Business Debtline Service - June 2018
Can we prevent the death of our high streets?
There has been a prominent shift in how consumers spend their money, with the high street experiencing ever decreasing footfall whilst in contrast online retailers enjoy phenomenal growth. Consumers themselves are being faced with declining real wages, record levels of debt and higher costs of living. These combined circumstances are shaping how high streets will look in years to come, and this threatens the traditional major retailers.
The worst hit retail sector is clothing, with over 20% of all UK sales now online. Convenience is king. People no longer want the hassle of having to go into town or shops which can add cost and time to your purchase. Eating in instead of eating out by using delivery services and apps are a further example of money that previously would have been spent on the high street. These rapid changes in habits are creating large global internet corporations like Amazon, and in the process killing of our traditional high street retailers as physical space become redundant.
The last few years has already seen some major names disappear: BHS, Toys R Us, Maplin, and most recently Poundworld. Mothercare and New Look are struggling and have been for some time. Recently, House of Fraser, M&S and Debenhams all announced falling profits and have had to restructure by closing shops and introducing cutbacks.
Town centres are particularly vulnerable, with business rates increasing rapidly as councils look to replace the income from empty stores, wages increasing as national minimum wages continuing to rise, car parking being a major issue in most towns with parking costs exponentially increasing and the growth of out of town retail outlets that offer free parking. This movement of retailers from small, town centre stores to larger out of town outlet stores with larger pulling power is an indication that the smaller stores can no longer compete.
So what can the high street do to survive? Well the demise of the larger retailers may free up space for smaller, independent operators. Shopping centres and landlords may have to offer pop-up opportunities, shorter leases and market style events to cater for those who are looking for something different and more authentic. Retailers need to offer more of an experience to consumers to entice them to visit.
New retailers are also emerging: vape shops and other niche shops that specialise in one particular item are becoming more common. These types of stores need smaller units, so larger stores could be split into smaller units to accommodate. Councils need to address the car parking problem to ensure there is adequate facilities at lower or free rates. Retailers also need to understand their market and be creative, to think on their feet and see what their customers want.
However, more importantly councils, landlords and retailers will have to collaborate together. Some of these will have to make sacrifices in the short term to secure our high streets for the future. The old proverb is “when the going gets tough, the tough go shopping”, well things have never been tougher and people are still shopping, just not on the high street and its time this was addressed.
Advice NI’s Business Debt Service is available on 0800 0838 018 and is open 9am to 5pm, Monday to Friday or you can email email@example.com. You can also visit our website to access factsheets and further advice at: www.adviceni.net.