A few months ago I wrote a piece on retail for Architectural Review Australia, now published in the June 2011 issue as 'Local Rules: The Death (and Rebirth) of Retail'.

As is becoming common practice here, I'm posting the longer 'director's cut' version below. Thanks to Maitú Ward for commissioning the piece in the first place. It also gave me a chance to get my story straight about all this before I appeared on ABC Radio National's By Design show, talking about online retail in the context of what they called 'self-direction' e.g. airports where you check in by yourself.

If you're in Australia or thereabouts, do check out the physical version of the June 2011 Architectural Review Australia—it's always a good read, and this issue features a slew of different tangential perspectives on 'shopping', including writing from old colleagues, friends, cohorts and correspondents David Neustein, Claudia Perrin, Russell Fortmeyer, Lee Stickells, Maitú Ward and others.

The piece below is not actually 'just about retail', as it touches on distribution patterns, fabrication, local economies and localism, and of course cities—but this is partly as retail is so core to what cities are about. I don't mean that as any kind of paean to consumerism at all; far from it. More a recognition that cities are about exchange, either cultural or commercial (or both), and that the marketplace, and its descendants, has always been a core component as a result.

The article was written with Australia as the focal point, as you'd expect, and many of the specific examples are drawn from that culture, but its general arguments probably apply more widely, and draw from experience elsewhere too.

However, the Australian market is characterised by a few key players who dominate the scene, which makes for a particularly tasty comparison with both independent retailers and online shopping. They include 'self-made men retail characters-types' like Gerry Harvey and Frank Lowy, responsible for dominant consumer electronics stores and malls respectively; and the behemoths of Wesfarmers and Woolworths—aka Coles and Woolies—who exert extraordinary control over the everyday lives of Australians. Watch this short ABC-produced infodesign-heavy movie to see how they have far more influence than, say, Walmart does in the USA. Harvey in particular led an ill-advised campaign essentially against online retail itself—I know—last year, before doing a U-turn.

(I'm also posting this in light of the news that the brilliant bookshopkeeper James Daunt has been appointed to take over Waterstones. Also a conversation earlier today, spiralling out of the fact that we have some Ikea furniture (a bed) in a shipping container somewhere, travelling from Australia to Finland, and the thought occurs that Ikea could replace that physical shipping by simply sending a copy of the bed from the Espoo store, and picking up the old one in Sydney. A form of fabrication possible with their already distributed network of components. And also posting as a marker of enjoying the ongoing discovery of numerous small, independent stores here in Helsinki. That, combined with the fact that Sundays here are largely retail-free, and so you remember the joys of a weekend not engulfed in pervasive shopping, a sensation now alien to much UK or Australian life.)

Spoiler alert: the core argument of this piece, as so often here, more or less comes down to this: 

"Physical experience had better be bloody good if it is to withstand the force of the internet. It now has to have a reason to exist, over and above simply being there by default."

And I write this as a positive and optimistic call-to-arms—as a design challenge, a strategic challenge—for those interested in digital/physical hybrids and systemic change, and from one who believes that the power of physical experience is essentially unrivalled.

Local Rules: The Death (and Rebirth) of Retail'

In around 1999, I think, I bought a Nike fleece top from then-internet shopping sensation Boo.com. It didn’t fit. I sent it back.

Boo.com was perhaps the most famous European victim of the ‘dot-com bubble’ of the late-1990s. The Swedish founders and London-based team burnt around US$190 million of venture capital in just six months, during which time Boo.com spectacularly careered from much-hyped launch to much-analysed receivership in 2000. The site featured Miss Boo, an interactive avatar sales assistant—think Microsoft’s ‘Clippy’ played by Natalie Portman—and rotating 3D views of its designer sportswear.

The site didn’t fit the internet culture—and the available bandwidth—of its time any more than the Nike fleece fitted me, and along with the other dot-com detritus from that first boom, it probably set back the idea of shopping online by several years.

Now, however, surveying the rapidly fragmenting retail landscape in Australia, we can see that Boo.com was maybe just in the wrong place at the wrong time. For one thing, in addition to Boo’s demise the year 2000 also witnessed the rather quieter birth of a similar operation, Net-A-Porter, now hugely successful and recently sold to luxury conglomerate Richemont for around $500m.

