A recent trip to Morocco made the Executive Director of the Economic Partnership think about what UK retailers could learn from the souks of Marrakesh.
It is no exaggeration to say that retail in Britain is having a torrid time after year-on-year reductions in disposable income have stripped away the ability and the inclination of consumers to spend in the nation’s shops. And those that have money are busy saving it or paying down debt rather than spending it; the savings rate, which was zero in 2008, has been about 7% every year since.
Brighton & Hove, with just over 5% of its shops vacant, has fared far better than practically anywhere else; the benchmark UK vacancy rate is over 14% and some places have over 30% of their shops standing empty. There is now a real fear that, against a backdrop of another three years of relative austerity and a steady increase in the burgeoning online marketplace, retail is undergoing a revolution that might change our high streets forever.
During the boom years average UK weekly earnings grew by 4% per annum while inflation was just 2%. The buying power of consumers led to a consumption-fest that in turn supported a national rise in GDP [private sector consumption accounts for over 60% of GDP]. But since the recession started in 2008 those figures have gone into reverse with average pay rises amounting to no more than 2% and price rises averaging 3%; effectively everyone has taken a pay cut.
The downturn has led to a string of well-documented liquidations on the high street with 2012 being the worst year since the recession began demonstrating that companies could survive a year or so of recession but not four years of low profits or losses. And, of course, the smaller independent retail failures don’t even get reported.
One of the things that is striking about the souks of Marrakesh is the sheer effort that goes into making them vital, exciting and vibrant. Everything is presented with the utmost attention to detail in displays of dizzying colour and variety. If you buy nothing [which is difficult] you could still spend hours just soaking it all up because it is such an interesting and exhilarating place to spend time.
Clearly we can’t reproduce the atmosphere of the souk in the city centre but we must keep it interesting. Both retail spend and footfall have declined in the city over the past two years but the latter not as much as the former would suggest which indicates that people are still coming even though they may not be spending. When the upturn comes [and it will eventually; if people halved their saving rate it would liberate over £45bn] we will not have ‘lost our audience’ like so many places where ‘dead shops’ have robbed locations of their appeal.
It is vitally important that we keep the city centre vibrant, despite the gloom and doom. That’s a job for a range of agencies; the retailers themselves, the council and the Business Improvement District all have a role to play. Each has to keep on playing it until things get better.
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