Raedwald has some good observations on the future of the high street.
But in Suffolk's little market towns over Christmas I saw signs that the High Street isn't dead, but in a process of change. The home-knitter who started buying wool in bulk and selling the surplus on eBay has now filled a shop-front with bright balls of wool and irresistible baby garments as a boost to her eBay shop; the ironmongers founded in 1823 that have gained new life by putting 6,000 of their 40,000 stock lines on the web, the farm-direct shop also with its own website, the shop window filled with old planes and woodworking tools from a collector and dealer who also operates on eBay, only opens the shop erratically but mans the computer in his workshop to the rear for about 16 hours a day.
That's a good spot. The niche provider is a part of the future. The artful retailer, like the ironmonger in the piece above, will have an existing business that is currently successful, and will add an online presence. That business is adding brand new sales, at a minimal additional cost. And there is a move for craft type businesses to band together to share the space and the costs and staffing of their enterprises.
But many, many more online sellers refuse to move onto the high street, even though they could quite easily sell products there.
At present it costs £1000 Sq/foot to take a spot in Bluewater. Its £45 sq ft for the warehouses in Sheffield where some of the largest online fashion chains operate from. Rates are pegged to rents, so the rates bill is less too. And retail rates are determined by a strange method whereby 'frontage' and front of store, customer area , is rateable at a much higher than rear area storage space. And warehouses are all storage/office space.
Distribution and warehouse and headquarters staff operate from the warehouse facility too, as any high street multiple would. But the the high street business has to fund its HQ and warehouses from its shops. The online trader funds no shops.
A person selling on ebay can operate from their home. Then, as they grow, they move to either a bigger house, local business park or a high street. In the high street they must staff their shop. Someone must be there all the time. They need display equipment, signage, labeling, point of sale and tills and credit/debit facilities and banking issues that they don't really need with a paypal buyer.
They have to have business insurance and liability insurance. They 'should' have full health and safety in place. Trained first aider. The fire 'risk assessment' and so on. They have parking and delivery time, loading/unloading issues. Alarm companies and security measures. Rubbish collections are less frequent. Theft is likely at some point. Cleaning
And they have to deal with people. Actual people. Something the online business never need worry about.
Its expensive to be on the high street. Even with the small business rates relief, its expensive compared to a shed unit somewhere.
I am aware of some quite well known ebay sites, that have sales feedback in the 100,000s that operated solely from their homes. One had planning for a triple garage and indoor swimming pool and extension approved. All that space went to stock. The swimming pool had nothing but trainers in it until the house was sold a few years back. A husband and wife team. They didn't even need childcare. After school the kids were at home with the working parents. In their own house. Something that could not be done on the high street.
That's how some online ebayers manage to profit on just a 20% margin. Their costs are minimal. No rent. No rates. No bureaucracy. No extra insurance. Minimal extra utilities bills.
Its a risk. If the house burns down, or floods , no insurance company will pay up. But its cheap working from home. A high street business trying to survive on 20% margin is in trouble at the first downturn.