Published on November 9th, 2018 | by The GC Team0
Electrical retailers “among hardest hit” by high street store losses
Research published today by PwC reveals that the high streets of Britain suffered “a record net drop” in the number of functioning retail stores in the first half of 2018.
Focusing on “Britain’s top 500 high streets,” and on retail chains with more than five outlets, the research found 2,682 stores closed against 1,589 opened, creating a net loss of 1,123 stores and giving rise to the “high streets losing 14 stores a day” headline that most media outlets are leading with.
Behind that headline is a pattern of large chains with outdated business models and faced with online competition, disproportionate business rates and rent, having to restructure, or go into administration, from where they are “rescued” by predators more interested in asset-stripping than in investing in the construction of a longer-term viable retail model for the future.
Electrical retail, one of the hardest-hit sectors according to the research, has suffered from online competition, but closure figures were most affected by the collapse of Maplin and the consequent loss of 50 stores earlier this year.
Lisa Hooker, consumer markets leader at PwC, comments: “Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures in the second half of the year due to administrations and company voluntary arrangements already announced will further intensify the situation.”
Measures in last month’s Budget promising to cut the business rates bill of half a million small retailers (premises with a rateable value of under £51.000) by a third, and a new tax for online operators, do at least acknowledge some of the inequity that has turned the benefit of a bricks-and-mortar prime high street location into a financial liability. But the BRC has characterised these as “tinkering around the edges” and called for “wholesale reform” of the business rates system.
Ironically, the budget measures may even exacerbate the pressure on chain retailers, giving smaller outlets a rates advantage and increasing the likelihood of the big-store closures that have a severe effect on the character and attraction of high street shopping venues.
A report earlier this year has even produced evidence that, as the chains move deeper into crisis, independents are bucking the overall trend and the number of independent outlets is actually increasing.
Jat Sahi, digital lead retail at Fujitsu, commented on the PwC report: “The various closures and cutbacks that have dogged the high street lately demonstrate how retailers need to rethink their bricks-and-mortar presence in the age of ecommerce. Consumers have become accustomed to the seamless convenience of shopping online, and this latest report underlines how some retailers have been unable to match that experience in-store.
“To thrive in this environment, retailers must be similarly geared towards the long-term. Technology should play a vital role here: step-wise investments now can help retailers operate more efficiently internally with, for example, Internet of Things driven supply chains or digitising store processes. This newfound efficiency can also free up resources for retailers to create customer experiences that are compelling enough to keep the tills ringing – for example, creating immersive experiences using AR and VR across all touchpoints. In this context, it’s alarming that only 50% of retailers have a digital strategy in place to drive this change.”