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Member blog: Shoppers on UK high streets fall by 10%: what can that mean for our towns?

 

I would like to begin by referring back to an article in The Guardian published last October.

The headline is a little misleading perhaps, since the journalist then adds that this was a figure spread over seven years, but it does indeed represent a decline. The question is why? The feature based on a British Retail Consortium/Springboard report speaks about weather and Brexit being two important factors affecting trade.

It is likely that concerns about Brexit were then – and still are – impacting seriously on people’s willingness to spend money. Uncertainty about the economy usually has that kind of depressing effect on retailers’ revenue streams. The weather? No! Any retail sales director will tell you that you can only use that excuse once, and September’s weather was not too bad, despite a short period of heavy rainfall.

The footfall data showed a drop of 1.7% in September and a 1.6% drop on the quarter, year on year. The article included the statement: “Bricks and mortar retailers have continued to struggle as consumers shift towards online shopping. The rising costs of running physical stores, including rent, wages and business rates puts additional pressure on retailers”.

Some bricks and mortar retailers have had a tough time, but then so have some online players. On the other hand, some other businesses have been reporting great results. Does that suggest that the problem is less about external effects but rather more about internal ones?

The article goes on to say: “A report released last month showed the number of shops, pubs and restaurants lying empty is rising at the fastest pace in nearly a decade. Debenhams and Marks & Spencer are among a number of major high street names to have announced store closure plans”.

My own experiences with my consultancy business are that the firms who are struggling most often have only themselves to blame. After all, based on recent annual reports some stores are significantly improving their sales revenues and profits despite the doom and gloom.

What particularly interested me though was the culmination of this article. It described how it is that shopping centres fared the worst with a 3.2% reduction in footfall. The more traditional high street saw a reduction of 1.8%, which is a considerable difference. Retail parks saw a slight increase in footfall at +0.1%. How do these figures square with the problem of the weather (the indoor centres fared worst!)?

If Brexit uncertainty has been a stultifying factor for business would they not show results more consistent with the normal patterns of growth/decline based on the different routes to market? They suggest to me that the physical trading environment is actually a much more important driver than the report’s narration explains.

It seems to me that the underlying motivations about how and why people chose particular retail destinations is still not adequately understood. If it was simply that the internet was killing of the bricks and mortar competitors, then I would have expected the decline to be much faster and stronger than it has been. You would not expect online pure players to be contemplating a ‘bricks and mortar’ presence which several are.

In what direction are we travelling? In France, excepting the largest towns, the areas in which I have worked no longer have a town centre retail offer except perhaps for a boulangerie. The retail parks are everywhere and are often small and fragmented, and like in the UK, some are now suffering because of the number of voids. One of my stores was the last one on the park! Hardly the best thing for capturing passing trade or encouraging window shoppers.

Germany, by contrast, has retained a high proportion of its retail offer in traditional town centres, and they are well used. They too have the internet but shops trade on regardless. They have also retained the other elements of a traditional town beyond just retailing. A balance of retailing, public meeting space, important community hubs – how many British towns have seen the local council move its headquarters out of the centre? There is no separation of function in German towns like we have increasingly witnessed in the UK: no set area for retail, another for civic functions and another for theatre or entertainment with a residential quarter somewhere down the road.

In other words, the towns in Germany have been allowed to evolve rather than being over-planned. The Netherlands too has an experience not dissimilar to Germany. If you want to go shopping, you go into town. Equally, if you want to undertake any other kind of community or non-retail activity then the town centre is the best place to be. I wonder if there are lessons to be learned here?

Next week I will be publishing some further reflections on The Changing High Street. I would welcome your feedback.

John Orchard is a Member of the Institute of Economic Development, and Managing Director of Welbeck Retail Management Ltd

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