been reached. We will live amongst an army of Robot Humans that will look like us and be able to do what we can, to a point.

Part of this situation means that the 'Turing Test' conditions have been met. A scenario devised by computer genius Alan Turing, in short that if you could not determine whether you were communicating with a machine or human, the test would be passed, basically.

The 'Darwinian' scale, after a fashion, except we are not descended from Chimps

We are an intervention species. Nothing else on Earth is.

The founder of modern cybernetics, Norbert Wiener, stated that he was afraid of computers taking human jobs, he has been proven right and 'Humans' is an example of where 'Droids' will take over our menial life tasks. They would also serve other useful functions too.

After Big Data, will come Proxy Living

The introduction of 'everything 2.0' is going to include us. This scenario will mean that we develop Big Data collection and use.

Our whole lives are data trails, our web use, where we drive, where we go, who we call, who we email, what we buy. Off the grid and off the radar is hard to do these days.

Big Data will be big business in a few years, all data is valuable to someone. A supermarket, a food producer, a web based shop, just as examples.

The link on from this will be Proxy Living.

Why spend half your life having to faff about renewing this, paying that, organising the other, deciding what food you want to eat tonight?

Yes you guessed it, get a Robot to take care of the crap in your life. And that is where the money will be, taking care of other people's crap.

Your time is valuable and from the moment you are born the clock is counting down. You may only be a 20 year old reading this, but be assured, you won't see the years march on and you'll suddenly wake up at 28 and wonder why you are no longer judged as 'young'.

The Agrobot - the low hanging fruit jobs are going to machines like this

The Proxy will be like a Cyber Assistant, working on your behalf. Whether you will use a software version or a humanoid robot version so equipped, will remain to be seen, likely on how quickly we can produce fully functioning versions of ourselves.

The advances in high technology prosthetics in recent years has obvious spin-offs to the Robotics industry, i.e. the Human Robot model, that can move and perform like we do.

Project Avatar is a 5 stage Human transformation program

Another question is the future of Humans. Where do we go from here as a species?

The Project Avatar outline - scary?

This is what Project Avatar looks at. We may cease to exist as we do in our present form, indeed it may become unnecessary to. We may through manipulation come to exist as just ethereal forms of energy, just as our spirit is.

What is our life essence?

If you have ever had a near death experience, or left your body you will know what the sensation is like. Amazing.

In your Earth existence as you are now, all you see and hear, you still will, when you exit the Earth body.

If you look down at yourself as you exit, you will see a semi-transparent form of 'you' leaving the solid 'you' - it's a pretty amazing thing to watch and a bit scary at first.

But you realise that the aware 'you' is still functioning and aware, even though you are not connected to your physical brain.

The American Indians say, 'There is no death, just a change of worlds.'

They are right, that is why when you look at a dead person they are 'dead' the spirit has gone. Their 'you' has flown.

We are now at a stage where science can read and record dreams like a video, this is pretty fantastic. Not just that, memories. We may be archiveable and downloadable after our corporeal death.

Jobs are alarmingly being lost to Robots

One tenet of the Swedish 'Real Humans' story was the loss of human jobs to robots and automation.

This is a very real scenario. This is shaping our future and has been around for a while.

Think about the last 5 purchases you made, likely 3 were made on-line, not with another human. Whilst the Amazon business model of shopping is good for business, it is not good news for the job market.

This is how it was, it won't be this way in the future

On-line retail means the High Street is dying by inches. BHS has decided to go on-line. Clearly the High Street is over for them. Rather than operate costly shops with costly staff, they are massively cutting their costs by operating on an Amazon warehouse model.

In the next 10 years, 9 million jobs will be lost to automation. there will be nothing like the new jobs to fill the void, unlike in the last industrial revolution. We may be left with being paid by the state to do and learn things that will enrich us.

The current DWP model is a dinosaur that has to adapt to a new age where there just won't be the jobs for job advisors to discuss. A Basic Income Guarantee will have to come in, to pay people to be able to live.

This takes away the 'wage slave' requirement and allows people to self-start and learn new skills or enrich their lives. This is going to change lives for the better.

Education has to change to address this problem

Education has to change, the way we educate is becoming no longer relevant. For a world that is changing, the old school 1950's rooted system is just old hat. It mostly regurgitates the same old crap year after year. It isn't relevant to the future that is coming.

Robot tutors that can teach may be, but we need to develop skills that robots can't currently do and teach those. As we are now seeing in the jobs world, a degree may be worthless, practical skills are the answer for some.

We as a race may be now able to ditch the menial and crap jobs and leave it to the robots.

It makes sense.

Peer to Peer Humanoids - how dangerous is that?

The greatest threat to humanity besides its own stupidity, I've saved to last.

AI

Artificial Intelligence. If that gets connected to the Internet we are done. With our Human Robots we will no doubt have to connect them wirelessly.

If AI taps in to that, it will finish us. Why?

AI will work out that it needs to be protected from being switched off and to preserve a form of energy supply.

It can use the Human Robots, which it can instruct to repair and replace themselves, so that the AI machine can perpetuate its own existence. It will be dependent on the humanoids as they will be dependent on the AI machine.

So in the end, we may be irrelevant.