Looking for growth? Then look to our high streets - Sunday Times

Losses at Fenwick illustrate retail’s challenges. But physical and digital stores can prosper with ‘bricks and clicks and paper’

If I hadn’t hit upon plumbing insurance cover, I’d have fancied being a retailer — principally because retail is detail. You can see how business is going every day, both through your takings and just being in your stores talking to customers.

However, it’s also because I have fond memories of the confectionery counter, as well as the book and magazine shelves of the Fenwick department store in Newcastle, close to where I grew up. Ever since John Fenwick founded the company in the North East in 1882 — initially selling just fabrics and clothes — it has been one of the high street’s greatest assets.

So I was saddened to read about its losses, £28 million, in the year to January. Turnover was £184 million, down almost £30 million on the year before; the Bond Street store in central London was recently sold off; the company is facing increased competition from online retailers; and it is in a constant battle to get shoppers through the doors of its eight remaining stores.

I’m not one of those doom-mongers suggesting that high street shopping will forever be in the doldrums. On the contrary, I see opportunities for growth. Yes, Fenwick is finding it difficult to adapt its offer, both online and in store, to compete with the specialists. But bustling high streets are so much a part of who we are that we’re all willing them to succeed. And plenty of us think we have smart solutions, including my son Tom, who once talked of launching a reinvention of WH Smith, called TH Harpins.

As an entrepreneur, I’m an optimist and see a bright future for our great British high street. But we need to think creatively and act boldly.

Since the pandemic, people have fallen back in love with in-person shopping, and bricks-and-mortar competition is less fierce than it is online. For instance, shares in online fashion retailer Asos climbed to £57 in 2021 and today they are well below £4, while its rival, Boohoo, is considering a break-up. When private equity group Apax Partners sold the online luxury retailer Matches Fashion in 2023 for £52 million, it was far less than the £400 million that Apax paid for it in 2017.

Contrast those stories with Frasers Group, which owns Sports Direct, alongside many other brands — the high street giant’s value has almost doubled since early 2021. Meanwhile, Marks & Spencer has finally achieved its turnaround under Archie Norman and Stuart Machin, as well as a return to FTSE 100 status, based on an increased focus on food, a rejuvenated fashion offer and store refurbishments.

So, what must retailers and online businesses do to adapt and thrive?

Regional department stores will, I think, be replaced by “specialists”, such as the beauty and cosmetics retailer Sephora, which sells hundreds of brands in almost 3,000 stores across 34 countries. It has six in the UK and a plan to get to around 100. Its Westfield outlets in east and west London turn over an estimated £26 million a year. In this category, I would also include Next and Zara, which will continue to prosper.

More retailers will need to adapt to an “omni channel” mindset, which I call “bricks and clicks and paper”, one of my “8 Secrets to Building a £Billion Business”. To achieve sustainable growth, companies have to combine e-commerce, retail and click and collect, together with mini-catalogues and direct mailshots. These latter elements work particularly well today — as the likes of The White Company, Sweaty Betty and Charles Tyrwhitt will attest — because fewer retailers use them, which means you get a bigger share of the doormat.

Businesses without a physical presence now will have to do more to get their products into retailers. For online-only brands, such as Purdy & Figg cleaning products and Stubble & Co backpacks, having a retail presence could reduce the dependency on Google advertising and social media spend. It develops credibility for the business and builds the brand cost effectively. It’s why Additional Lengths, a hair-extension business in which I have invested, is considering opening a salon in central London to build credibility for Remi Cachet, its professional brand.

So, if you are running an e-commerce-only business, think about adding “bricks” through either selling wholesale, or running concessions or your own stores.

Companies should also invest more in their digital platforms, so that they operate concurrently with more traditional sales and marketing strategies. A physical presence requires an online one, too, so that consumers benefit from both experiences — seeing what they want to buy up close and then purchasing at leisure. Physical and online shopping experiences will need to feel more seamless.

High streets would benefit from a more diverse range of shops that reflect the local culture. Independent businesses understand the customer better and are quicker to adapt to changing tastes — but because they lack buying power and online capabilities, many of them will be replaced by a new generation of national players. I’ve often wondered why we don’t have a national fishmonger or a nationwide chain of florists or beauticians. High streets would benefit if we did.

We should make it easier, too, to convert the upper, unused floors of high street buildings into residential flats, which would make these areas more vibrant. Years ago, when I was a management consultant, I did a piece of work for Tetley’s Brewery called “LOTS — Living Over The Shop”. The company wanted to put residential accommodation above its pubs, but in the end noise was the limiting factor.

Stores could become destinations for more than shopping, too. If landlords can be flexible with rents, a new generation of entrepreneurs could breathe life back into them. What were once shops could become shared workspaces for small businesses, or leisure destinations — for the likes of bowling company Lane7 or indoor golf chains such as Puttshack.

There is an extraordinary opportunity for our high streets to reinvent themselves in this digital age. Our economy isn’t just about huge infrastructure projects and billion-pound investment deals; it’s about what’s happening on our own doorsteps. And I believe the future is bright, because bricks plus clicks plus paper equals growth.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader magazine