The UK Retail industry is facing three primary pressures:
• The weakening of UK consumer confidence due to inflation and compressed wages.
• The continuous rise of ecommerce.
• The change in consumer preference.
The high street has always been in a state of flux, evolving to meet the demand of consumers. Trends come and go, and consumer demand is a fickle thing. Some pundits and experts believe that the high street is dying and that within twenty years or so, all shopping will be online.
So does it mean that it is the right time to sell? Or is this just another challenge that the industry can overcome?
True enough, the past few months have been challenging for the retail industry. Many of the more well-known high street names have declared bankruptcy. Some have emerged leaner and fitter, others have disappeared completely.
The best way to understand the situation the retail industry is experiencing is to understand UK consumers. With inflation in creeping up and wages increasing but not near enough to support the essential spend (rent/mortgage, food, clothing, heating etc.) families tend to spend less and less on other items which aren’t essential.
Indeed the retail industry is facing the worst challenge from the rise of ecommerce. When business owners are asked what could possibly save the retail industry now, they only gave one answer – a miracle.
Toys R Us and Maplin plunged into administration which means there are thousands of jobs at risks. New Look declared that it would shut down 60 stores and get rid of 1,000 jobs.
Photo studios, pet grooming centres, toy and bike shops are just a few examples of retail outlets which are facing difficult times.
The British Retail Consortium warned retail owners that sales will continue to be slow throughout the year and this will extremely affect shops and stores that sell non-essentials. Mothercare opted to reconstruct their finances, House of Fraser is considering closing stores and Claire’s have experienced serious cash flow issues.E
Experts agree that the rise of ecommerce is one good reason why the high street retail industry is currently suffering. People now opt to buy more things online more frequently and have their orders delivered to their doorstep.
The fashion industry is one sector that has faced the biggest issues in the past few months. ASOS and Boohoo are dominating the online market offering the latest fashion for men and women, weakening retail stores sales.
Next also reported a slump in revenue due to the weakening of the clothing market due to errors and omission. Next admitted that 2017 has been the most challenging year they have encountered in the past twenty five.
New Look is another company that has experienced a painful fall. They have opened branches across the globe and even located some of them in high-end real estate locations despite the increased business rates in UK.New Look admit that they are facing a fall in sales and revenue and declared that trading is a continuous challenge. They launched a company voluntary arrangement that will help them restructure some of their assets and liabilities.
Aside from retail, restaurants, bars and other eateries also face the same challenge trying to survive. Prezzo declared that they will be shutting down 94 stores putting 500 jobs at risk. This act is necessary especially now that online delivery services such as Deliveroo and Just Eat are becoming increasingly popular.
According to Moore Stephens, there are more than 1,500 restaurant insolvencies and still 15,000 others at risk.
From the data gathered by the accountancy firm UHY, the UK’s best 100 restaurants are now in the red.
So is this really the end of UK high street?
Philip Benton from Euromonitor is not convinced. He believes the high street is not actually dead; it is merely going through a reinvention to adapt to modern consumer demand. He is not denying the fact that online shopping is increasing, but most of the purchases are still carried at stores since customers are not only into the product but also they are looking at the overall shopping experience.
Understanding customer preference and habits is one way to keep the high street alive. If retail stores can match the demands of their customers then there is certainly no reason for them to close. The only time that a store is inefficient is if it not used properly. To declare that the high street is dead is not true; it is just reinventing and evolving.
Also seeking advice from experts is one way to understand the current situation. Whether it has something to do with business rates reevaluation or creating a new plan to better your business, asking for assistance is the best way to go. Gerald Eve can help you understand the market better and help you find the best solution for your business needs.
We must accept the possibility that banks, cinemas, post offices, fashion boutiques and travel agencies will experience continuous decline as more of us look for an online solution. However, other businesses such as coffee shops, salons and convenience stores are expected to grow in numbers and help sustain the high street.
If we can create a business centre where customers can immediately buy what they want and what they need, then expect higher income to be generated. Accept change and shy away from the traditional high street. Embrace the transformation and you will see that businesses (and the high street) will flourish over the coming years.
We are following trends on investor appetite in the high street. If you’re interested in commercial property in London, our specialist sectors include offices, industrial, retail and leisure. Contact us today to discuss further.