Barriers to New Entrants - 25 'vital and viable' priorities

Research from the Institute of Place Management at Manchester Metropolitan University has identified the Top 25 priorities that can influence high street vitality and viability. This resource introduces the 'Barriers to New Entrants' priority - why it matters, and what you can do about it.

Date added 24 September 2020
Last updated 24 September 2020

What are the 25 vital and viable priorities?

Research from the Institute of Place Management at Manchester Metropolitan University has identified the Top 25 priorities that can influence high street vitality and viability.

The framework was created by experts from a range of disciplines and other stakeholders to foster cross-disciplinary knowledge and broadening real-world understanding of the changing nature of the high street.

The 25 priorities are practically orientated and, given their ability to be controlled or influenced at a town level, are fairly internally focussed. For each of the priorities you will find an introduction to evidence that describes the priority, suggests what it covers, discusses how it might be implemented and the level of control associated with it.

Additionally, you will find suggestions of what the priority could mean for implementation during the COVID-19 recovery stage.

Barriers to Entry

Factors included in Barriers to Entry

Barriers to entry; Landlords

Ranking

Adaptability

Rank

Score

Descriptor

Influence

6th out of 25

4.22 out of 5

Very Influential

Control

23rd out of 25

2.95 out of 4

More difficult to control

25 Priorities

19th out of 25

12.39

High priority

 

Description/Definition

In pure economic terms, barriers to entry refer to the obstacles and fixed costs that new businesses or start-ups need to incur in order to enter a new market or industry. In the context of the high street, barriers to entry also refer to hindrances that are associated with the profile and characteristics of the location (land prices, rents, vacancy rates, whether there is ground for development, absence/presence of competitors, land uses, commercial lease agreements) and the macro-environment (business rates, taxes, the presence of alternative trading channels such as internet retail).

Why does it matter? (Influence)

According to Schivardi and Viviano (2011), entry barriers for new businesses are significantly affecting the local economic conditions and productivity in places. For example, in places where restrictions to large supermarkets and superstores have been lifted and competition has indeed increased to the detriment of small retailers, local councils have struggled to regulate retail trade activity. At the meso level, Town Centre First policies have been introduced to impose additional barriers to large retailers, supposedly protecting local independents by reducing the number of stores on the location. However, such measures have led to the micromanagement of store locations, thus putting additional planning barriers that have impacted the location’s productivity and appeal (Cheshire et al., 2015). Overall, entry barriers can exert a strong influence on performance for established businesses, as they can increase their profit margins while reducing productivity and efficiency at the detriment of the consumer (higher prices) (Schivardi and Viviano, 2011).

However, considering the rapid expansion of online trading, having high entry barriers may be very detrimental to the vitality and viability of the high street, as it can affect the attractiveness of the location and lead to unstable employment (Warren, 2014) and a non-functioning trading environment. Essentially, lack of prohibitive barriers to entry can give the possibility for small independents and specialist retailers to enter the high street easily, and the entry and exit rates of stores will then be mostly subject to the demand for such stores (Wrigley et al., 2009).

What can you do about it? (Control)

It is important for councils and place management bodies to try to eliminate as many barriers as possible (e.g. enhancing activity hours and trading hours, renegotiate land uses, identify property owners), as well as provide guidance, create business education initiatives, and offer affordable business premises for start-ups in order to encourage the entry of new and diverse businesses in the high street (Coca Stefaniak et al., 2005). On top of that, other forms of trading, such as markets and pop-ups can offer easy access to space for small or new businesses (Hallsworth et al., 2015), and are excellent business incubators, nurturing retail innovation and diversification (Grimsey et al., 2020).

It is tougher to control barriers such as business rates and other property taxes that favour starting up a business by only online trading, even though many authorities and various reports are calling for levelling the playing field on that front. Additionally, landlords are a key stakeholder group that is difficult to control, but it is essential to engage with local landlords in order to adapt policies and offer them incentives to diversify in an attempt to reshape high streets and town centres. Ultimately, a place that is open, diverse and possesses low entry barriers is not only attracting new businesses, but also people from a wide range of backgrounds that can boost it with their talents and creativity (Florida, 2003).

Barriers to New Entrants and COVID-19

The COVID-19 pandemic is a clear barrier to entry that prevents new businesses establishing. In the crisis phase, it was important to start to assess how many businesses may not be coming back to the high street, as attracting new businesses and addressing vacancy is important. Place managers will also need to work with local commercial property agents and the local authority to start or update a register of known landlords and involve them in the development of a vision for the high street, as well as working with business support organisations, local colleges and others to develop simple guidance, to taking space and access, to where to find space.

These attempts can be enhanced with the use of data dashboards that monitor vacant space and property values in order to benchmark your high street against comparable places. Place managers will need to look at gaps in the offer that may be appearing and publish these as ideas for new businesses. In the transformation stage, relationships with landlords and their agents will have developed to ensure vacancy is short lived, and a system is developed to indicate longer term prospects for available premises. Having a pipeline of good business ideas is also important, and something that can be forged by successful collaborations between universities, colleges, market operators, and artists. The use of crowd-funding platforms and regular seed funding initiatives between these organisations can also develop a network of premises that is available in the short term for new businesses. Finally, a network of local mentors will be identified to help develop civic and business skills in young and unemployed people.

See also

Diversity; Functionality; Innovation; Merchandise; Place Management

References

Coca-Stefaniak A, Hallsworth AG, Parker C, et al. (2005) Decline in the British small shop independent retail sector: exploring European parallels. Journal of Retailing and Consumer Services 12(5). pp 357–371.

Cheshire PC, Hilber CAL & Kaplanis I (2015) Land use regulation and productivity—land matters: evidence from a UK supermarket chain. Journal of Economic Geography 15(1), pp 43–73.

Florida R (2003) Cities and the creative class. City and Community 2(1), pp. 3-19.

Grimsey B, Perrior K, Trevalyan R, Hood N, et al (2020) Grimsey review: Build back better: Covid-19 supplement for town centres. Available at: http://www.vanishinghighstreet.com/wp-content/uploads/2020/06/Grimsey-Covid-19-Supplement-June-2020.pdf

Hallsworth A, Ntounis N, Parker C, et al. (2015) Markets Matter: Reviewing the Evidence and Detecting the Market Effect. Manchester. Available at: https://www.placemanagement.org/media/19883/markets-matter-final.pdf

Schivardi F. & Viviano E. (2011) Entry barriers in retail trade. Economic Journal, 121, pp. 145–170.

Warren S (2014) ‘I want this place to thrive’: volunteering, co-production and creative labour. Area 46(3), pp. 278–284.

Wrigley N, Branson J, Murdock A, et al. (2009) Extending the Competition Commission’s findings on entry and exit of small stores in British high streets: implications for competition and planning policy. Environment and Planning A 41(9), pp. 2063–2085.

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