Women carrying shopping bagsImage copyright
Getty Images

Hardly a month goes by without news of another wave of shops shutting.

So, how many shops have closed recently – and what’s behind the High Street crisis?

What shops are closing?

A record 2,481 shops disappeared from UK High Streets last year – up 40%, according to the accountancy firm PwC and the Local Data Company.

Big chains such as Toys R Us, Maplin and Poundworld went bust and vanished altogether.

Others such as Homebase, Mothercare, Carpetright and New Look did restructuring deals with their landlords, closing hundreds of shops between them.

The number of empty shops stands at a record high.

And in July the proportion of all shops that are empty reached 10.3%, its highest level since January 2015.

This year, the trend has continued, with fashion chains Karen Millen and Coast announcing closures. They have more than 200 outlets and concessions between them.

The fast-growing online fashion chain Boohoo snapped up the brands following their collapse. But Boohoo isn’t interested in owning and running physical stores, so the number of closures will continue to creep up.

Why are shops struggling?

In many ways, retail is a pretty simple business. You have to sell things for more than you paid for them

But in the past few years, things have become a lot harder for traditional retailers.

Image copyright
Getty Images

Image caption

Department stores such as Debenhams have been struggling with soaring costs

Companies have had to deal with rising costs, from wages and business rates to regulatory changes such as the introduction of Europe’s new data law, the General Data Protection Regulation (GDPR).

And, at the same time, retailers are trying to adapt to rapidly changing shopping habits.

Consumers now spend one in every five pounds online – and if businesses are seeing 20% fewer sales on the shop floor as well as their fixed costs rising, then profit margins will be squeezed.

Image caption

Online spending usually peaks around the festive season

This huge shift in spending is disrupting retailers’ business models. Too many retailers either fail or are unable to adapt.

Those with underlying problems have suffered.

Take Debenhams, it’s been struggling for years. Its previous owners had saddled it with a huge amount of debt and it was tied into long leases.

Another department store, House of Fraser, was rescued last year by Mike Ashley’s Sports Direct. He outlined a plan to create the “Harrods of the High Street” and said about 80% of the stores would remain open. But he’s now admitted the business was losing more than £1m a week.

Consumers are spending increasing amounts of their disposable income on experiences and lifestyle. Being mediocre isn’t good enough anymore.

Are there fewer shoppers?

Shoppers are making fewer visits to High Streets.

The retail analytics company Springboard tracks footfall in main towns and cities. It’s seen a decline in numbers for the past few years.

Inclement weather and a reduced appetite for spending by consumers have played a role along the way.

Consumers are still shopping, of course. But even with the rise of online, shops need people to walk through the door.

How many jobs have been lost?

From March 2016 to 2019, UK retail lost 106,000 jobs according to the British Retail Consortium (BRC). Those figures are based on data from the Office for National Statistics.

Poundworld saw the biggest job losses, with more than 5,000 redundancies. Toys R Us and Maplin also lost 5,500 jobs between them.

Image copyright
PA

This year, the fallout from various restructurings includes 1,000 job losses at Sir Philip Green’s Arcadia group and 100 redundancies at the fashion retailer LK Bennett.

More job losses will come. More than two years ago, the BRC warned there would be up to 900,000 fewer jobs in retail over the next decade.

What’s opening instead?

Although last year saw a big drop in store openings overall, there were some bright spots.

Beauty salons, nail bars and independent coffee shops were some categories that saw the largest increases in store openings.

Analysts have said this demonstrates the High Street’s move away from traditional retailing.

Supermarkets Aldi and Lidl are two of the big names also continuing to open lots of stores.

But the overall picture is the UK has too many shops and in the wrong locations. The winners will be the companies that know what their consumers want and give it to them, with great service and products they want to buy.



READ SOURCE

READ  North Sea bosses upbeat but gloom hangs over onshore economy

WHAT YOUR THOUGHTS

Please enter your comment!
Please enter your name here