Britain’s crisis-hit retailers suffered a dramatic fall in shopper numbers in the last three months as consumers continued to opt to visit out of town retail parks, or to shop online.
According to the latest footfall data, the scorching hot bank holiday weekend failed to halt the decline in people entering high street stores, leading to a 1.9% drop last month compared with a year ago.
Over the last three months, high street retailers recorded a fall in shopper numbers of 3.1%, according to retail data company Springboard, which revealed the number of people visiting retail parks rose by 1% last month.
The figures will not make happy reading for store managers following a torrid year that has forced the sector to discuss whether it faces an existential crisis.
Multiple chains such as Poundworld, Maplin, Toys R Us and Multiyork have all entered administration. New Look, Carpetright, Mothercare and Debenhams have been forced to seek legal agreements with their landlords to shut stores and slash their rent bills. Arcadia, the owner of Topshop and other fashion brands, faces an uncertain future.
What’s the problem?
Physical retailers have been hit by a combination of changing habits, unseasonably warm weather, rising costs and broader economic problems. In 2018 Toys R Us, Maplin and Poundworld disappeared as a result.
In terms of habits, shoppers are switching to buying online. The likes of Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores.
At the same time, there is a move away from buying ‘stuff’ as more people live in smaller homes and rent rather than buy. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence.
What help do retailers need?
Retailers with a high-street presence want the government to change business rates. They also want more political certainty as the potential for a no deal Brexit means some are not only incurring additional costs for stockpiling goods but are unsure about the impact of tariffs after October 2019. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges which they say put off shoppers.
What is the government doing?
In the October 2018 budget the government announced some relief on business rates for independent shopkeepers. It has also set up a £675m ‘future high streets’ fund under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.
What is the outlook in 2019?
Some retailers could go under. Weakened by a difficult Christmas – which accounts for the entire annual profits of many retailers, and with further Brexit wobbles to come – retailers are facing a tough 2019. Another rise in the national minimum wage in April and the falling value of the pound against the dollar, which is used to buy goods in the far east, have also added to costs and hit profits.
Marks & Spencer is also in the process of closing 100 shops by 2022 – further adding to the sense of despair on the high street.
Springboard said shopping centres are particularly struggling to attract people through their doors, as the stores try to compete with the inexorable rise in online buying. Shopping centre footfall declined by 2.2% in August compared with a year ago, it said.
Helen Dickinson, who leads the British Retail Consortium, said the figures reflect how cautious consumers are holding back on discretionary spending and not heading out to the shops.
“Only retail parks, with their combination of activities and shopping, were able to buck the trend, and there is little sign that the stresses on retail will abate any time soon,” she said.
“Stuck between weak demand thanks to Brexit uncertainty, and rising costs resulting from business rates and other public policy costs, many retailers are clearly struggling. The government should take the opportunity to reduce the heavy cost burden holding back retail investment.”
Diane Wehrle, Springboard’s insights director, said the August figures were actually bolstered by the hottest August bank holiday on record which brought shoppers into stores.
“Footfall has declined in every year since Springboard started publishing its national data in January 2009. In contrast to the high street, footfall in retail parks rose in each of the first three weeks, averaging +1%, levelling off in the last week but remaining in positive territory.
“This demonstrates their ongoing attractiveness to shoppers as they continue to bridge the convenience-experience gap, necessary in today’s retail environment.”
In May, the Guardian reported that the number of shops lying empty soared by more than 7,500 in 2018. A fast rise in the number of new barbers, beauty salons, vaping stores, cafes and restaurants or bars, was more than offset by the closure of hundreds of banks, pubs, estate agents and fashion retailers.
These latest figures will also do little to ease the concerns of Britain’s convenience store owners, who have warned that the disruption of a no-deal Brexit could push many owners who are already working 70 hours a week over the edge.
Association of Convenience Stores chief executive James Lowman said his members, who employ more than 400,000 shop staff, would be significantly affected following a no-deal Brexit.
He said: “Convenience stores have a unique reach into every community, so it’s absolutely essential that the regular delivery and supply of products to our sector is maintained in the event of disruption as a result of no deal, especially for isolated communities where their local shop is the only place for people to get everyday groceries for miles around.”