If this seems like idle tittle-tattle from the high end of the retail market, the ramifications of all this are actually at the core of how our cities function, and what they are. For various internet-based technologies—not simply online ordering—may be about to completely re-orientate the way that Australians consume. This could potentially help rebuild local economies and radically alter patterns of settlement and occupation of space.

At the very least, the emerging confluence of social media, online retail, smart home delivery networks, and fabrication may deliver services that far outstrip the current retail offer for most Australians; which is, after all, a shopping mall of increasingly homogenous nationally-owned franchises. Yet they may also contribute to local economic resilience, lower carbon footprints, increased social capital and reduced car dependency.

Commerce and exchange remain at the heart of cities, and so at the heart of civilisation itself. After all, the marketplace has traditionally been perhaps the key node within urban networks, providing a centre for exchange and interaction, a public space in which the city’s output and interests became legible, tangible; a place of theatre, innovation, debate, delight. Peter Ackroyd described London’s markets as “a Niagra of voices”, within “a city devoted to consumption in all of its forms”. We would recognise the great Asian cities on the same terms, but this feels a long way from the homogenous, controlled malls and high streets of contemporary Australian city. 

But looking across that landscape and taking stock of the last few months, we have witnessed the demise of the Borders and Angus & Robertson book chains—though probably not solely due to online retail and e-books—as well as an extraordinarily ill-judged campaign, essentially against internet shopping, spearheaded by Gerry Harvey (boss of consumer electronics giant Harvey Norman). The latter only served to highlight both the often enormous savings that customers could make online as well as the comparatively prehistoric approach to online retail taken by many of the major chains in Australia.

For most retail environments in Australia perform poorly in comparison to alternatives worldwide, either in terms of quality of service and experience, or simply price. Stores like Harvey Norman are an odd combination of low quality and high prices—pile it high but don't sell it cheap. Shopping here is often a car-dependent activity, with all that entails (the spread of Wal-mart supercenters has been directly linked to obesity in the US.)

And this is before the terrible twins of peak oil and climate change really start hitting supply chains and price points. The reasons for this are multiple, including the overweening market dominance of Coles and Woolworths (See ABC's 'Hungry Beast' for more on this duopoly), as well as a handful of chains across each sector, combined with the traditional but increasingly erroneous claims about ‘Australia being a small market’ and ‘the tyranny of distance’ both preventing innovation in service. If the wider strategic question is what form of retail is good for the city, few can argue that the current incumbents on Australia’s high streets and malls are doing a good job. 

Online, the situation is just a bad. Simply compare the online stores of a theoretically high-end retailer like David Jones with its UK equivalent John Lewis. Click around. One is good, one is bad. You can tell which is which within a few seconds. One is focused on websites promoting its stores, almost brochureware; the other is genuinely retailing online. And where is the food delivery service to match Ocado? Look at the brilliantly conceived Net-A-Porter iPad app, or its male companion Mr. Porter and then pause to consider Richemont’s stated intention to move into the South-East Asian market, and imagine the shiver running up Frank Lowy’s spine.

But it’s not all bad. In terms of small independent stores, Australia can perform well. Shops like TITLE record store in Sydney or Swensk clothing in Melbourne for instance, seem to be thriving. (Likewise Via Alley, Potential of Hydrogen, Published Art etc. etc.) These stores seem to implicitly understand their local community of interest, and so issues of provenance, craft, identity and service, in ways that national chains simply cannot.

Yet when the dread word ‘disintermediation’ is rolled out, the local stores are placed just as much in the firing line by the likes as Gerry Harvey. As with many utterances and activities from this increasingly anachronistic generation of retailers—see also Lowy—they’re increasingly out of step with the 21st century. Underlying these warning signs on the dashboard, there are assumptions that iTunes kills off record shops, that the Kindle kills bookshops, that social media kills newspapers. But previous patterns don’t indicate this. Most older forms of almost everything meaningful still survive, and experiences and services are rarely purely digital or physical, but increasingly hybrid. The human race is additive rather than subtractive, for better or worse.

What does happen is that superceded forms become smaller, more distributed, localised, both physical and digital. This is what will probably happen to newspapers, for instance, but what would it mean for retail?

A huge opportunity, that’s what.

The local independent store is far more useful, from the point-of-view of urbanists, than the national chain. Research from the US indicates that between 54 and 58 cents of every dollar spent at a locally-owned retailer stays in that local environment, as they tend to employ a local accountant, a local delivery service, local web designer, local graphic designer, advertise in the local paper, and so on. A national store contributes only 15 cents to the local environment for every dollar spent, as they tend to centralise those same functions in order to induce greater efficiency.

