An uncertain future for the UK High Street - Resolve Group UK

An uncertain future for the UK High Street

Resolve Group UK

An uncertain future for the UK High Street

Latest statistics issued by the ONS show a decline in consumer purchases of 0.2% in the three months to December 2018, across all main sectors except fuel.

Compared to November, when sales were bolstered by Black Friday discounting, the quantity of goods bought in December 2018 decreased by 0.9%, in all sectors except food stores and fuel stores.

This was not the merry Christmas that many retailers had been relying on to improve their overall fortunes as consumers reined in spending. The British Retail Consortium said the key Christmas shopping period had been the worst for retailers since the financial crisis a decade ago.

Over the whole of 2018 purchases did increase by a positive 2.7% however this represented an annual slowdown in comparison with the peak of 4.7% experienced in 2016 before the Brexit vote.

A further nail in the coffin of bricks and mortar retailers was hammered home as online retailing continued to grow accounting for 20% of total retailing in December 2018 – an overall growth of 13.9% when compared with the same month a year earlier.

An annual report from the real estate adviser Altus Group forecasts that more than 23,000 shops will close in 2019 with an estimated loss of 175,000 jobs alongside a slump in the value of retail property. Already this early in 2019 John Lewis Partnership have said that for the first time since 1953 they may suspend partners bonuses due to low profit margins, Marks & Spencer are announcing still further store closures, HMV has entered administration again and is desperately looking for another buyer whilst William Hill has just announced the closure of up to 900 stores as operating profits fell 15%in 2018.

This could prove to be an even greater nightmare than 2018 which saw 125 retailers close with the demise of 20,000 shops and 150,000 jobs as retail chains such as Toys R Us and Maplin closed their doors for the last time.

It seems many issues continue to plague the survival of the UK High Street, not the least of which is the continued increase in online sales and changing consumer spending behaviour with fewer customers actually visiting the high street. This coupled with ever increasing staffing costs due to increases in the minimum wage, profit margins being squeezed by currency fluctuations and enforced desperate discounting,  and ever increasing business rates and rents which are all having a serious negative impact.

Those retailers succeeding despite the challenges are those that have stayed relevant and most are embracing a multi-channel strategy, recognising the need to be present when and where their target customers need them, offering goods both competitively priced and attractively displayed.  Increased use of technology, properly directed, can make the retail experience more personalised and relevant to loyal shoppers. Creating experiences that give customers more control and convenient ways to shop is ever more important whilst ensuring the customer experience is seamless across all touch points and channels.

We predict an increasingly difficult 2019 for retailers – our advice is always that early action is the key to avoiding or surviving financial difficulties. The difference between businesses that survive and thrive and those that fail is how well they manage difficulties.

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