UK: Online retailing will carry on hitting high streets, says report

The growth of online shopping could lead to the closure of one in five high street stores by 2018, a

The growth of online shopping could lead to the closure of one in five high street stores by 2018, according to a report released today. - Credit: PA

The growth of online shopping could lead to the closure of one in five high street stores by 2018, according to a report released today.

A new study from the Centre for Retail Research (CRR) says that over the next five years, the number of UK retail stores will drop from 281,930 to 220,000 if current trends continue.

In addition, there could be some 316,000 job losses in the same period due to what the CRR describes as the “growing retail crisis”.

The share of consumer spending going to high street stores is falling - it was 50% in 2000 and is predicted to drop to 40.2% by next year, according to the CRR. Meanwhile, online retail continues to grow and is predicted to account for 21.5% of all retail sales by 2018.

The report, Retail Futures 2018, states that consumer spending has increased by 12% since 2006 but operating costs for retailers have increased by 20%.

Its author, CRR director Professor Joshua Bamfield, said: “Customers now shop in multiple ways, checking a store’s website, visiting stores, reading reviews and making online price comparisons with smart phones whilst shopping.

“Retailers have to make clear and strategic responses to the changing pattern of how consumers shop, which includes tactical decisions about store numbers and locations. They also need to fully integrate these physical stores with their websites, smart phone offerings and social media community coherently.

Most Read

“Going forward, I think retail stores will remain an important, although smaller, part of the shopping process as online retail continues to grow.”

Wales is set to suffer the largest number of store closures, with 29% of high street shops at risk, followed by the North West, with 28% of stores predicted to shut, according to the CRR. The lowest number would be in London, where 9% of shops could close, they said.

The CRR said store vacancy rates have risen from 5.4% in December 2008 to 14.1% in March 2013, an increase of 161%. They warn store vacancy rates could double from current levels in the next five years, reaching 24% by 2018.

They also predict that 164 retail firms could go into administration in the same period, having an impact on 22,600 shops and 140,000 staff.

Local shops are also set to be hit in the next five years, falling by 26% - or 34,587 shops - by 2018 as customers migrate to online shopping, retail parks and town centre stores, said the CRR.

Professor Bamfield said: “The performance of the retail sector has been thrust into the media spotlight in the past two years as the Government formed an alliance with celebrity retail expert Mary Portas.

“The subsequent report set out a range of initiatives to breathe life back into the high street. This is a mammoth task which requires high levels of funding and extremely tight management, both of which are challenging to say the least.

“High streets need to combine the enthusiasm generated by Mary Portas with realistic and well-managed plans. The focus should be on declining secondary and tertiary sites in lower income areas.”

His report also recommends the Government invests £320 million to revive problem town centres by turning empty shops into accommodation and creating leisure, entertainment and business facilities to attract more consumers.

Business Secretary Vince Cable said recent figures for the retail sector were “moderately encouraging” but acknowledged it has been through “a lot of distress”.

Asked about the CRR report at an event in central London, Mr Cable said: “The retail sector has been through a very torrid time.

“There are two reasons. One was that when we went into this crisis in 2008-9, there was probably 20% over capacity in the retail sector, so they expanded very rapidly on the back of unsustainable growth.

“The second reason is that there has been an enormous technological revolution in how people are ordering through email, Amazon-type companies.

“In my high street, which is in Twickenham, which I represent, it’s quite a depressed town centre in some ways, but actually behind the facade you will find quite promising internet business growing.

“Maybe people aren’t coming through the doors, but there is business growth happening.

“It is a sector that’s had a lot of distress, but I think if you look at the most recent indicators, I don’t want to make myself look a fool by talking about green shoots, but there are some moderately encouraging figures around retail activity in the last few months which we must hope is sustained.”

Labour spokeswoman on high streets Roberta Blackman-Woods said: “The Tory-led Government’s economic failure and complete lack of strategy for the high street means businesses are being forced into closure, taking jobs and potential economic growth with them. They are failing to listen to communities.

“We need urgent action to kick-start our economy. If Labour were in government now, we would be temporarily cutting VAT to help get the economy moving. And we would give more powers to local people and local councils to have a say in what their high streets look like, to support small businesses and prevent the spread of too many betting shops or payday lenders.”

Become a Supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Become a Supporter