What has happened to the high-street?
This year the proverbial fan was hit in terms of the retail sector and especially in terms of section of that sector that comes under the term 'the high-street'. Several big hitters fell away, with Toys R Us, House of Fraser, Debenhams and New Look all either going into administration or seemingly on the brink of doing just that. Nearly 6,000 shops closed in 2017 more than any year since 2010, and shop openings were also worryingly reduced year on year. So why is this happening, and what can be done, if anything, to reverse this trend?
The first thing to take into consideration when looking at the plight of the retail sector is the decline in real wages. People just don't have as much money to spend and instinctively they protect what they view as essential. Fashion retail for most falls fairly low down on this list and is therefore this sector of the industry sees drastic falls in their sales as a result of consumers tightening their financial belts. This issue is compounded by the looming beast of Brexit. The fall in the value of the pound has seen a rise in food price inflation, further pulling consumer's wages into essentials such as food and adding to the woes of the fashion retailer as a result.
Large food retailers, however, are not totally high and dry, with brands such as Marks and Spencer recording a sharp reduction in profits. Consumers are now far more aware of the food they are buying and the health and environmental implications of their purchase. This has led to a culture of buying local and often at independent vendors rather than rarer and larger shops at supermarkets. Therefore, the large superstores, especially, are beginning to struggle.
Rocketing business rates have also seen large retailers struggle in town centres. This has also combined with reductions in footfall. Due in turn to the advent of online retailers such as Amazon, Boohoo and ASOS, with 20% of fashion revenue coming from online sources. This has seen further shop closures, especially in the form of large department stores. Traditionally this is the hardest retail space to re-sell and this trend has continued with no changes currently in sight. Many large spaces have either had to be converted into segments with a large number of brands under one roof or change their purpose entirely into venues such as cinemas. Many of the large spaces, if they have survived as one large retail space, have been taken by cut price brands such as Primark and Sports Direct. Brands that can sell the volume of stock to survive in the current climate, though this status quo might be jeopardy with the recent administration of Pound World.
It is these changes, however, that might help to save the high-street from its current slow demise. Retailers adapting their space for other uses such as cinemas or other activity centres mirrors the move away from a material centric consumer to one more concerned with the experiences related to activities with friends. The breaking up of larger stores has also allowed for innovation, as a rise in the number of short leases being granted has increased the number of independent pop ups opening up. This can give the consumer more choice and most importantly often a choice that they couldn't get online. That in essence is the key for retailers. In order to draw people onto the high-street they need to offer something that they could not get on the internet. Shoppers can buy big brands online, they can order their food to be delivered. They cannot however, buy experiences with their friends or family and often they cannot or it is more difficult to buy from independent retailers online. It is these kind of shops, therefore, that look set to flourish in the future.