Figures from the Office for National Statistics, published this weekend by the Observer, reveal that 85,000 jobs have been lost from the UK’s high streets in the first three quarters of this year.
The data seen by the paper also showed that almost 1,000 retail businesses – including major employers such as Poundworld, House of Fraser and Evans Cycles, as well as smaller traders – went into administration between January and September.
An additional 26 big-name high street outlets, including Homebase and restaurant chains Jamie’s Italian and Prezzo, have entered into Company Voluntary Arrangements (CVAs) in 2018. This insolvency procedure allows embattled businesses to pay their creditors over a fixed term while closing sites and paying reduced rents for remaining units.
There are a number of factors that have combined to create the current high street closures crisis. Among them are the growth in online shopping and increases in business rates and the legal minimum wage. Following last year’s revaluation, the average business rates bill for a department store in England and Wales increased by 26.6% to £717,952.
Meanwhile, consumers are restricting their spending due to minimal real wage growth and uncertainty surrounding the outcome of Brexit. It’s a perfect storm that many retailers are struggling to weather.
What can be done?
According to Chris Horner, a licensed insolvency practitioner with insolvency specialists Business Rescue Expert, the high street’s woes are partly the result of overexpansion by large brands.
“The main thing to notice is that antiquated brands such as BHS, House of Fraser and Debenhams, are suffering the hardest,” Horner says. “These brands have not evolved with the modern market and internet consumerism.”
Horner believes that now is the perfect time for SMEs to hone their unique value propositions and create distinctive customer experiences so they can step in to take the place of fallen giants.
“The growth areas in the high street appear to be from discount chains and small independent retailers with a unique offering,” he adds. “These retailers can push themselves through social media for cheap online advertising and offer products which are not found in bulk on the likes of Amazon.”
Carl Reader, the chairman of business advisory firm D&T, believes that the government and landlords have their part to play in reviving the high street.
“It’s not too late to save the high street at all, provided that the retailers and the authorities work together to create an environment for the high street to survive,” Reader says. “The burden of non-domestic rates and planning restrictions make it hard for new and independent businesses to flourish, whilst the pension funds that own large swathes of retail property are happier to leave empty units rather than charge a realistic rent.”
However, Reader also admits that the high street may have to change its appearance in order to appeal to modern consumers.
“Showrooming is a perfect example of how the High Street could look in the future,” he says. “By demonstrating products, manufacturers can provide the tangible retail experience without necessarily holding stock. Tesla, and to a lesser example Apple, are great examples of this.”
With 14 high street stores closing each day in the UK, it’s imperative that restaurants and retailers figure out how to lure customers out of their homes and back into their local communities.
Read more about the crisis on the high street:
- High streets retailers must not join Amazon in a race to the bottom on Black Friday 2018
- 1 in 5 high street retailers are cutting their workforce in the run up to Christmas
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