Is Britain still a nation of shopkeepers? For the third year in a row, we have seen a plethora of shop closures after a challenging Christmas. The closures reflect how difficult everyday Britons are finding it to cope with falling living standards and declining real spending power. But they also reflect the reality of weak retailers, changing markets - particularly the rise of multi-channel - and possibly less forbearance from the banks.
Furthermore, they make life even more challenging for beleaguered town and city centres. Voids are said to be circa 14% at the moment but the average masks the polarisation in centre performances. Key retail magnets - London’s West End, Westfield Stratford and Liverpool One - have gained market share. Such gains, alongside material differences in discretionary spending capability for households in the South East of England versus the rest of the country, mean many other centres in the North and West have seen their high streets decimated.
“If local authorities bleed retailers too hard they will have no rates”
The town centres of East Lancashire, South Yorkshire, Strathclyde and much of Northern Ireland have become deserts. Charity shops, c-stores, value outlets and betting shop openings do not compensate. So what is to be done?
Clearly an increase in spending power would help bolster retailers’ survival rates. But an uplift is not anticipated any time soon, which brings us, therefore, to the supply side.
The laws of economics may work their magic but we sense nudges are necessary. Many retail rents are simply too high, and the tenures of leases too long and unwieldy. To keep regulators out of the equation, rents need to fall and terms need to become more flexible. Additionally, ahead of the major April hike in business rates, local authorities need to get real and realise that if they bleed retailers too hard they will have no rates.
Britain does remain a nation of shopkeepers, among the most innovative and talented in the world hence a global leading e-commerce penetration. However, our retailers are not magicians and those influencing production should perhaps think when retail dilapidation is the subject of debate.
Dr Clive Black is head of research at Shore Capital Stockbrokers