5 Reasons Behind The Decline of the UK High Street
Vacant units and boarded-up shop fronts; vape stores and betting outlets rubbing shoulders with bric-a-brac emporiums and struggling independents. Sound familiar? This grisly scene is one many shoppers will be familiar with across the UK; our high streets are deep in the midst of a much publicised decline.
High street shopping has long been a British pastime but a perfect storm created by an age of austerity, the continued preference for online shopping, crippling rents and business rates have all taken their toll on a once vibrant sector of British life.
The financial squeeze has been far reaching. Both big chains and independent retailers have fallen foul in recent years. The decline of the high street has become an all too common news story. Once infallible giants like BHS, Maplin, and Toys R’ Us have fallen by the wayside. Others, such as Mothercare, New Look and the restaurant chains Byron Burger and Prezzo teeter on the brink and have resorted to vastly reducing the number of outlets in their high street portfolio, leading to job losses. Indeed, it is estimated that more than 50,000 have lost their job in the retail sector in 2018.
British shopping habits are increasingly moving online. The transition appears irreversible. In August of 2018, the proportion of online retail spending made for a record-breaking 18.2%.
Local councils and BID teams across the UK are endeavouring to stem the tide of decline, but in order to alleviate the symptoms, it’s worth looking deeper into some of the causes behind the ailing health of the UK’s high streets.
1. Online Shopping Grows Unabated
The proliferation of online shopping has continued unabated since the turn of the last decade. According to ONC, non-food related online sales accounted for around 20% of total sales in the summer months of 2018.
Being able to browse an extensive catalogue of items from the comfort of your own sofa is an attractive prospect for the British lover of efficiency. The ability to order anything, from a new pair of jeans to a brand-new sofa, is certainly more convenient than the journey to the shops.
Some have argued that many businesses have been left behind during the transition to online markets. Online fashion retailers such as Asos have come to dominate the market in recent years. The firm enjoyed double digit sales growths for the third year running in 2018, taking in a mighty £2.42bn.
Some small businesses have been slow on the uptake regarding online sales in comparison, with reports suggesting that as many as 500,000 SMEs across the country have insufficient online presence or access. In an age where anything can be found in just a few clicks, a lack of online presence can be a death knell for already struggling businesses.
2. Rising Business Rates and Inflation
Increasing business rates have contributed to the struggles of high street stores. In April 2018, rises in rates and the National Living Wage hiked the strain on businesses for the second year running. Though none would disagree that improvements to staff earnings are a good thing, many small businesses have found it difficult to offset the rise in light of low profits. The total bill of business hikes is expected to top £728m by April 2019. A government estimate for 2018 predicted almost half a million UK stores would see an increase in their business rates over the course of the past year. A perfect storm when considered alongside poor profit margins.
Meanwhile, inflation growth remains slow, with the surging cost of merely keeping the doors open far outweighing any inflation gains. Some have argued that business rates have been used as an excuse by struggling businesses to hold their landlords to ransom in order to stay open.
3. Declining Real Wages and Stagnant Growth
It isn’t only business owners who have struggled with financials. Declining real wages and stagnant inflation growth has beset the UK customer in a timeline of strict, and crippling, austerity measures. Former shoppers simply have less money to spend on the non-essentials, and cost-cutting measures have made people more careful about where they spend their hard earned cash. The UK has had the weakest wage growth of all G7 countries since the 2008 Financial Crisis with average wages actually lower across the board than they were in 2008.
4. Parking Problems & Lack of Infrastructure
As the squeeze on physical space continues across the UK, many high streets are just plain difficult to get to for those travelling into the centre. A lack of affordable, close-proximity parking has made securing a spot something of a lottery, whilst demand for space has only driven up prices.
Many local councils operate Park & Ride bus routes or other public transportation options, but considering these also require a ticket it suddenly becomes much cheaper to look elsewhere than to travel to the high street for the average UK consumer.
Over expansion & Out of Town Malls
Arguably, many of the large chains that have faced difficulty recently have so due to over expansion during the pre-recession boom years. The era of multiple stores in one location, banked on the hopes of continued success and an ever-increasing public retail spend have long expired. Of course, with the over saturation of particular brands in one area, it is not surprising to consider the less suitably located ventures would struggle during an era of belt tightening.
With shop numbers within a city centre limited by physical space, many expanded to out of town shopping malls and designer outlets; hubs of the retail experience packed out with multiple retail brands and eateries, making out of town shopping a destination event considering abundant free parking is often included. Rents tend to be cheaper out of town too. Amazon, for example, paid just £14m in business rate tax for their out-of-town warehouses over the past year.
The UK high street may be in obvious decline, but many councils and stakeholders across the nation are fighting back, coming up with inventive and innovative methods of countering this trend, with growth in new areas. Collaboration and creative thinking in relation to communities and mixed use social spaces are seeing some High Streets bounce back.
Check our next blog in our State of a High Street Nation series to find out what teams across the UK are doing including developments in the Digital High Street.
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