Similarly, further recent research—also reported by the New Rules Project—indicates that areas with ‘buy-local’ campaigns have out-performed those without for the last four years running.

So local independents contribute disproportionately to local economies. This is not to say that national chains have no place; simply that they must take on and understand those qualities of provenance, innovation, craft and embeddedness of the local store, and work within, rather than against, local networks.

An example: Thornton’s Budgens is a local North London branch of a national chain of UK supermarkets, where Budgens is the chain and “Thornton” is the name of the manager of that store, Andrew Thornton. This might seem a cutesy nod back to locally-owned stores when it is no such thing, yet Thornton has significant control over how his store works, to the extent that he has brokered deals with other independent stores in the neighbourhood, such as the baker directly opposite, and sells their bread in his store with a clear marker indicating it’s from over the road.

This is good for the baker, who has quite effectively increased the real estate in which their bread can be sold without losing their own store, as well as for Budgens and Thornton. The rest of their store is labelled up accordingly: fish from 30 kilometres away, from this fleet, beef from 25 km, from this farmer, and so on. The economics of the New Rules project research suggest that bread sold solely at the local bakery will not contribute as many pence to the local economy, but agglomeration theory suggests that both stores can co-exist happily, even supportively, producing a greater overall sum. And this embedded local identity means that the area’s DNA is also reinforced with every purchase.

Thornton’s Budgens is now moving into urban agriculture, growing vegetables on its roof which are sold downstairs every Friday, engaging 20 local volunteers as well as the heat from the supermarket in a form of lo-fi symbiosis.

Compared to the previous model—local baker goes out of business; supermarket homogenises and dominates through suppressing local innovation—this is a major step forward, and a slow dissolve of the chain model either way, reinforcing provenance, craft, social capital and localism. The Architecture Association’s Lawrence Barth uses Thornton’s Budgens specifically, as an example of contemporary local innovation economies.

However, this store is in posh Crouch End, and It’s possible to critique the schadenfreude over the demise of Angus and Robertson—some have seen this as privileged inner-urban view, from those who are surrounded by the independent stores of Surry Hills or Carlton or New Farm, whereas outer suburban dwellers only had the Borders and Dymocks of shopping malls as their sole bookstore.

Yet there is little genuine argument there—are we to suggest that suburban residents should simply be thankful for that low quality retail offer in some way? Equally, it is possible to critique the likes of Net-A-Porter, or inner city farmers’ markets, as offering nothing to the broad mass of suburban residents, which is where Australia actually lives. Yet decades ago, fashion in general was solely the preserve of the rich, just as a decade ago organic food was. Fashion has long since become mainstream, organic food or locally-sourced equivalent is also becoming so. 

Moreover, recent natural disasters in Australia and Japan have viscerally demonstrated how brittle the supermarket-based food supply system is, with stores losing all produce within hours, with little chance of predictable re-supply.

So we need to find a way of sustainably re-localising production and distribution either way. Rediscovering a cultural memory for growing food locally is one thing; distributing and buying locally is just as important. Thorton’s Budgens offers but one model; there are numerous others. What they all have in common is their pattern: in the argot of the internet, “small pieces loosely joined”—distributed, localised if not locally-owned and carrying their DNA with them.

And the reality is that the alternate offer from “retail kingpins” Harvey and their ilk is incredibly poor in comparison to either contemporary internet shopping or retail, never mind the possibilities of physical experience in general or of these new models. And it is this that will be found out.

Put simply, physical experience had better be bloody good if it is to withstand the force of the internet. It now has to have a reason to exist, over and above simply being there by default. Books and magazines have had to re-capture what is good about their physical incarnation—and newspapers have to figure this out—as the internet meant they were no longer the default way of shipping editorial or narrative.

Successful ones have done so; others are now simply carried online. This pattern will apply to much retail just as much as it does to media.

Fortunately, the smaller independent retailers are those who find this easiest, being innately resourceful, and in it for the love of it as much as anything. Leaving aside high-value flagships, like the exemplary Apple Stores or OMA’s store for Prada in Manhattan, it is to local independents that we tend to look for experience, difference, quality and innovation.

