High Streets Initiative · 28 August 2018

Have mobile apps killed off the high street, or are they fighting to save it?

Mobile apps have packaged much of the high street offering into a phone

Mobile apps have been instrumental in the rise of online shopping, but are they a natural enemy of the high street, or can they support our bricks and mortar businesses?

Smartphones have moved from being useful to becoming essential. Many rely on the convenience of this technology to get through all aspects of their daily routine.

Businesses have noticed this trend and, in order to stay relevant, have developed apps to meet customers demands and match their fast-paced lifestyles. However, as a result, some physical businesses are suffering.

The Centre for Retail Research found that 61,000 High Street stores have shut down since 2012, with 31,000 stores predicted to close by the end of 2022. Online shopping is partially to blame for the death of the High Street, but have apps also played a part in its demise? Or, in fact, are apps fighting to save it? Let’s find out.

Mobile banking

Banks are not the most glamourous of places. Waiting in line to shout your request to a teller through a pane of glass, while trying to remain discrete as you give them your financial details, hoping not to become a fraud statistic, hardly makes for an enjoyable experience.

It also doesn’t help that they are only open when most people are at work, making visiting a branch a difficult task.

To combat this issue online banking was introduced. People were able to manage their savings and current accounts from the comfort of their home. But, with the rise of the smartphone, online banking has evolved even further into banking apps.

In 2017, according to industry analyst CACI, 22 million people used a mobile banking app to manage their current account and these people racked up 5.5 billion log-ins to banking apps, according to UK Finance.

Mobile banking apps are also proving popular amongst the younger generations. A Crealogix UK study revealed that 91% of millennials prefer banking apps and online banking to visiting branches; however they are not to blame for the decline of branches. In fact the growth of mobile banking is being driven by older consumers living in rural areas, who perhaps do not have a local branch and find it easier to bank digitally.

There is no denying that apps have revolutionised how consumers handle their finances, but what has this meant for the bricks and mortar branches? And, more importantly, those who work in them?

In 2017 The Times reported that 802 bank branches closed: The Royal Bank of Scotland (RBS) alone closed 259 branches last year, cutting 680 jobs in the process and the reason is purely down to the increased use of digital transactions. An RBS spokesman told the BBC: “Since 2014 the number of customers using our branches across the UK has fallen by 40% and mobile transactions have increased by 73% over the same period.”

Conversely, not all is lost when it comes to bricks and mortar banks. Research by the Social Market Foundation found that when it comes to more significant and long-term financial decisions, such as  seeking financial advice (57%), or taking out a mortgage (50%), the majority of people still prefer to visit a branch. So bank branches may still have a place on the High Street for the time being.

Read more about the current state of UK high streets:

Movie streaming services

It has been nearly five years since we last saw the iconic yellow and blue Blockbuster sign lighting up UK high streets, since the last of its UK stores closed in December 2013, but are DVD rental stores missed on our streets?

Thanks to a range of film and TV streaming services such as Netflix and NowTV, the public now have access to hours of entertainment without needing to leave their sofas, they can even access these services on the go. The Office for National Statistics’ annual Internet Access and Use report found that 46% of adults (over 25 years old) said they have watched paid services in the past three months – this number is up from 29% in 2016.

A more dramatic rise can be seen amongst the 16-24-year olds, with figures rising from 55% in 2016 to 81% in 2018.

According to UKOM-approved com Score data, “roughly 17% of mobile internet users in the UK, some 5.8 million adults, accessed the Netflix app on either a smartphone or tablet in March (2018).” Although there are means to watch DVDs on the move, these streaming services allow people to access thousands of films, documentaries and series through a device they can put in their pockets.

Some will argue that they miss the sociability that Blockbuster provided, the family routine of a Friday night movie and an overall sense of nostalgia. But, based on streaming service figures, these rental closures certainly haven’t affected our entertainment consumption. However, there is another victim of these streaming apps aside from the DVD rental market – DVD retailers.

“Mobile apps have revolutionised the high street by packing it into your phone.”

As the total revenues from digital video – which includes services such as Apple’s iTunes, Sky’s store and Now TV – surged almost 23% to £1.3bn last year, whilst  High Street sales of DVDs and Blu-ray discs fell 17% to £894m.

Source: GlobalData

People are swapping physical copies of films for the opportunity to watch a wider selection. A typical new release DVD retails at £10 in most stores, this offers one film. A Netflix subscription is £9.99 for a premium account per month, which includes unlimited watches of their entire library of films and TV shows, including exclusive Netflix-made content.

Although it seems as though the DVD is on a downwards spiral, experts are predicting the decline will slow by 2022 as streaming services struggle to convert diehard movie buffs and collectors from physical to digital.

This, along with the fact that Christmas is a peak time for physical sales, Kim Bayley, chief executive of the Entertainment Retailers Association told The Guardian: “A multichannel economy is going to exist for some years to come. The strength of the DVD and CD formats over the Christmas period shows that physical still dominates when it comes to gifting, for instance.” Implying that retailers may survive on the High Street in the coming years.

Food ordering

Apps are there to make consumers’ lives easier, from checking the trains are running before turning up at the station, to paying for your lunch using your phone when you have left your wallet at home. Phones are the Swiss army knives of the modern world, but what is convenient for a consumer may not be so convenient for business owners in the restaurant industry.

Food/drink ordering apps seem to be the perfect solution for tackling long lines in a fast-paced society. If you want a coffee, you can order it en route, and ensure it is ready for pick up by the time you get there. It all sounds perfect, however, the issue with introducing these apps is that the staff have to get used to the new system as well as continuing traditional sales.

Starbucks introduced mobile ordering in 2016, however in 2017 it saw a 2% drop in transactions as a result of bottlenecking and overcrowding from the mobile ordering. Instead of stopping long queues, the app created surges of customers coming into collect their orders. Baristas have also experienced a decline in tips as a result of people paying for coffee using the app, leaving no opportunity to leave a tip.

Since the apps’ launch Starbucks have made efforts to improve the system for their customers, introducing text message notifications when a customer’s order is waiting, enabling them to avoid being caught in a surge. They have also introduced pick up shelves in some stores and changed staff responsibilities to be solely responsible for mobile orders.

However, these changes do not address the tip issue which has been described by a Starbucks shift leader as being ’in steady decline’.

Similarly, McDonald’s have experienced staff leaving their jobs due to finding the new mobile ordering system too complicated, which is forcing them to handle more tasks and is creating stressful working conditions, without the benefit of a pay rise.

A food ordering app success can be seen from Domino’s Pizza, the pizza takeaway company experienced a 41% growth of app-based orders between 2015 and 2016. The app features a tracker which updates to show the progress of the customer’s pizza from order to delivery. It also allows for one click ordering and has a deals section, removing the need for customers to search for offers outside the app.

Sam Furr, founder of mobile app development agency Tappable said: “Mobile apps have revolutionised the high street by packing it into your phone. For example, Amazon have forced retailers to deliver, and fast.

“You can browse items, see what you look like in clothes, and virtually place a new arm chair in your living room before you’ve even seen it in real life. Mobile apps for retail gave people a much wider choice, and convenience. It also allowed smaller players to make a dent in the bigger chains.”

Apps have definitely had an undeniably positive affect on consumers, making almost every aspect of their lives easier. However, the jury is out on their effect on bricks and mortar businesses because, for some, apps have revolutionised their business allowing it to flourish in the digital age, whilst for others it is shutting their doors for good.

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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