The Uncertain Future of High Street Retail
High Street stores have always been there when we need them. If you ever need a DVD, video game, greeting card or item of clothing, you could guarantee a successful acquisition when you visit a shop in your local town. However, as decades passed, and technology introduced us to the world of online shopping, the concept of perusing the High Streets became more like a bizarre act. The Telegraph reported that last year, footfall in June dropped by nearly 3% thanks to online purchasing. So what does the future hold for High Street retailers? Is it ‘Everything Must Go’? We look into the various aspects of the industry and what pitfalls and rises surround it.
The High Streets Low Point
The High Street has suffered greatly over the past year. Footfall and vacancy rates are one of the biggest unofficial ways of analysing the overall health of the UK retail sector. In the House of Commons’ retail industry statistics and policy paper, it said that The British Retail Consortium (BRC) publishes a monthly footfall monitor report. The most recent statistics were from April 2015, which showed that the consumer footfall in all locations was down by 0.8% on the same month in 2014. Footfall in High Streets fell by 0.1% and 3.0% in shopping centres. While the national town centre vacancy rate was 10.2%, down from 10.4% in January 2015. There a several big names including Marks & Spencer and New Look which are currently investigating their number and size of stores. While Top Shop and BHS owner Arcadia are just looking into the future of 260 stores that have leases due to expire over the next three years.
Spending on the High Street has seen a steady decrease, with research from BIS reporting that in 2011, 42% was retail spending and was expected to fall 40% in 2014. This is a substantial decline compared to the year 2000 which saw 50%. The causes they stated were pressures on prices exerted by online retailers and large grocery stores, increased costs of business rates and rents. There are also smaller issues that still have an impact such as the price of parking a car and the lack of spaces. The virtual shops are what everyone wants today, but what kind of impact does it have?
Digital Domination
There is no denying that online shopping is a saving grace in the eyes of the 21st Century consumer. For as far back as 2007, online sales in the UK have seen a steady rise. Seasonal periods in particular show peaks in retails sales each year in the months leading to Christmas. Internet sales value as a proportion of total retail sales rose from 2.7% in January 2007 to 12.8% in January 2014. December 2014, £1.1 billion was spent in online shops, which is the first time that more than £1 billion had been spent in a single month online.
The report states that the increase in online sales is due to businesses moving to internet only stores. Online and mail-order businesses in 2008 accounted for 3.4% of the total number of enterprises in the retail industry. If you look at the music and film sector for example, over half of the sales of physical products are already online. HMV, which is the mainstay of High Street entertainment stores, is one of the biggest examples of a struggling retailer, which originally saw itself go into administration back in 2012 before being revived. However, the affect of this saw many stores close their doors permanently.
CBI’s ‘Business Voice’ publication explained the power of the online industry has in the retail market, saying that over a quarter of electricals’ sales are online, with retail strategy consultants, Javelin, suggesting that this could increase by 25% within the next ten years. You will find now that a small amount of people who go into High Street stores are using the newly implemented ‘Click & Collect’ feature.
Black Friday’s Impact
We all love a good bargain. Squeezing our pounds as much as possible is what we all seek to achieve. So when the eagerly anticipated sales hit stores, a herd of shoppers begin their frenzied purchases. Over the past couple of years, the biggest event has been Black Friday. Originally starting in the US back in 1932, Black Friday is seen as the official start to the Christmas season and has become infamous for its extensive bargains. At the end of last year, IMRG and Experian collated the information from the sales and uncovered that both events were huge successes, surpassing their previous records. Black Friday saw £1.1 billion spent which beat 2014’s figure of £810 million substantially.
For the online portion, Black Friday’s success couldn’t be greater, with 270% taking to the digital deals, compared to an average UK shopping day. However, according to retail analyst, Footfall, the High Street saw footfall decrease by over 4%.
In a piece on CITYA.M., director of UK Footfall, Steve Richardson, commented: “There seems to be a real loss of consumer appetite for Black Friday compared to last year. Of course, this could be an indication that people are simply switching their buying behaviours and going online to secure a deal.
“However, the drop in visitors in store can also be attributed to retailers’ changing their Black Friday strategies and extending the promotional event beyond a single day of discounting.”
Footfall’s earliest figures show that traffic instore dropped by 3% across the whole week compared to the previous year. What is the outlook going forward?
The Bleak Future for the High Street
Javelin conducted research and found that in 2020 the internet will influence 75% of clothing, furniture, electricals sales. A staggering 44% increase on the current figures. It continues to say that with the ecommerce taking over, town and shopping centres’ stores will suffer greatly, shrinking by 27%, resulting in 21% less retail space and 31% fewer stores in town centre venues.
The High Street retailer will always be there in some aspect. Perhaps there could be fewer stores and the ones left are only in bigger cities where the mixture of tourism and being well known will always guarantee footfall no matter what. With online however, the possibilities are endless in what you can actually purchase and with the constantly evolving society, it cuts out the middle man. Movehut found that in its database, the biggest city with the most available shops to rent is London.
So what do you think about this revelation? Are you more of a “Make a day of it” mentality or is online the only way forward? Let us know in the comments section below.
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