It’s gloomy news for the high street as figures compiled by the Local Data Company (LDC) show the occupation rates in shops, pubs and restaurants have dipped in the first six months of the year, prompting retailers to call for ‘decisive action’ from the government to help rebuild confidence in cities and towns across the UK.
The statistics make stark reading: across the 3,000 locations monitored by the LDC, closures increased by nearly 17 percent, while the number of new openings fell by just over 2 percent in the same period. The net result is that a further 4,000-odd gaps have opened up on the high street.
As you might expect, some sectors have been hit harder than others. Pubs marked a 6.5 percent decline, mainly because of a toxic combination of reduced income – due to less footfall – and stubbornly high operating costs. In retail, it’s been electrical goods stores, fashion shops and estate agents that have been feeling the pinch, largely as a result of big rises in internet shopping.
Even big brands are struggling in difficult trading conditions
It’s not just small operators who are folding, either. In fact, it’s the larger retail groups – with multiple outlets – that are under the greatest pressure: 2,500 such stores closed down in the first six months of 2018. Stores that once appeared invincible, like House of Fraser, have already collapsed into administration, while a number of others – including Mothercare and Homebase – are teetering on the brink.
A troika of challenges – rising costs, reduced spending and changing consumer habits – has caused a rapid escalation in the threats facing high street retailers. Just a week or two ago, we looked at the demise of the city-centre department store; its existential crisis is the result of similar shifts in spending and shopping patterns, as consumers spend more cash on experience-based activities and less on acquiring goods.
Obviously, there’s a conversation to be had about he role of town centres in the future. What will happen if vacancies persist and the shoppers disappear into thin air? Most industry groups feel that government should be doing more to stop the rot. Retailers’ profit margins are not only being scotched by customers whose ability to spend has been hampered by the lack of wage growth in recent years but are being relentlessly squeezed by eye-watering business rates and rising import costs. It’s a perfect storm for retailers already at crisis point.
Some stores – and high streets – are bucking the trend, though
The LDC figures did contain some good news. Those businesses whose services can’t be easily replicated online or in out-of-town locations are still buoyant. The barbers, beauty salons and coffee shops that are staples of the high street have actually seen their numbers rise over the period.
Other successes include Primark, which has seen growth, rather than contraction, and continues to do brisk business. Its business model is much more agile than many of its competitors, providing customers with exactly what they want: fast-moving, seasonal lines that change frequently and offer superb value for money.
It’s remarkable that a company without an ecommerce offering can survive and thrive in a digital age. But the chain uses its digital reach to engage with customers on a more intimate level, capturing loyal customers without big advertising campaigns. There are probably lessons to be learned here by other businesses looking to emulate their success.
What does the future hold?
It’s likely that the high street won’t ever be the beast it was. But that doesn’t mean it’s dead in the water, rather that business owners and investors will have to look for fresh ways to entice the public back into town centres. For example, the new interest in wellbeing which has seen people cut their alcohol consumption and look to improve their diet through vegetarian and vegan options may well have hastened the decline in traditional pubs, but it’s also traced a corresponding rise in gyms, health clubs and health-oriented eateries.
The ability to respond to innovation and emerging trends will continue to be important. Engaging with and satisfying customers is also key – customers can drive creativity, helping brands to move forward, as long as business owners listen and are prepared to take positive action. In last month’s budget, Philip Hammond pledged business rates relief to small retailers and promised a planning consultation that may see some of the UK’s 50,000 empty shops granted a change of use. The high street may yet enjoy a renaissance but it will require vision and commitment from government and business owners alike.
Posted on November 20, 2018 | High Street