10 July 2018
Retailers under pressure
In my blog of 26 March I examined some of the reasons for the current dramatic rate of business failures among our High Street retailers. Since then there has been more bad news. House of Fraser has announced the closure of 31 of its 59 stores, Poundworld has entered administration, threatening the closure of 335 shops, and even Marks & Spencer has signalled the closure of more than 12% of its outlets. Statistics published by the Local Data Company confirm that 2017 saw a net loss of 1,772 retail premises, the largest number since the recession.
March 2018 was a particularly bad month, probably exacerbated by exceptionally poor weather. Footfall was down 6% on the previous March; clothing sales were down 20%. By April the share of retailing that had moved online had reached 17.3%.
Not all bad news
Provisional data on total retail sales for May 2018 published on 14 June by the Office for National Statistics show that things are perhaps not quite as bad as they appeared. Retailers’ feedback attributed better spending on food and household goods to the ‘feel good’ factor generated by good weather and the royal wedding. This doesn’t factor in the recent World Cup success. Whereas growth in all retail sales had been only 1.4% in April, it reached 3.9% in May. But these data apply to the whole of the retail sector, not specifically in-store purchases. Online spending for department and clothing stores achieved new records: the percentages of retailing online in May were 17.4% for department stores and 17.6% for clothing. So the trend away from in-store to on-line continues unabated.
A long-term trend
The decline of the High Street pre-dates the internet by 20 years or more. In the 1980s developers were encouraged to build vast out-of-town shopping malls with free parking and relatively low business rates. The major supermarkets followed, although the bubble burst in 2011 when Tesco closed 43 stores and abandoned 49 other projects. There has however been no reprieve for High Street retailers, who have suffered further from increased city-centre parking fees, the imposition of the national living wage, and rising business rates.
The outlook is better
Paradoxically High Street vacancies are at their lowest for ten years. The reason is that the High Street is at last reinventing itself. There has been a realisation that the term High Street is not of necessity synonymous with retail stores. In order to succeed local retailers have to provide services that cannot be supplied by Amazon. At the present time, for example, technology has not advanced to the extent that you can buy a haircut on-line! Outlets that can now be found occupying premises of former retail stores include gyms and crazy golf – the crazy golf business, Swingers, now has premises in many town centres. Trampoline parks are also a new high-street phenomenon and there are now 120 of them situated in premises formerly occupied by retail brands. Another newcomer is the Italian style gelateria or up-market ice-cream parlour.
Perhaps most surprising is the return of the bookseller. There has been an upsurge in the number of boutique bookshops, but even more remarkable has been the resurgence of Waterstones since it was taken over two years ago. It is not long since the book trade was Amazon’s first victim and had been given up for dead. Waterstones reinvented itself as a book-buying ‘experience’ and has now become profitable again. Interestingly Amazon have now started to establish a chain of bookstores across the USA!
The High Street of the future will continue to be a place where people meet and mingle, but it will look rather different. It will be a mixture of residential, retail and entertainment. This change needs to be encouraged if we are to avoid our town centres becoming dirty and dilapidated. A good start would be a fairer business rates system that puts town-centre retailers on an equal footing with out-of-town stores and internet warehouses. Local Councils also need Government help to buy up and convert unoccupied retail premises.
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