On Tuesday, Debenhams – the British department store founded in 1778 – went into administration. With 166 stores nationwide and 25,000 jobs at stake, this news represented another blow to British retail after a decade of closures.
While the collapse of Lehman Brothers in the US and the bailout of Northern Rock in Britain are viewed as the iconic events of the global financial crisis, it was the demise of Woolworths – the iconic retailer with more than 800 UK outlets – which captured the ‘credit crunch’ in the popular imagination. Between December 2008 and February the following year – as the country plummeted into recession – it closed every UK store. 27,000 jobs were lost.
In the decade since, history has repeated itself with alarming regularity. Borders UK closed at the end of 2009. GAME shut half its stores in 2012, while Comet and JJB Sports disappeared completely. British Home Stores (BHS) went into administration in 2016, as did Maplin and Toys R Us last spring. Others, like Jessops and House of Fraser, having been restructured, are now smaller than they once were, while Marks and Spencer is disappearing from high streets across the country. Falling sales at the Arcadia Group, whose labels includes Topshop and Dorothy Perkins, means store closures and job losses are inevitable.
Earlier this year John Lewis announced it would be shutting its first store since 2006 – Knight and Lee in Portsmouth’s Southsea. The city is something of a ground zero for British retail, having lost its Marks and Spencer last year. Fifty miles west, in Bournemouth, the main shopping area of Commercial Road was once dominated by the same company and BHS. Today both are gone. A shopping arcade next to them lies half empty.
The explanation for such decay is familiar: a combination of the internet and out of town shopping centres driving a necessary evolution. Because modern capitalism is driven by Panglossian optimism, and one increasingly detached from reality, the presumption is something will happen. That the market will create the jobs of tomorrow.
Only it won’t. 150,000 retail jobs were lost in 2018 and another 175,000 are expected to go this year. And while high streets are indeed evolving, betting shops, fast food outlets and pound shops are the consequence of political choices, not inevitability.
It’s not just retail which has seen a transformation in recent years – it’s high street banking where technologically-driven restructuring offers a glimpse of the future. In 2015 HSBC announced 8,000 redundancies, while Lloyds has shed nearly 4,000 jobs over the last two years. In January, Santander announced it would be shutting 140 branches across the UK. Barclays reduced its headcount by 5,500 between 2008 and 2012.
Things are set to get worse. One of the areas most exposed to automation over the next decade is low income service work, particularly retail and food. In the US Amazon is rolling out Amazon GO, a store which has such high levels of automation, including automatic payment through radio-frequency identification (RFID) tags, that staffing levels are a fraction of the present industry standard. The company hopes to roll out 3,000 stores in the US by 2021, while European rivals look to steal a march on them in their domestic markets.
The soft introduction of automated self-service in McDonalds shows how it is often tasks which are automated rather than jobs. But while workers will remain there (principally because they remain so cheap) the increased throughput means the sector won’t be creating new jobs but rather losing them. While other service jobs which require fine motor-sensory coordination will remain immune from technological displacement – think care work, cleaning or getting a haircut – most retail will not. Between that and the onward march of internet shopping, the prospects of the high street remaining a mass employer are close to zero.
So what do we do with empty shop fronts becoming an increasingly common signature of 21st century life?
Part of the answer is a nationwide adoption of the Preston model. In Preston, ‘anchor institutions’ procure contracts with local business with certain conditions attached – think a cleaning contract in a school only open to worker-owned enterprises based within ten miles. This has proved a game changer, with the city recently named Britain’s most improved and the best place to live and work in the north-west.
The Preston model serves to keep public money within local economies rather than flowing back to outsourcing monoliths like Capita, Serco and Sodexo. That goes beyond reviving the high street, but it’s a start.
Importantly the model also enables the growth of worker-owned businesses in their place. Without access to credit, however, their expansion will remain limited. This is why we need a network of regional investment banks to finance the growth of this sector, the current small scale of which results from the tendency of commercial banks to steer clear.
Then there are the universal basic services (UBS) of information and transport. To revive high streets we need free bus transport and the roll out of free, ultra-fast internet in town centres. University College London has calculated the expansion of the Freedom Pass, presently available exclusively to over-60s, would only cost around £5bn nationally. That’s with consumption increasing some 260%.
Thirdly, rent caps need to be adopted so unscrupulous landlords can’t hold communities to ransom. At the same time a register of landlords of empty shops in each local authority should be established. Empty shops have detrimental consequences on communities and they should be able to campaign to avoid them whenever possible. At the same time, business rates need major reform.
Fourth is the issue of consumer demand and ending the low wage economy. Britain’s minimum wage remains a poverty wage. Increasing it, and bringing parity across age groups, will mean more people can enjoy the goods and services they want.
Finally is the issue of infrastructure. Retail as we know it is ending, but this change could lead to something better than the present decline. This would require a greater emphasis on services – like barbers, hairdressers and cafes – but also moving resources into socially useful areas: high quality care work for an ageing population; nurseries; local energy generation; adult education. As with information and transport these sit within a broader spectrum of five core UBS that I outline in my book: health and care, information, transport, education and housing. Any revival of the high street must be integrated with these UBS as well as a rapid transition beyond fossil fuels.
Because the Conservatives have no analysis of modern capitalism beyond doing nothing and pretending it’s the ‘free market’, this crisis will only get worse. Each year will bring another Woolworths or Debenhams. Indeed retail and manufacturing, the backbones of the 20th-century economy, may one day employ as few people as agriculture does today. The adequate response from the left must be built on acknowledging such a seismic rift. The alternative is to accept a low wage, low productivity economy which stagnates for the next decade just like it has done for the last.
Britain’s high streets can be revived – but this will require 21st century socialism.