Friday 11 January 2019 8:00 am

Christmas shoppers shunned the high street, but attacking Amazon won’t help

Between the fierce renewal of the Brexit saga, parliamentary shenanigans, and a particularly chilling cold front (interpret that literally or metaphorically, as you will), the merriness of Christmas feels like a thing of the past.

But for the high street, it feels like Christmas never came at all.

Reports of retail sales, released yesterday by KPMG with the British Retail Consortium, highlight the worst period of Christmas trading in a decade. Consumers haven’t held so much cash back from the high street around the festive period since the financial crash in 2008, raising yet more questions about the future of consumption and the value of bricks-and-mortar shops to British customers.

Some are arguing that the stagnation in retail sales is a symptom of Brexit chaos. There may be a small element of this – we know that uncertainty harms businesses, and it is often true that it affects the habits of customers as well.

But to frame the high street debate in the context of Brexit is to overlook the major driver of this year’s Christmas downturn: times are changing, and the rise of online shopping has thrown a spanner in the works for our traditional views of consumption.

Customers are indicating to us through their choices in the market that online shopping is the way of the future. It’s convenient, efficient, and can be a much more effective way to get goods and gifts from point A to point B.

“One in every five pounds spent in UK shops is now online,” according to the Telegraph – a record that is only set to increase.

And while some traditional high street businesses are feeling the benefits too (online sales for Marks & Spencer increased by 14 per cent in the weeks leading up to Christmas), they are still taking a hit from the decline in in-store purchases.

With the overall picture looking increasingly bleak for physical shops, frustrations with the outdated tax system are growing.

This is understandable. Despite reporting UK sales of close to £9bn, it was revealed yesterday that online giant Amazon paid only £63m in tax. An outdated system of business rates and prolonged failures with corporation tax do put high street shops at a disadvantage, and these should be addressed for the sake of businesses and consumers alike.

However, this should not mean a race to the bottom for all retailers. Rather than dragging Amazon into a tax war with John Lewis, business rates need to be overhauled and reformed, to allow shops to become increasingly competitive with the newer, mainly online options.

We can’t “save” high streets by fighting a losing battle against online shopping. And nor is there a fixed, one-size-fits-all model for what the high street should look like. If they cater to local needs, high streets will remain vibrant places.

But we should let the market determine whether it’s shops, restaurants, pubs, experienced-driven outlets, or more homes that occupy this space – not a government drive to pick winners amid the panic over these Christmas figures.

The goal should be to have the best options for consumers at their fingertips, not protected relics of the past.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.