And these experiences are increasingly digital/physical hybrids, with both online and physical brands used for research, for browsing, for testing, for advice, and for purchasing and for after-sales. In a world where more objects are connected to the internet than people, physical experience is becoming more meaningful, and this applies to the torrents of innovation in retail as much as anywhere.

Perhaps ironically, the impact of the ‘internet of things’ might usher in an entirely new emphasis on sensory design and spatial intelligence.

You visit the physical store for physical experiences—to squeeze the kiwi fruit or poke the beef, to get specialist personalised advice on which of six pairs of jeans fits best, to see a band play live or hear an author speak, to run your fingers over the embossed cover of a Marian Bantjes book. Unless you are of a particular persuasion, you don’t need to squeeze the toilet rolls, or thrust a new kitchen towel to your nose and breathe in …

Much of ‘the weekly shop’ can be handled far better online, meaning it largely ceases to exist. You shop physically for enjoyment, or for quality, on an as-needs basis, and the rest is essentially automated.

Indeed, with delivery via bike or electric vehicle, the impact of displacing this unnecessary time and movement could be enormous, in terms of carbon and oil, road accidents, congestion, air quality, health, time sovereignty, you name it. Local markets and retail strips can offer local delivery services, enabling citizens to travel by public transport, walk or ride, select their produce, and have the goods delivered to their home at their convenience. It's an old model—the grocery boy on the bike—overlaid with a contemporary distributed networks model and interface layer.

(One wonders how supermarkets performed this bait-and-switch in the first place. We once had local networks of fishmongers, butchers, bakers on high streets, with produce delivered on bike by grocery boys. (Or see the prototype Commonwealth Aircraft Corporation ‘Deliverette’ delivery van at the Melbourne Museum.) Now, we have to do the logistics around shopping; drive to the store, carry the heavy bags back to the car, and then sit in traffic driving it all home. How did that happen?)

More profoundly again, fabrication technologies might completely derail existing carbon-hungry and expensive distribution models altogether. If each house has a small fabricator in it, everyday household objects like homewares are produced in situ, on-demand, side-stepping retail altogether. If each street has a a larger fabricator, in the newsagent, say, products like bikes, furniture or components for white goods and consumer electronics can be manufactured in-situ, to designs downloaded locally or globally. Ship the ‘recipe’—the digital file—source the materials locally, and distribution is only over the last few hundred metres. The impact  of ‘local fabbing’ could close the loop first hinted at by the internet’s emphasis on participation, re-distribution and networks. (Note this vision is also resource-heavy in its own way, with an equally complex cost and distribution model; more to consider here.)

How will Gerry Harvey even sleep when he hears about that?

Still, the small, resourceful local store persists. An editorial brand like Monocle is quietly building a global network of tiny but high-performing retail outlets in their key cities, supported by a carefully curated selection bespoke goods sold online. The stores also provide physical networking opportunities for loyal readers, a place for digital networks to become physical. One can easily imagine Net-A-Porter/Mr. Porter popping up a few small stores in Hong Kong, Sydney and Osaka, as physical extensions of its digital brand.

What a purely digital experience can’t do, rather obviously, is physical. And again, cities are about physical exchange as well as digital exchange, and always will be. Facebook has increased and reinforced physical social ties, rather than replacing them. The reality is, in the words of Clay Shirky, that the internet is used as a dashboard for physical activities—for real life—as much as anything. What it does is reallocate patterns of activities, with what Doug Rushkoff calls an inherent bias, rather than replace.

So for lazily undifferentiated chains, the tide is only going one way. Let’s not shed a tear for that. For independents stores with a genuinely distinctive or local offer, the internet offers an extension of their brand, or their footprint, or their experience. Let’s give a cheer for that. For wider strategic concerns, new patterns of local production and distribution may produce resilient, low-carbon, distributed economies. Let’s get behind that in particular.

The journey from Boo.com to Net-A-Porter has taken just over a decade. In that time, Facebook has emerged to lure at least one-third of all Australians into using it, and ITunes alone is responsible for at least 25% of all music sales in the USA. That’s all music sales, in less than seven years. These are transformative forces, far more disruptive than the existing Australian retail industrial complex actually realises, and easily capable of overcoming their intransigence, hegemonic power and lobby groups. The challenge is not to shore up that installed base, but to instead reinforce and direct the potentially positive patterns within internet retail, to work with the grain of this new culture such that it produces resilient local economies and communities, richer patterns of production and consumption, and, as a result, better physical experiences.